The Continuing Frauds of Elizabeth Holmes

No one should be surprised that the convicted CEO of Theranos is trying to rehab her image. What is stunning is how quickly someone took the bait.

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Two weeks ago, the former founder and chief executive of now-defunct biotech startup Theranos was due to report to prison.

Elizabeth Holmes was supposed to begin serving a 135-month sentence after a jury convicted her of four federal charges of fraud – three counts of wire fraud and one count of conspiracy to commit wire fraud. Those criminal convictions stemmed from Holmes knowingly defrauding investors out of hundreds of millions of dollars by misleading them about the capabilities of her company’s blood-testing technology.

Her lies propelled her to the upper echelons of Silicon Valley for a time, while making her the youngest self-made billionaire on earth and pushing her Palo Alto, Calif., company’s valuation to $9 billion.

More disturbingly, the frauds arose from Holmes promoting “revolutionary” fingerstick blood tests she was fully aware provided inaccurate and unreliable results to patients, risking their health and their lives.

At one point, Holmes offered the blood tests to the public, putting her company’s flawed technology to use on patients with serious medical conditions and causing them risk of grave physical harm. The inaccurate findings went out to patients being screened for cancer, to women closely monitoring their pregnancies, and even to one patient who, due to her blood tests, was led to believe they might have the precursor virus to AIDS.

In the meantime, Holmes “enjoyed a lavish life while carrying out her fraudulent scheme, living in a $15 million mansion and traveling in a Theranos-paid private jet,” according to the U.S. Department of Justice.

She gained a national profile, adorning the covers of Fortune, Forbes, Inc., Glamour and The New York Times style magazine. “Holmes dined at the White House, joined the Board of Fellows of Harvard Medical School and was named by Time as one of the 100 Most Influential People in the World,” the DOJ noted.

Even after Theranos voided its erroneous tests, according to the DOJ, Holmes “was undeterred and again chose deceit over candor by downplaying the extent of the patient impact to investor-victims and continuing forward with her elaborate fraud.”  

Considering the blood tests – which she claimed “produced results that were better, cheaper and more accurate than existing methods and at a speed faster than ever before possible,” including superior monitoring for infectious diseases – did not work as advertised, how is it Holmes is still avoiding prison?

Elementary, this spring she filed a last-minute appeal of U.S. District Judge Edward Davila’s decision for her to start her prison sentence on April 27th with the Ninth Circuit Court of Appeals, which allows her to walk free while she awaits the results.

Holmes, now 39, has sought to remain free following her convictions in January 2022 and, this year, giving birth to her second child.

Just after she was found guilty, it was discovered she had purchased a one-way ticket to Mexico in what prosecutors alleged was an effort to flee the country. “The government became aware on January 23, 2022, that defendant Holmes booked an international flight to Mexico departing on January 26, 2022, without a scheduled return trip,” prosecutors wrote in a filing. “Only after the government raised this unauthorized flight with defense counsel was the trip canceled.”

Holmes’s legal team claimed she was just traveling to a friend’s wedding south of the border, assuming she would not be found guilty.  

Shortly before having to report for prison last month, Holmes tried and failed to persuade Judge Davila to allow her to steer clear of incarceration while she appealed her convictions. Instead, the judge recommended Holmes be sent to a low-security facility in Texas, though it is not yet certain she will serve out her sentence there.

Her latest tactical move to once again delay doing time appears to be working – for now. And it turns out, she has also been very busy during her reprieve.

This week, we learned she has been telling her story to The New York Times, which printed a puff piece of staggering proportions, calling Holmes “Liz,” and characterizing her as “an authentic and sympathetic person.”

The article, printed alongside crisp, jumbo-sized photos of Holmes and her husband, Billy Evans, in jeans and bare feet, cuddling their blonde babies by the ocean, portrayed Holmes as “gentle and charismatic, in a quiet way.”

It also depicted her as a loving mother and wife, sorrowful of her past mistakes and dreading how she must soon go to prison rather than be with her children.

The writer of the article, Amy Chozick, asked questions such as: “How do you have an honest conversation with a person whose fraud trial has played out so publicly? I tried to ask Ms. Holmes this directly. How do I believe you when you’ve been convicted of (basically) lying? But how could I ask someone who was nursing her 11-day-old baby on a white sofa two feet away if she was actually conning me?”

The story, which notes Holmes has not spoken to the media since 2016, doesn’t get much better from there. Describing the convicted CEO as “modest but mesmerizing” Chozick concludes, “If you are in her presence, it is impossible not to believe her, not to be taken with her and taken in by her.”

The Times story was met with widespread criticism, with even Fox News piling on, proclaiming, “New York Times dragged for Elizabeth Holmes profile,” noting that when contacted, the Times refused to comment.

“She did, in fact, perpetrate an elaborate scheme to defraud investors, as established by a mountain of bulletproof journalism, federal investigations and a criminal trial,” Axios healthcare editor Sam Baker wrote on Twitter after the article was published.

Silicon Valley communications strategist Brooke Hammerling quipped, “I truly hope the PR person behind this gets enough money to buy an estate in Kauai.”

Perhaps being the first to trot out Elizabeth Holmes’s latest pre-incarceration incarnation was too tempting to resist, even for the Times. But it is hard not to recall what James Stewart wrote in his 1989 bestselling book, “Den of Thieves,” about how the most infamous offenders can eventually recover from public disgrace by hiring the best PR teams.

In it, Stewart observed how Wall Street titans, such as Michael Milken, the famed 1980s junk bond trader who went to prison, managed to resuscitate their reputations by playing the long game. 

The goal, he wrote, “was to turn public opinion from outrage to neutrality to acceptance – and finally to admiration.”

Lo and behold, the Milken Institute Global Conference concluded its 26th year this spring as one of the hottest tickets on Wall Street, convening “the best minds in the world to tackle its most urgent challenges.” 

Who’s to say the Elizabeth Holmes Planetary Summit won’t be next?

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