What's up guys and welcome back to wall street millennial, just a few days ago, disgraced theranos founder elizabeth holmes was convicted on four counts of fraud and conspiracy charges. Each charge carries a maximum sentence of 20 years, so she could theoretically spend the next 80 years of her life in jail. But most legal analysts think that she will be allowed to serve the sentences concurrently, so she will probably only end up serving 20 years or less if you've been following the home saga over the past few years, the guilty verdict probably doesn't come as a big surprise To you, she founded the blood testing company theranose. In 2003, she claimed to have developed a revolutionary new technology which could perform hundreds of lab tests using only a prick of blood and at a fraction of the cost of traditional testing technologies.

She raised hundreds of millions of dollars from supposedly sophisticated investors at a peak valuation of nine billion dollars. This made her the youngest ever self-made female billionaire and she likened herself to the next steve jobs. But behind the facade holmes was masterminding, one of the largest and most sophisticated frauds in the history of silicon valley. In 2015, a wall street journal reporter by the name of john kerry, talked to the former employees, who basically told him that theranos was a near total fraud.

Holmes desperately tried to defend herself saying the wall street journal article was a hit piece and that her company's technology was legit. After this bombshell report, the house of cards came crumbling down very quickly. Their edison machine, which they claimed could perform. Hundreds of tests could actually only perform a handful of them and even though suffered from inaccuracies in 2018, the company officially dissolved and investors lost everything.

It wasn't until late 2021, a full six years after her fraud was originally exposed that she was finally convicted for her crimes, and she will probably continue living in her luxurious san francisco home for yet another year before she finally has to move to a jail cell. In this video, we'll look at the shocking new revelations that came out from the homes trial, as well as why it took so long for justice to finally be served after dropping out of stanford holmes, founded theranose using the educational trust her parents gave her her vision Was to create a new technology that could diagnose a wide range of medical conditions using only a single prick of blood. Their revolutionary new technology promised to be far more convenient and cost effective than the traditional blood testing process, which requires long and painful blood draws. She was a brilliant salesperson and was able to score investments from the highest levels of silicon valley in wall street.

Over the years, theranos raised close to 1 billion dollars from billionaires, including oracle, founder larry, ellison, media tycoon, rupert murdoch, as well as countless other high caliber venture capital funds. She recruited former generals, secretaries of state and defense, and a former ceo of wells fargo to join theiranos board of directors. Almost all of her investors and board members had backgrounds in either government technology or finance. Very few of them were medical doctors or had any significant experience in the medical diagnostics industry.

They lacked the expertise to independently verify the efficacy of theranosis technology. Homes is basically targeting the dumb money to fund their startup. If the investors knew what they were doing, they would have seen multiple red flags from the beginning. Their edison machine claimed to be able to do three things which would each be revolutionary in their own right.

First off, it only needed a few drops of blood to perform a test, while traditional methods required a large vial of blood. With such a small amount of blood, it can be almost impossible to detect compounds which have low concentrations. Secondly, she claimed that one sample could be reused many times, so you can test for many different things. The problem is a lot of tests require the blood to be spun in a centrifuge or other pre-processing procedures which effectively destroys the blood.

Thus, using the same blood for multiple tests is often impossible, and thirdly, their edison machine was small enough to fit on a doctor's desk. Current blood testing machines are giant often taking up a whole room. The supposed technological investment of the edison would be as revolutionary as the switch between the ibm mainframe to the personal computer. The current state of medical technology is three nobel prizes away from making theranos's edison machine possible holmes was not a nobel laureate.

She wasn't a doctor either in fact, because she dropped out of college. Her highest academic achievement was a high school diploma, so a high school educated amateur scientist supposedly led the development of something real scientists haven't been able to do in decades. That's about, as likely as a kid inventing nuclear fusion for their middle school science. Fair theranos was highly secretive with their technology.

They didn't publish it in peer-reviewed journals or allow independent scientists to verify that the machines were actually working, given the lack of independent verification. Why would investors be willing to give this company a 9 billion valuation at the peak? A big part of their noses credibility came from their high profile deal with a massive pharmacy chain. Walgreens in 2013 walgreens started offering theranose blood tests at a few dozen of its locations in arizona with walgreens being such a large and sophisticated company. People assume that they had done proper due diligence on theranose, but, as it turns out, she was only able to land the walgreens partnership through deception, holmes personally falsified, the company's internal scientific reports by putting the pfizer logo on the top.

