Elizabeth Holmes will go on trial next summer to face criminal fraud charges for allegedly defrauding investors, doctors and the public as the head of the once-heralded blood-testing startup Theranos.
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U.S. District Court Judge Edward Davila ruled Friday that the trial against Holmes and the company’s former Chief Operating Officer Ramesh Balwani will start July 28, 2020.
Prosecutors allege that Holmes and Balwani deliberately misled investors, policymakers and the public about the accuracy of Theranos’ blood-testing technologies.
The two pleaded not guilty to wire fraud and conspiracy to commit wire fraud. If convicted, they could each face maximum penalties of 20 years in prison and a $2.75 million fine, plus possible restitution, the Department of Justice said.
Holmes dropped out of Stanford University at 19 to found Theranos in 2003, pitching its technology as a cheaper way to run dozens of blood tests with just a prick of a finger and a few droplets of blood.
A notoriously secretive company, Theranos shared very little about its blood-testing machine with the public or medical community. Holmes said she was inspired to start the company in response to her fear of needles.
She carefully crafted her image as well, wearing almost entirely black turtleneck sweaters that earned her the moniker in Silicon Valley as “the next Steve Jobs.”
Investors bought what Holmes was selling and invested hundreds of millions of dollars in the company. At one time, Theranos was worth more than $10 billion and Holmes the nation’s youngest self-made female billionaire.
But an investigation by The Wall Street Journal in 2015 found that Theranos’ technology was inaccurate at best, and that the company was using routine blood-testing equipment for the vast majority of its tests. The story raised concerns about the accuracy of Theranos’ blood testing technology, which put patients at risk of having conditions either misdiagnosed or ignored.
The Journal’s investigation marked the beginning of the end of Theranos. Walgreens ended its blood-testing partnership with the company, and the Department of Health and Human Services effectively banned Theranos in 2016 from doing any blood testing work at all.
Last year, Holmes forfeited control of Theranos and agreed to pay a $500,000 fine to settle charges by the Securities and Exchange Commission that she had committed a “massive fraud” that saw investors pour $700 million into the firm.