Elizabeth Holmes, one-time billionaire and media darling, goes on trial

Published

4 years ago

August 30, 2021

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Former Theranos CEO Elizabeth Holmes leaves after a hearing at a federal court in San Jose, California, July 17, 2019.

Stephen Lam | Reuters

Nearly a decade ago, Elizabeth Holmes was proclaimed the golden girl of Silicon Valley, and briefly crowned America’s youngest female self-made billionaire.

This week, she’ll walk into a San Jose federal courthouse with a very different image: a defendant charged accused of fraud.

Federal prosecutors in the Northern District of California have accused Holmes and Ramesh “Sunny” Balwani, former Theranos president and for a time her romantic partner, of defrauding investors and patients. They each face two counts of conspiracy to commit wire fraud and 10 counts of wire fraud. Holmes and Balwani, who will be tried separately, pleaded not guilty.

Jury selection in Holmes’ trial will begin Tuesday and is expected to take at least two days, a process that typically takes less than a day in lower-profile cases. Opening statements are scheduled for Sept. 8 and the trial is expected to last 13 weeks.

If convicted, Holmes could face 20 years in prison. Prosecutors say Holmes not only swindled investors of hundreds of millions of dollars, but she also put thousands of lives at risk.

The rise and fall of Theranos

Holmes’ saga began when she had a vision of running hundreds of laboratory tests with just a finger prick of blood. She dropped out of Stanford at age 19 to start Theranos. The idea was to make blood tests cheaper, convenient and accessible to consumers.

The company struck partnerships with Walgreens and the grocery chain Safeway. Her board of directors included luminaries such as former Secretaries of State Henry Kissinger and the late George Shultz and former Secretary of Defense James Mattis.

But Holmes’ vision turned upside down in 2015 after Wall Street Journal reporter John Carreyrou published a series of damning reports exposing the shortcomings and inaccuracies of Theranos’ technology.

Patients were given inaccurate test results relating to conditions such as HIV, cancer and miscarriages.

“She commercialized a medical product that she knew did not work, her machine only did a handful of tests that did not do them well at all,” Carreyrou said in an interview with CNBC last week.

In 2018, Holmes and Balwani were charged with “massive fraud” by the Securities and Exchange Commission. That led to Theranos being dissolved and Holmes settling with the SEC. She agreed to pay $500,000 without admitting or denying the charges. Balwani intends to fight the SEC charges.

The investors

Holmes once had some of the most powerful and wealthiest venture capitalists in America behind her healthcare start-up Theranos.

Investors such as media mogul Rupert Murdoch, former Education Secretary Betsy DeVos, the Walton family of Walmart fame, the Cox family, Patriots owner Robert Kraft and Mexican investor Carlos Slim became so enchanted with her they poured millions into Theranos.

Some of those investors are expected to testify in Holmes’ trial. All of the major investors, who doled out $700 million over the course of a decade, did not respond to CNBC’s request for a comment. Prosecutors allege the investors were swayed by exaggerations and misrepresentations of the blood-testing technology.

“When a deal turns into this, you don’t want to be on that list of investors anymore,” said Kevin O’Leary, chairman of O’Shares ETFs and a judge on CNBC’s “Money Court.”

O’Leary, who said about 20% of his investments have failed, didn’t mince words when asked about the fallout from Theranos investors.

“You can understand how embarrassing it is to get a zero like that,” O’Leary said. “Clearly means you didn’t do your due diligence which all investors know is a mistake. When there’s a really hot deal, what suffers immediately is the diligence process. You’re just questioning if you can get into the deal.”

According to the indictment, prosecutors say there were six wire transfers from unnamed investors that they allege were the result of fraudulent claims about what they were getting in return.

“It’s going to be highly scrutinized and the investors will be dragged back into the press again and shamed for it,” O’Leary said. “I can guarantee you this, it will change nothing. When this is over whatever happens, it will happen again. I guarantee nothing changes in regards to investment in Silicon Valley.”

A Silicon Valley tale

Instead of being an example of Silicon Valley’s best, Theranos turned into a black eye for start-ups.

One of Holmes’ defense strategies may be to blame the so-called “fake it ’til you make it” motto of Silicon Valley. Earlier this year, the judge ruled her defense team can lean on the hype and exaggeration of start-up founders to explain Holmes’ own actions.

