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

New bipartisan bill would require companies to report AI job losses

Published

4 hours ago

November 5, 2025

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New bipartisan bill would require companies to report AI job losses

A pedestrian walks past Amazon Ireland corporate offices in Dublin, as Amazon.com, Inc., said on Tuesday it plans to cut its global corporate workforce by as many as 14,000 roles and seize the opportunity provided by artificial intelligence (AI), in Dublin, Ireland, Oct. 28, 2025.

Damien Eagers | Reuters

A new bipartisan bill seeks to provide a “clear picture” of how artificial intelligence is affecting the American workforce.

Sens. Mark Warner, D-Va., and Josh Hawley, R-Mo., on Wednesday announced the AI-Related Job Impacts Clarity Act. It would require publicly traded companies, certain private companies and federal agencies to submit quarterly reports to the Department of Labor detailing any job losses, new hires, reduced hiring or other significant changes to their workforce as a result of AI.

The data would then be compiled by the Department of Labor into a publicly available report.

“This bipartisan legislation will finally give us a clear picture of AI’s impact on the workforce,” Warner said in a statement. “Armed with this information, we can make sure AI drives opportunity instead of leaving workers behind.”

The proposed legislation comes as politicians, labor advocates and some executives have sounded the alarm in recent years about the potential for widespread job loss due to AI.

In May, Anthropic CEO Dario Amodei said that the AI tools that his company and others are building could eliminate half of all entry-level white-collar jobs and cause unemployment to spike up to 20% in the next one to five years. Anthropic makes the chatbot Claude.

Layoffs have been announced recently at companies across the tech, retail, auto and shipping industries, with executives citing myriad reasons, from AI and tariffs to shifting business priorities and broader cost-cutting efforts. Job cuts announced at Amazon, UPS and Target last month totaled more than 60,000 roles.

Some experts have questioned whether AI is fully to blame for the layoffs, noting that companies could be using the technology as cover for concerns about the economy, business missteps or cost cutting initiatives.

WATCH: Is AI behind recent job cuts? Here’s what to know

Technology

Tesla sales in Germany have cratered from last year, data shows

Published

5 hours ago

November 5, 2025

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Tesla sales in Germany have cratered from last year, data shows

Elon Musk, CEO of Tesla Inc., arrives at the Tesla plant in Gruenheide, Germany, on March 13, 2024.

Krisztian Bocsi | Bloomberg | Getty Images

Tesla sold just 750 electric vehicles in Germany for October 2025, less than half of what it sold a year ago, according to data out Wednesday from the country’s federal transport authority, known as KBA.

In October last year, Tesla sold 1,607 EVs in Germany.

KBA data shows 434,627 new battery electric vehicles year to date, the KBA data said, up nearly 40% from the same period last year. Of those EVs, 15,595 were Teslas, a decline of 50% for Elon Musk‘s automaker this year.

Tesla operates a massive vehicle assembly plant in Brandenburg, Germany, which is outside of Berlin, but the company is not a hometown favorite.

Musk’s incendiary political rhetoric and endorsement of AfD, Germany’s extremist, anti-immigrant party, have weighed on left-leaning consumers’ interest in the Tesla brand there.

Op-ed: The fuel for the AI boom driving the markets is advertising. It is also an existential risk.

Published

6 hours ago

November 5, 2025

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Op-ed: The fuel for the AI boom driving the markets is advertising. It is also an existential risk.

Sam Altman, chief executive officer of OpenAI Inc., during a media tour of the Stargate AI data center in Abilene, Texas, US, on Tuesday, Sept. 23, 2025.

Kyle Grillot | Bloomberg | Getty Images

With OpenAI’s recent release of its AI browser, the historic level of capital expenditures being made in the current AI arms race may accelerate even further, if that is possible.

From the reciprocal, and some have said circular, nature of hundreds of billions in commitments in investment, tied to future chip purchases, to the extent to which GDP growth is reliant on this boom, some have said this is a bubble. A Harvard economist estimates 92% of US GDP growth in the first half of 2025 was due to investment in AI.

But much more needs to be understood about the connection between the breakneck investment in AI and the business models that underpins the entire economy: the advertising technology (Ad Tech) industrial complex.

For the past 25 years the infrastructure of the internet has been engineered to extract advertising revenue. Search Engine Marketing, the advertising business model at the core of Google, is perhaps the greatest business model of all time. Meta’s advertising business, based on engagement and attribution, is a close second. And right behind both of these is Amazon’s advertising business, powered by its position as the largest online retailer. While a smaller portion of Amazon‘s topline, its highly profitable advertising business makes up a disproportionate percentage of Amazon’s profits. So much so that nearly every major retailer has spun up their own version of retail media networks, all driving significantly to the bottom lines and market capitalization of massive companies like Walmart, Kroger, Uber (and UberEats), Doordash and many more.

In fact, these platforms have been using AI to refine their advertising business models for years, in the form of algorithmic models that powered their search and recommendation engines, and to increase engagement and better predict purchase decision, seeking an ever-greater share of all commerce, not just what is typically thought of as “advertising.” These three multi-trillion-dollar market cap companies either
wholly, or substantially, derive their profits from advertising. And now they are using some portion of those historically profitable advertising revenues to fuel infrastructure investments at a level the world has not seen outside of War Time spending by governments.

But at the same time, the latest wave of AI has the potential to disrupt the very same trillions in market cap that is fueling it. AI will, without question, change how people search (Google), shop (Amazon) and are entertained (Meta). Answers delivered without clicking around the web. AI-assisted shopping. Infinite personalized content creation.

If AI represents such a potential existential risk, why are Google, Meta and Amazon such a huge part of the current arms race to invest in AI? The “moonshot” outcome of would be that achieving Artificial General Intelligence, or Super Intelligence, AI that can do anything a human can, but better, would unlock so much value that it would dwarf any investment.

But there is more immediate urgency to protect, or disrupt, the advertising business model fueling the trillions in market cap and hundreds of billions of current investment, before someone else does. While the seminal paper that launched this phase of AI, “Attention is All You Need” was written by mostly Google researchers, it was OpenAI and Microsoft, and now Grok as well, that launched the current AI arms race. And they are not remotely as dependent on the current advertising industrial complex. In fact,
Sam Altman has called the feeds of the major platforms using AI to maximize advertising dollars, “the first at-scale misaligned AIs.” He is clearly stating which businesses he believes OpenAI is trying to disrupt.

What comes next?

This time is different, but it also comes with different risks. The major difference with the current fever in infrastructure investment vs the dotcom bubble of 2000, is that in large part the companies funding it are among the most profitable companies in the world. And so far, there has not been indications of cracks in the business model of advertising that is both funding their investments, and their market capitalizations (along with so many massive companies people wouldn’t think about being in the advertising business).

But if AI does disrupt, or even break, the current advertising model, the shock to the economy and markets would be far greater than most could imagine.

Google, Meta and Amazon are still best positioned to create new business models, and as mentioned, have been using AI for far longer to support their advertising business models with great success.

However, fundamentally changing the way people interface with search, commerce and content online will require just that, entirely new revenue models, maybe, hopefully, some that are aligned, that are not advertising based. But whatever the model, perhaps it is helpful to consider that the justification in AI
infrastructure spending may not be to just unlock new revenue, but to protect the business models that make up a much more significant portion of the market capitalization of public companies than most people are aware.