Elizabeth Holmes outside the Palo Alto courthouse where a jury found her guilty of defrauding investors.

The year started out well for justice, but less so for accountability

The trials of the women, though on vastly different charges, demonstrate clearly that there are two classes of victims: those for whom the wheels of justice grind slowly; and those for whom they move quickly.

On the first weekday of the new year a California jury handed down a verdict in United States vs. Elizabeth Holmes, finding the Theranos founder guilty of four counts of wire fraud and conspiracy to commit fraud against investors. Just a few days earlier, a New York City jury found Ghislaine Maxwell, the disgraced British socialite who procured girls for Jeffrey Epstein to abuse sexually, guilty of sex-trafficking. The timing of the two decisions aimed at powerful women made them collectively feel like a good omen, as if 2022 was shaping up to be the Year of Accountability. 

According to the evidence presented by prosecutors in both cases, the verdicts seemed fair and the juries thoughtful. (John Carreyrou, the former Wall Street Journal reporter whose investigative series on Theranos brought down the company, said in the final episode of Bad Blood, his podcast series about the Elizabeth Holmes trial, that the jury had been “unusually thoughtful.”) Holmes was found guilty of defrauding investors but cleared of the charges against patients. Maxwell, for her part, was convicted of five of the six counts with which she was charged for aiding and abetting Jeffrey Epstein’s sexual abuse of minors in the 1990s. 

As different as the charges were, both trials raised uncomfortable questions about gender, underscoring how seriously our legal system takes protecting the interests of rich white men. Remember that Maxwell is the only person to have faced federal prosecution for her involvement in Epstein’s vast criminal enterprise—besides Epstein, who died in prison in what was ruled a suicide. Holmes is a “unicorn”—the first Silicon Valley CEO to be convicted of white collar crime, who also happens to also be a female founder, an under-represented demographic that receives just 11 percent of VC funding. “I wonder if [Holmes would] be going to prison if she didn’t have ovaries,” mused NYU marketing professor Scott Galloway on his podcast, Pivot

Like the last prominent female CEO convicted of white collar crime—Martha Stewart, who in 2004 was found guilty of obstruction of justice and sentenced to five months in prison—Holmes became a cautionary tale about a woman who flew too close to the sun, inspiring both a media frenzy and a content extravaganza. The rise and fall of Holmes, a billionaire (on paper) entrepreneur who was once heralded as the next Steve Jobs, has generated two prominent podcasts, a best-selling book, a documentary, a TV series on Hulu debuting March 3 that stars Amanda Seyfried, and a recently announced Apple Original Films adaptation of Carreyrou’s book, Bad Blood, starring Jennifer Lawrence. (Martha Stewart’s case, which took place before the podcast revolution, also inspired best-selling books—including a how-to guide written by Stewart herself while she was under house arrest—and a made-for-TV movie starring Cybill Shepherd.)    

Things get a bit more complicated—both with the Stewart comparisons and the idea that Holmes’s case contains broader lessons for the tech industry—when you consider the specifics of what she promised, and what Theranos actually delivered. As I have noted before, Theranos wasn’t a tech company, despite how it was pitched to investors. Holmes wasn’t trying to hawk a ride-sharing app or a social network or a coworking space. She was pitching a medical device that purported to diagnose diseases from a drop of blood with greater accuracy than traditional laboratory tests requiring larger samples. And unlike Martha Stewart, whose crime was relatively minor—she lied to investigators about a suspiciously well-timed sale of stock—Holmes lied to patients and investors, with life-altering implications.  

Theranos’s product never worked, which set Holmes apart from her Silicon Valley peers. Holmes told investors that Theranos’s “minilab” device could run thousands of blood tests, even though it never could run more than 12. She implied that it was being deployed on the battlefield and in Medevac helicopters, when she never had a deal with the Department of Defense beyond an exploratory conversation. One patient, Erin Tompkins, testified that she ordered a Theranos test at Walgreens, and was misdiagnosed as having HIV. “I was quite emotional about it,” she said, adding that she tried to call the company but never got beyond a customer service representative. Another patient, Brittany Gould, took the stand to say that a Theranos test result indicated that she was miscarrying, which would have been her fourth miscarriage in a row. Thankfully, a nurse practitioner encouraged her to get a second test, which confirmed that Gould’s baby was healthy. 

