The Unicorn That Wasn't: United States v. Elizabeth Holmes

Silicon Valley experienced a landmark trial when Elizabeth Holmes, the black-turtleneck-wearing Theranos founder, faced 11 counts of federal wire fraud and conspiracy.

In United States v. Elizabeth A. Holmes (Case No. 5:18-cr-00258), the Northern District of California examined the collapse of a $9 billion startup. This case fundamentally shifted how startup founders approach the ethos of "faking it until you make it."

The "Wire Fraud" Standard

Prosecutors didn't need to establish that Holmes's technology never functioned. Instead, they demonstrated she "knowingly made false representations to investors to get their money."

The prosecution centered on specific bank transfers tied to particular deceptions:

The Pfizer Logo: Holmes incorporated pharmaceutical company logos into internal documents to create false impressions of third-party endorsements.
The "Military" Claims: Holmes claimed her technology was deployed in medevac helicopters, which was inaccurate.

The Defense Strategy: "Failure is Not Fraud"

The defense characterized Holmes as a misguided visionary who genuinely believed in her technology but failed at execution. They attempted separating "puffery" (typical startup enthusiasm) from criminal fraud.

The jury rejected this argument. Holmes faced conviction on 4 counts, resulting in an 11.25-year prison sentence.

Why This Matters

This docket represents substantial evidence regarding corporate governance, investor relations, and acceptable industry standards. It serves as a cautionary example from federal prosecutors to the venture capital sector.

Read the Primary Source

Access the Superseding Indictment and Jury Verdict Form via AskLexi for direct examination of court filings.