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SAN FRANCISCO — Federal prosecutors on Friday filed criminal charges against Theranos CEO Elizabeth Holmes and the company’s former president Sunny Balwani — marking a pivotal turning point in a scandal that has rocked the business world and captivated the public imagination.

So, what’s next for the Silicon Valley villains of the moment? Here are seven questions to watch as the case moves forward.


1. Will the case go to trial?

Holmes and Balwani are facing serious allegations: nine counts related to defrauding investors, patients, and doctors, carrying a penalty of up to 20 years in prison and up to $2.7 million in fines. Holmes and Balwani seem likely to go to trial, though it’s possible one or both of them could avoid the hoopla with a guilty plea.

The two chose different paths three months ago, when the Securities and Exchange Commission charged them with massive fraud in a civil case. Holmes immediately settled with authorities, agreeing to pay $500,000 without admitting or denying guilt. But Balwani opted to fight the charges, and he’s due in court later this summer.

2. Will Holmes and/or Balwani try the my-ex-duped-me defense?

Adding intrigue to the case is the fact that Holmes, 34, and Balwani, 53, were romantically involved for years while they ran the company as a duopoly. According to Wall Street Journal reporter John Carreyrou’s new book about the scandal, they got together not long after Holmes dropped out of Stanford at age 19 to start Theranos in 2003 — and broke up in the spring of 2016, when Holmes pushed Balwani out of the company as Theranos’s troubles mounted.


All of which points to the possibility of a tried-and-true defense: I was tricked by my lover.

Don’t be surprised if Holmes’s defense tries to point the finger at Balwani, and Balwani’s at Holmes. Meanwhile, a statement put out on Friday from Jeffrey Coopersmith, the attorney representing Balwani, offers an early hint of what Balwani’s defense might look like, painting Balwani as an honest, well-meaning hard worker whose business simply failed. It’s worth noting that the statement doesn’t once mention Holmes, but you can expect that to change.

3. What will happen to Theranos?

Last we heard, the blood-testing company was working on a technology called “MiniLab” that would test blood drawn the old-fashioned way — with a needle in the arm — rather than the promised finger prick that made Theranos famous. Now, in a move timed with the unsealing of the indictment, Holmes is out as CEO. Her replacement is David Taylor, the company’s general counsel.

Taylor is walking into a difficult situation. The company is running out of money, and it debts are piling up. According to the Wall Street Journal, if Theranos can’t turn things around, creditor Fortress Investment Group could seize the company’s assets and force it to liquidate as early as this summer.

4. Will there be a reckoning for Theranos’s high-profile supporters?

Among Holmes’s most voluble fans were Sens. John McCain and Joe Biden, CNBC star Jim Cramer, and former Secretary of State George Shultz. To date, not one has spoken out against Theranos or recanted his prior cheerleading. But each could face questions about what he knew and when.

McCain spoke highly of the company throughout 2015, promoting Theranos’s work in Arizona and tweeting a photo of himself with Holmes on the very day the Wall Street Journal’s first exposé went to print. The same year, Biden called Theranos’ California facility “the laboratory of the future.” Neither has mentioned the company since.

As for Cramer, he hosted Holmes on “Mad Money” the day after the first Journal story, giving her a friendly and uncritical platform to deny the allegations against Theranos. Shultz, now 97, may have the most to answer for, as the Journal’s reporting revealed that after his grandson, Tyler, blew the whistle on Theranos, the former secretary of state repeatedly pressured him to keep quiet.

5. If there is a trial, who will testify?

Expect the government to try to bring forward as star witnesses some of the former Theranos employees who blew the whistle on the company, including the younger Shultz. Theranos’ investors and partners, some of whom have already sued the company, could also be called to the stand to detail how Holmes and Balwani duped them into parting with their money.

The defense, meanwhile, may have a harder time. As the world came crashing down around Theranos, only one voice has persistently defended it: Tim Draper, a storied Silicon Valley investor and a partner at DFJ, has repeatedly spoken up for Holmes and accused the media of unfairly persecuting her. He could serve as a character witness for a defendant who appears to have few remaining friends.

6. What new details could be brought to light in a trial?

Each new Theranos revelation seems to layer in power, corruption, and celebrity. And a public trial could tease out yet more.

Carreyrou’s new book shows that the deception at Theranos began as early as 2006, but a trial could unveil more detail about how far back the deception went. A trial could also shine more light on the lies that Holmes and Balwani told investors about the state of their business and their capabilities of their technology. And it could reveal more examples of the harm that the company’s blood tests sold in Walgreens stores in California and Arizona may have inflicted on patients.

7. How much public attention could a trial command?

The 1990s brought the O.J. Simpson trial. In the 2000s, it was Ponzi schemer Bernie Madoff. Will this decade’s big court trial be about blood testing?

It seems possible. Those other historic trials brought celebrity, wealth, and can’t-look-away coverage — all ingredients that a criminal trial over fraud at Theranos seems poised to deliver.

  • Well if Biden and Hillary are contacts or “friends” the new Steve Jobs will walk. Anyone who knew anything about diagnostics knew this was a scam. The next scam is CRISPR. Interesting but no where near the hype

  • The Theranos story presents the classic combination of greed and hubris. What distinguishes this story from so many we have seen since Enron ( and before) is that patient safety and health were seriously compromised. While nobody can truly determine one’s culpability without either full due process or entry of a plea, it is important to have all of the facts available and disincentivize such conduct in the future since greed and hubris cannot be surgically removed from the human condition.

  • Good article.

    One thing is certain; to the extent that Holmes speaks at all during trial, we won’t be hearing that bogus baritone voice. It’ll be all 17-yr old chirpy cheerleader naif, fake eyelashes blinking away.

    I’m dubious at this point that she’ll get heavy time if convicted. I’d like to be wrong.

    • She’s going to play the naive card. And, I believe she did end up way over her head in this whole scheme as a very young ceo. Still, the fake voice, the wardrobe, etc… were all well-calculated manipulations which are going to come back to bite. Since she’s dem and Biden, McCain love her, and that she’s the awesome female breaking glass ceilings (and then falling back through them but we won’t mention that here.), if she goes to trial in Santa Clara County, there is probably not going to be one woman on the jury who would convict her. Some evil white old guy will be the real reason for the scheme.

  • Hi, thank you for your thought provoking article. I really hold that every single “cog” in the legal system will work towards ensure decades long incarceration for the two of them.

    It is clear, it was fraud from the onset and they must be made an example by way of punishment.

    The only thing I worry about is that, Holmes never sold any of her holdings with Theranos and therefore ultimately did not profit from the scam.

    I hope this fact does not became key in deciding her fate because she flat out knew from day one that her mission statement was nothing but deceit and fraud built upon lies, coverups and thought out corporate secrecy.

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