“It’s going to be a wake-up call for venture capitalists and young entrepreneurs in Silicon Valley,” Carreyrou said. “If you go too far, if you push the envelope and hype and exaggerate to the point of lying, it becomes securities fraud.”

However, if she’s found not guilty, some say it could encourage risk taking.

“It’s going to a take guilty verdict to course correct and even a guilty verdict in this case might not be enough,” Carreyrou said.

Mental health defense

Explosive new court documents unsealed just days before jury selection shed light on how Holmes’ lawyers might mount a mental health defense. In the filings, Holmes claims she was the victim of “a decade-long” abuse by Balwani, whom she met when she was 18.

The documents reveal she plans to claim he psychologically, emotionally and sexually abused her. According to one filing, Holmes accused Balwani of throwing sharp objects at her, controlling what she ate, when she slept, how she dressed and monitoring her calls and text messages. Balwani denied the claims.

The court filings also revealed Holmes plans to take the stand in her own defense, a move many legal experts say is a risky one.

“It’s an uphill battle: Balwani may have exercised influence on her, due to his age or prior successes,” said Danny Cevallos, an NBC News legal analyst. “But will she convince a jury that his influence excused her own conduct?”

Today, with her trial repeatedly delayed she’s now the mother of a newborn. Holmes, who once was a ubiquitous presence in the media, stays silent and ignores reporters’ questions every time she enters and exits the courthouse.

That will all change if she does indeed take the stand to finally tell her side of the story.

Technology

High school, college students are excited about AI, not dreading jobs impact

Published

2 hours ago

November 4, 2025

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High school, college students are excited about AI, not dreading jobs impact

Why NYU business school prof has students work with 'black sheep' AI in classroom

The recent wave of white-collar layoffs may have employees and job seekers rattled, but according to New York University Stern School of Business professor Robert Seamans, his current class of MBA students isn’t worried.

“I don’t get a huge sense that they’re dreading the job market or that they think there are going to be dramatic changes,” Seamans told a gathering of technology executives at last week’s CNBC Technology Executive Council Summit in New York City. “These students have been in the job market already before coming back to school and they’re used to the ups and downs of being in the workforce.”

Seamans said his focus in the classroom is making sure students have the skills they need when they graduate, and that includes generative AI and more generally, machine learning. Running experiments using AI in group settings is one way he gets students used to the technology, its advantages, and its limits.

For instance, he recently asked students to write a short paper on whether return-to-office mandates are good or bad for the workforce. He then had them select a large language model of their choosing to strengthen their argument. The second part of the assignment had students writing another paper, but this time asking the LLM to respond in an adversarial way with critical feedback — what Seamans calls a “black sheep” approach.

“I’m trying to get them to understand that they can interact with AI in a variety of ways,” Seamans said. He added that in his experiment, many of his students preferred the more adversarial way, perhaps because it more closely modeled the variety of opinions and thoughts in an actual workplace. “We don’t know what all the best practices are yet, but that’s why I want them to keep trying different things,” he said.

AI ‘as a tool and not a crutch’

Earlier in the day at the TEC Summit, a group of students in high school and college spoke to CNBC’s Contessa Brewer about how they’re being exposed to AI (or not) in the classroom. Their responses show that despite the enthusiasm for the technology in the workplace, students are being advised to go slow.

Aarnav Sathish, a high school senior, said his teachers strictly discourage AI in the classroom. Outside of school, however, the 17-year-old uses ChatGPT for help with assignment busywork, quickly adding that he wants to use AI “as a tool and not a crutch.”

Ezinne Okonkwo, a 19-year-old undergraduate at Columbia University, said her professors also discourage students from using AI, instead preferring that they develop the subject matter skills needed for each class. However, like Sathish, she uses AI outside the classroom for tasks that feel repetitive or that she already knows how to do. “If I have to write a bunch of emails that all feel the same, I’ll use it to make them sound a little different,” Okonkwo said. “I won’t use it for coding if I don’t already know how to do it in that coding language.”