(l to r): Bill Clinton,
Elizabeth Holmes, and Jack Ma at the Clinton Global Initiative on September 29, 2015.

As disturbing as that all sounds, it was the charges that stemmed from lying to the investors—not to the patients—that caused the jury to return a guilty verdict. To be sure, the defense successfully blocked testimony about the emotional impact of getting false test results, so it may have been harder to convince the jury to convict on those counts. Juror number six, a man named Wayne Katz, explained to ABC News that the jury ultimately felt that the CEO was “one step removed” from patient victims, so they weren’t directly defrauded in the same way as investors like the billionaire DeVos family, which put $100 million into Theranos; Daniel Mosley, a lawyer who invested $6 million; or PFM Health Sciences LP, a hedge fund that invested $96 million. For whistleblower Tyler Shultz—grandson of former Secretary of State George Shultz, who was on the company’s board—the verdict was mostly cause for celebration. But, as he told John Carreyrou on his Bad Blood podcast, he and his former colleague Erika Cheung were not motivated to put their “necks out on the line” so they could avenge aggrieved billionaires. They were trying “to save patients from potentially getting bad medical results.”  

It would be a travesty if Elizabeth Holmes were to wind up being the only Silicon Valley hype artist called to account for lying to investors or a range of other crimes. Elon Musk, for example, got a slap on the wrist for tweeting that he was taking Tesla public—a lie that sent the stock soaring—settling with the Securities and Exchange Commission for $40 million and agreeing to make some performative changes at the company. Travis Kalanick never faced criminal charges for any of the multiple scandals at Uber, which included price gouging, a culture of rampant sexual harassment and a failure to vet drivers, which led to high profile incidents of drivers committing sexual assault on female passengers. Neither has Facebook’s Mark Zuckerberg, even though his platform’s algorithm has weaponized disinformation, leading to disastrous outcomes ranging from a genocide in Myanmar, manipulation of the 2016 U.S. presidential election by a Russian troll farm, and the coordination of the assault on the Capitol by white nationalists on January 6, 2021.  

Holmes has yet to be sentenced. Each of her four fraud counts carries a 20-year maximum, but those sentences are likely to be served concurrently. She will probably get off with a much lighter sentence, as the judge takes into consideration factors such as her being the mother of an infant. Maxwell, who faces up to 65 years in prison, is awaiting sentencing, though her lawyers are currently trying to throw the whole verdict out on a technicality after a juror told a media outlet that he was a victim of sexual abuse. 

It has long been said that “the wheels of justice turn slowly,” but by looking at these two cases it’s clear that the relative slowness of that turning seems to depend on who the victims are. In the Maxwell case, where the victims were sexually abused underage girls, the crimes went uninvestigated for decades, until Julie K. Brown, a journalist with the Miami Herald, wrote a series that led to Epstein’s second arrest in 2019. (In 2008, Epstein famously cut a deal with prosecutors in Palm Beach, in which he pleaded guilty to soliciting a prostitute and served just 13 months in jail with extensive “work release.”) By contrast, Holmes was indicted for fraud more quickly–about three years after the first of John Carreyrou’s troubling reports were published in the Wall Street Journal

Ultimately, it is a good omen that Maxwell and Holmes, with their fleets of high-priced lawyers to match their unjustified entitlement, were both charged with crimes they obviously committed. But going forward, unless the complaints of teenage sex-trafficking victims and patients who got bad, potentially life-altering test results are treated with the same urgency as those of billionaire investors who lost money on a scam, the Year of Accountability will just have to wait.