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The Margin: Is ‘The Dropout’ a true story? Where Theranos founder Elizabeth Holmes is now

Viewers tuning into the new Hulu series “The Dropout” starring Amanda Seyfried may be wondering whether it’s based on a true story.

It sure is.

Elizabeth Holmes captured the imagination of Silicon Valley with her self-made startup story in the early 2000s. She dropped out of Stanford to create a groundbreaking blood-testing system. She attracted high-profile investors, graced magazine covers and was dubbed the next Steve Jobs.

Holmes’s biotech company, Theranos, promised a revolutionary system for testing blood — only a few drops were required for a test that cost a fraction of existing blood-testing technology. Theranos was valued at $9 billion and secured contracts with Walgreens and the Department of Defense, according to case filings.

Holmes became a media darling, appearing on the covers of Forbes, Fortune, Inc. and New York Times Style, and giving a TEDMED talk. But her meteoric rise came to an explosive halt following a series of investigative pieces from The Wall Street Journal in 2016. 

This led Holmes and former Theranos executive Ramesh “Sunny” Balwani — who kept a romantic relationship private from investors, board members and employees for years — to face criminal charges.

So it should come as little surprise, then, that the saga has inspired a book, an HBO documentary, a podcast, a film and the new Hulu limited series that people are talking about. Indeed, “Theranos” and “Elizabeth Holmes” were topping Google Search trends the day after the series premiered.

So where are Holmes and Balwani now?

Holmes was found guilty of fraud and conspiracy in January, and her sentencing hearing is set for late September. Balwani’s trial is scheduled to begin on March 9. But if you’ve grown fuzzy on the real-life details of the scandal that inspired “The Dropout,” here’s a recap of what’s happened so far.

Who is Elizabeth Holmes?

Elizabeth Holmes grew up in Washington, D.C., and was a top student throughout high school. She dropped out of Stanford University in 2004 at just 19 to found what would become Theranos. Holmes lost an uncle to cancer when she was young, and said that his death inspired her to create the Theranos testing system. (That claim, among others, has been debunked.)

“I believe the individual is the answer to the challenges of healthcare. But we can’t engage the individual in changing outcomes unless individuals have access to the information they need to do so,” Holmes said in a now-deleted 2014 TEDMED talk. Theranos was meant to do just that by making blood tests as routine as diet and exercise.

Holmes, now 38, became known for her distinctive black turtlenecks — consciously modeled after Steve Jobs, some thought — and her baritone voice. She sported the turtlenecks “like a uniform,” telling Glamour magazine in a 2015 interview, “I probably have 150 of these.” 

In 2015, she was crowned the youngest self-made female billionaire by Forbes, with a net worth of $4.5 billion at 31 years old.

What was Theranos?

Holmes kept Palo Alto, Calif.–based Theranos in “stealth mode” for its first 10 years in operation as it developed a proprietary technology, which it said could run tests using only a few drops of blood, away from public view.

“One tiny drop changes everything,” a Theranos slogan claimed. The blood was stored in its “nanotainer,” and Theranos’ stated goal was to create a second device that could quickly and accurately test that blood. That device was, at times, called “Theranos Sample Processing Unit (TSPU), “Edison” and “miniLab.”

Running several blood tests using mere drops of blood would be especially helpful for elderly people with collapsed veins, people who required frequent blood tests due to chronic illness, and anyone with a fear of needles, Theranos said. And, the company claimed, all of this could be done at a fraction of the cost of existing technology.

The company drew the attention of big-name investors, including Betsy DeVos, who went on to serve as education secretary under President Donald Trump, and the heirs of Walmart
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founder Sam Walton, among others.

Holmes also secured a highly unusual board of directors for a healthcare startup, including two former U.S. secretaries of state in George Shultz and Henry Kissinger, as well as William Perry and Gen. James Mattis, former and future secretaries of defense, respectively.

What did Elizabeth Holmes actually do at Theranos that got her into trouble?

Questions about the accuracy of Theranos’ claims arose as early as 2015, with The Wall Street Journal reporting that the company’s keystone product was only handling a small fraction of the 240 blood tests it advertised. In truth, Theranos was using traditional technology to run a majority of patient tests. 

In 2015, employee Tyler Schultz — the grandson of board member George Shultz —  blew the whistle and reported Theranos to New York state’s public health lab. It’s the first known complaint against the company.

Read more: Theranos whistleblower: How to prevent another $600 million Silicon Valley disaster

Theranos scaled back its testing in late 2015 at the behest of the FDA, which at that time had only approved one of its tests. Walgreens terminated a partnership it had formed with Theranos and closed the 40 testing centers it had introduced inside California and Arizona stores. The Securities and Exchange Commission filed civil securities-fraud charges against Holmes in 2018. She settled and paid a $500,000 fee.

After federal prosecutors filed criminal charges against Holmes and Balwani, Theranos was dissolved in 2018.

What charges did Holmes face?

Both Holmes and Balwani, 56, were charged with two counts of conspiracy to commit wire fraud and 10 counts of wire fraud. 

The indictment, filed in the U.S. attorney’s office for the Northern District of California, alleged that Holmes and Balwani defrauded two groups: investors and patients. 

Holmes and Balwani “engaged in a scheme, plan and artifice to defraud investors,” prosecutors claimed. Between 2010 and 2016, the two told investors that Theranos could provide accurate, fast, reliable and cheap blood tests and results when they knew their technology was not capable of doing so, prosecutors allege.

Prosecutors also alleged the pair told investors that Theranos would generate over $100 million in revenue in 2014, when Holmes and Balwani knew the company would only generate a few hundred thousand dollars that year. Prosecutors said investors were also told that Theranos had lucrative contracts with the Pentagon and that its technology was already in the battlefield — when, in actuality, the company only had limited revenue from military contracts.

Patients were defrauded between 2013 and 2016 because the tests weren’t as fast, accurate or reliable as advertised, prosecutors alleged.

Holmes’s trial was delayed several times, first due to the pandemic and then due to her pregnancy. Her trial began in September 2021, and there was no public livestream of the case.

Where is Elizabeth Holmes right now?

A jury convicted Holmes on two counts of wire fraud and two counts of conspiracy to commit fraud in January, following a three-month trial that featured dozens of witnesses — including Holmes. She now faces up to 20 years in prison for each count, although legal experts say she is unlikely to receive the maximum sentence. Her sentencing is scheduled for Sept. 26.

Holmes will remain free on a $500,000 bond for the several months leading up to her sentencing. She is reportedly living at the $135 million Silicon Valley estate of her partner, Billy Evans, son of hotel magnate Bill Evans. They welcomed a baby boy together in July 2021. And Vanity Fair reported that she’s already holding meetings with filmmakers to try and work on a documentary about her “real” story. She also wants to write a book.

Balwani was released pending trial. Jury selection for his trial begins on March 9.

This article was originally published in August 2021, and has been updated with the outcome of Elizabeth Holmes’s trial.

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