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Elizabeth Holmes' Young Female Billionaire Scam

| 10.1.22 |
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Elizabeth Holmes is back in the limelight after a court in California found her guilty of four of 11 charges related to health technology fraud, which carries a sentence of 20 years in prison. 

In general, the lawsuit was filed against Holmes in the aftermath of his fraudulent actions against investors, related to the health technology startup Theranos, which Holmes has been working on since 19 years ago. 

This guilty verdict is certainly a stumbling block to Holmes' ideas of youth in the technology industry. However, who exactly is the figure of Elizabeth Holmes? how did it go until he was found guilty?

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The origins of the Theranos ide idea

Elizabeth Holmes was born on February 3, 1984, she received higher education at Stanford University, United States (US), majoring in chemical engineering. While still in college in 2002, he had the idea to create a test kit that could detect any disease, with just a drop of blood. This idea was presented to his professor at Stanford University, Phyllis Gardner. However, Gardner said that Holmes's idea was impossible to realize. 

Holmes seems to have ignored Gardner's opinion. Then in 2003, Holmes did not continue his studies at Stanford University. At the same time, Holmes founded a startup company engaged in the field of health technology, which was named Theranos and located in Palo Alto, California. With Theranos, Holmes worked on an idea he came up with in college. 

Theranos is a company that creates a device that detects all diseases, with just a drop of blood. To realize this idea, Holmes took Ian Gibbons, a British chemist who became the head of the Theranos lab.



Youngest billionaire

When he founded Theranos in 2003, Holmes was only 19 years old, and dared to admit that he had a patent for a device that claimed to be able to detect various types of diseases with a drop of blood. The claim immediately became new hope for the world of health, because the tool that was echoed by Theranos, made blood tests run at a low cost in a short time. 

Many venture capitalists from the United States conglomerate were investing in Theranos at that time, for example, former US Secretary of State Henry Kisinger and the founder of technology company Oracle, Larry Ellison. Assisted by Larry Ellison and Don Lucas, a venture capitalist in Silicon Valley, Holmes managed to raise a lot of capital. 

At its peak in 2014, Theranos managed to have a total asset value of 9 billion US dollars (Rp 128 trillion). With this achievement, Theranos has the status of a Unicorn company that is aligned with technology companies that grew up in Silicon Valley, such as Google, Apple, NetFlix, and so on.


Not only Theranos who got the name, but also Holmes as its founder and CEO. Holmes was named the world's youngest female billionaire by Forbes magazine in 2014, when she was 30 years old. Holmes at that time also managed to record a net personal worth of around 4.5 billion US dollars (around Rp. 64 trillion using current exchange rates). In addition, Holmes also received the title "The next Steve Jobs" from business magazine, Inc. By dressing like Steve Jobs who wore a turtle neck model, Holmes' popularity at that time indeed had the upper hand. However, Holmes' popularity gradually plummeted in 2015, due to an investigative report from The Wall Street Journal.


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The cover of the fraud is revealed

It was John Carreyrou who made an investigative report on the fraud committed by Holmes through Theranos. Carreyrou's findings seem to challenge the claims of the Theranos device which is able to detect 240 types of diseases with a drop of blood. Carreyrou concluded that the blood test results from Theranos' device were inaccurate, after comparing the blood test results from several common test kits with Theranos's. 

The Theranos blood detector shows different results from the results of most of the tools that are already in circulation. In addition, the claim about the patent of a blood detector made by Holmes was also refuted. The device used for most of Theranos' blood tests was not the product of a company called Edison as previously claimed. Theranos turned out to use blood test kits from other companies, which can be purchased freely. So, the patent from Theranos is still an idea. 

Meanwhile, a tool that can test all diseases with just a drop of blood is a mere boast of Holmes. In other words, Theranos never created a device that could practically be used for blood tests according to Holmes's ideas. At that time, Holmes was still calm. He responded to the findings of Carreyrou as mere nonsense, from people who were jealous of his technological innovations. 

"This is what happens when your job is going to change a lot of things, first they think you're crazy, then they turn against you," Holmes said in an interview with CNBC TV. After Carreyrou's report emerged to the public, lawsuits continued to come against Theranos which finally made Holmes unable to cover up the cover of his fraud.



The end of the Holmes story with Theranos

In 2016, the US health regulator officially banned Holmes from circulating and operating a blood test service for two years, after a blood test procedure was discovered at Theranos' lab. Along with the announcement of the operating ban, one of Theranos' partners, Walgreens, a pharmaceutical company in the US, also stopped working with Holmes. 

Walgreens recalled all Theranos blood test bags at all of its stores. A lawsuit also came from the state of Arizona in 2017, the Attorney General in Arizona announced that Theranos must return all funds purchased from Arizona residents for blood test kits, including paying fines. In total, Theranos's total dependents amount to US$ 4.65 million (around Rp. 66 billion if using the current exchange rate). 

Theranos agreed to the payment without any negotiations. 2018 was the toughest year for Theranos and Holmes. US financial regulators have named Ramesh Balwani, former head of Theranos and former girlfriend of Holmes, for defrauding investors by advertising fake products. The Theranos scam was based on false claims about the US Department of Defense using its technology. Then, the company also lied when it claimed to have revenue of 100 million US dollars (Rp 1.4 trillion) in 2014.

With the lie, Holmes' voting rights in Theranos were revoked. Then, Holmes was also banned from holding a position as a policy maker at Theranos, and he had to pay a fine of 500,000 US dollars (Rp 7.1 billion). Along with many lawsuits that went to Theranos, Holmes finally closed the company he had started for 15 years on September 4, 2018. 

Not only got a civil lawsuit, Holmes also received a criminal lawsuit. Also in 2018, Holmes and Ramesh Balwani were accused of fraud on investors by the California Attorney General's Office. 

The criminal lawsuit which took place in 2018 only met a bright spot at the beginning of 2022. After approximately two years, Holmes was finally found guilty of four of the 11 charges related to fraud against investors.




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