Theranos Founder Elizabeth Holmes Found Guilty of Investor Fraud
TL;DR
Fake demos, fake revenue, fake military deployment. When costly signals become cheap to produce, the whole system breaks.
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Primary source for the criminal conviction in Silicon Valley's largest fraud case. Documents how Theranos raised $700 million by demonstrating technology that didn't work, using fake device protocols and fabricated military deployments. Essential reading for understanding how costly signaling systems fail when verification mechanisms break down.
Key Findings from U.S. Department of Justice (2022)
- Edison device demonstrations were fake—samples were actually tested on hidden third-party Siemens equipment
- Only 12 of 300 Theranos tests ever ran on the proprietary Edison device
- Claims of military deployment on battlefields and medevac helicopters were completely fabricated
- Revenue claims of $100 million vs. actual revenue of ~$100,000 (1000x exaggeration)
- Company voided all patient tests after finding 'patient impact existed for every test'
- Holmes sentenced to 11 years 3 months; Balwani to 12 years 11 months; $452 million combined restitution