This way she tricked walgreens into thinking that pfizer had confirmed their technology. So now real patients were getting their fingers pricked in walgreens and sending them to theranos labs for testing. The problem was their nose didn't have the technology to perform those tests, so they used commercially available machines from siemens and other manufacturers. These machines require a much larger amount of blood than a single finger prick, so they dilute the blood with water to increase the volume one theranost victim by the name of brittany.

Gold testified in the trial. She was pregnant at the time the theranose results showed of normal results, which suggested that she would miscarry after undergoing significant psychological stress. As a result, she went to quest diagnostics to get another test. The quest tests show that her blood work was completely normal.

The thousands of tests that theranus performed put patients in real harm, in fact, in 2016 the centers for medicare and medicaid ordered theranos to stop performing tests, as they cause quote immediate jeopardy to patient health and safety. Unquote, it was revealed in the recent trial that theranos lured investors with absurd financial projections. They misled investors saying that they were selling their tests to the us military and massively overstated how much money they could make from their walgreens partnership. They told investors that they expected to make 140 million dollars of revenue in 2014 and almost 1 billion dollars in 2015..

Denise siam was a corporate controller at theranos and was responsible for the company's accounting. She said they made zero dollars of revenue in 2014 and only 500 000 in 2015., so the real results were more than 99 less than what they told investors. Yam said that she has no idea what the basis for their projections were. It's likely that holmes just made them up, and while the company was burning, hundreds of millions of dollars, holmes was spending lavishly on private jet flights, expensive dinners and at one point had three personal assistants.

The wall street journal first exposed their notes in 2015 and by 2017 pretty much. Everyone in the industry agreed that their notice was a complete fraud, but it took another four full years for her to finally stand trial and she probably won't start serving prison time until september of 2022. john cariu, the investigative reporter who exposed her said it may actually Be pretty difficult for a court to convict her? You know she has shown her ability uh at convincing people and manipulating people, and so she'll present a sympathetic figure to a jury and and uh possibly be able to manipulate a jury. John kerry's prediction was exactly correct: holmes's lawyers didn't deny that theranos was a fraud.

Instead, they claimed that therano's ceo sonny bowani, who was having a romantic relationship with holmes at the time, was abusive to her. The abuse impacted her mental state and manipulated her to go along with the fraud. Balwani has denied these allegations. Holmes's lawyers provided a handwritten note from her diary in it she wrote quote every morning.

I will force myself out of bed and spend 30 plus minutes to write what i want from my day. Unquote, she claimed that bahwani pressured her to improve her time management practices. This ultimately contributed to her motivation for the fraud over the years. Holmes made numerous provably false statements to investors, business partners in the media.

Importantly, she admits that belwani did not force her to make these statements. Furthermore, besides holmes's own claims, there is no evidence about wanting pressure to write about time management in her diary. She easily could have done this on her own accord. This type of emotional abuse defense is somewhat common in domestic violence cases, but is highly unusual in white-collar crime cases.

Some of the jurors have said that they viewed holmes's defense as a sympathy ploy and that's why they ended up convicting her on four counts of fraud and conspiracy. At the end of the day, she was the founder and ceo, so the buck stops with her holmes. Was a free woman for six years in, between the first time her fraud was exposed and when she ultimately went to trial inside edition spotted her taking long walks with her new boyfriend around their luxurious san francisco home, most ordinary criminals are taken off the streets within Days of their crimes being exposed, so why was holmes able to stay free for so long? The prosecutors probably knew that holmes was highly manipulative and a charismatic speaker if they wanted to convince a jury to convict they needed a bulletproof case, so they didn't want to rush the investigation. The trial was supposed to be held in 2020.

She got lucky with kovid, as the court delayed the case to 2021 for safety reasons. In 2021, holmes unexpectedly announced that she was pregnant and pushed the trial back another few months. In fact, even to this day, holmes is still a free woman living in her luxury. San francisco home, her sentencing hearing is expected to happen in september of 2022 after sunny balwany's trial, despite the overwhelming evidence for her crimes, there are still people who support her.

In fact, boss girl, t-shirts, displaying holmes's face have become very popular in recent months. Her supporters view her as a female icon and many think her actions were justified under the guise of fake it till you make it. The theranose case exposed the excesses and lack of due diligence that goes on in silicon valley and with the spac frenzy over the past couple years. These excesses have also been brought to the public markets whenever there's a new technology that promises the potential for 10 or even 100 times returns.

Investors are often willing to suspend their disbelief and hand over hundreds of millions of dollars with almost no due diligence. Alright guys that wraps it up for this video, what do you think about elizabeth holmes? How long do you think she should be sentenced for? Let us know in the comments section below as always. Thank you so much for watching and we'll see you in the next one wall, street millennial, signing out.