Siblings Carson and Andrew Boyer both attend Georgia Tech, yet are having different experiences with AI. Carson, 19, a freshman, is studying engineering and said his professors allow AI in moderation. He finds it most useful for his Mandarin classes when he can use ChatGPT to practice having a conversation. “It’s like having a Chinese tutor,” he said.

Andrew, 21, a senior, says his professors encourage AI usage, but they “don’t want us to copy and paste in AI work.” He was recently surprised when during a midterm exam for an information security class the teacher allowed students to use the internet and AI. While at first that seemed like a good thing, he soon realized that his professors set up the exam so that AI couldn’t complete a lot of the more nuanced and visual questions.

“I think the class average was like a 60,” Andrew said. “At Georgia Tech, they are evolving and upping the work to be more high-level concepts that we have to be able to understand and do on our own.”

If there was one thing that NYU’s Seamans wanted the room of tech executives to take away about the young people coming into their organizations, it’s that despite the focus on AI, ultimately employers are dealing with humans that require empathy and understanding.

“Everyone coming into your companies all have their own human skill set,” he said. “Some are good speakers or group leaders, others are great at finance. What they all want is a chance to work with this technology and become a contributing member to whatever team they’re on. AI is going to change, so what you really want is a workforce made up of active and engaged minds and a workplace where this kind of thinking is encouraged.”

Technology

Spotify tops third-quarter estimates on strong user growth, issues mixed guidance

Published

3 hours ago

November 4, 2025

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Spotify tops third-quarter estimates on strong user growth, issues mixed guidance

Thomas Fuller | Lightrocket | Getty Images

Spotify on Tuesday reported strong third-quarter results that topped Wall Street expectations and saw total revenue climb 12% year over year, but issued weak guidance for revenue and subscribers for the current quarter.

Shares of Spotify fell 2% on Tuesday.

Here’s what Spotify reported compared with LSEG estimates:

Earnings per share: 3.28 euros vs. 1.97 euros expected.
Revenue: 4.27 billion euros vs. 4.23 billion euros expected.

The streaming platform increased premium subscribers by 12% to 281 million, coming in just below StreetAccount expectations of 281.24 million.

Spotify hiked subscription prices in August to 11.99 euros from 10.99 euros in multiple markets, including South Asia, the Middle East, Africa, Europe, Latin America and the Asia-Pacific region.

Premium revenue for Q3 grew 9%, or 13% on a constant currency basis, but 446 million euros in ad-supported revenue was down 6% from last year, which was flat on a constant currency basis.

StreetAccount expected 467.7 million euros in ad-supported revenue for the quarter.

“The business is healthy,” CEO Daniel Ek said in a release. “We’re shipping faster than ever. And we have the tools we need – pricing, product innovation, operational leverage, and eventually the ads turnaround – to deliver both revenue growth and profit expansion.”

Spotify announced in September that Ek will step down at the beginning of January and transition to the position of executive chairman. Longtime executives and co-presidents Gustav Söderström and Alex Norström are set to replace him.

Palantir stock drops 6% on valuation concerns as CEO Karp rips short seller ‘market manipulation’

Published

3 hours ago

November 4, 2025

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Palantir stock drops 6% on valuation concerns as CEO Karp rips short seller 'market manipulation'

Palantir CEO Alex Karp on AI bubble: Depends whether GDP grows because of AI

Palantir‘s stock fell 6% on Tuesday as Wall Street analysts raised concerns about the company’s elevated valuation and “Big Short” investor Michael Burry revealed a short position in the software company.

During an interview with CNBC’s “Squawk Box” on Tuesday, CEO Alex Karp ripped into short sellers, calling their moves “market manipulation.”

Karp called the positions “super triggering” and said they are “shorting one of the great businesses of the world.”

“Honestly, I think what is going on here is market manipulation,” Karp said. “We delivered the best results everyone, anyone’s ever seen.”

The stock move overshadowed the company’s top-and-bottom-line beat and stronger-than-expected guidance. Revenues also topped $1 billion for a second straight quarter and Palantir lifted its full-year guidance.

“The more muted stock reaction after hours is in the context of high expectations (recall last quarter, Palantir beat revenue by 7%) and significant outperformance (+175% YTD),” wrote Goldman Sachs analyst Gabriela Borges in a note to clients.