Theranos founder Elizabeth Holmes was convicted Monday. But the wealthy and famous investors that Holmes courted lost all hope of getting their money back.
Rupert Murdoch lost $125 million, and her richest and most prominent victims were the DeVos Family – Betsy DeVos (Trump-era Education Secretary), who invested $100m.
Other notable figures who lost large amounts include former Secretary of State Henry Kissinger, who invested $3 million, ex-Defense Secretary Jim Mattis, who lost $85 million, and New England Patriots owner Robert Kraft, who invested $1 million.
Walmart’s owners, the Walton families were also deceived. The family invested a staggering $150 million in Theranos.
After a five month trial, Holmes, 37 was found guilty on four counts of wire fraud.
A court was told by her how she dreamed up a blood-testing biotech business and that it would deliver amazing results. The court was told that she had mastered marketing and was capable of convincing some of America’s most prominent names in finance, tech and business.
Rupert Murdoch (media mogul) was among the initial investors. In February 2005, he led a $5.8m Series A fundraising round for the company.
Elizabeth Holmes was seen leaving the courthouse on Monday after being found guilty of four charges
Rupert Murdoch was a media mogul aged 90 who invested $125million in Theranos. He became one of Theranos’ largest investors. His stake was sold for $150,000 in 2017.
Murdoch increased his stake to $125million after calling Toby Cosgrove, former CEO of Cleveland Clinic to inquire about Holmes.
Cosgrove and his practice were also said to be considering an investment in Theranos. However, this never happened.
Carreyrou claims that Murdoch saw other investors in Theranos – such as Cox Enterprises (an Atlanta conglomerate investing $100 million) – as proof of the technology’s legitimacy and projected revenues.
Murdoch, in turn, attracted many other investors. This was crucial to the company’s success.
Holmes was diligent in courting Murdoch. In one story from Wall Street Journal reporter John Carreyrou, Holmes recounts how Murdoch met him at his California ranch. He said that he was surprised by the bodyguards she had, while Holmes only had one.
Carreyrou wrote that she asked Carreyrou why she wanted it.
Carreyrou wrote the Murdoch-owned Wall Street Journal story in 2015 about Theranos’s questionable foundations.
Holmes discovered the story and asked Murdoch for an end to it.
Robert Leach, an assistant U.S. lawyer, said that Holmes was being questioned by him personally.
Holmes responded, “I did,”
Carreyrou’s Report caused Theranos to collapse, as well as Murdoch’s financial loss.
The company purchased Murdoch’s $125m shares back for $1 in March 2017.
This price could allow Murdoch (worth $22.4 billion) to write off his Theranos investment as a loss. It could also save him millions of taxes due on investments elsewhere, according to the Wall Street Journal.
Murdoch, 90 years old, was not the only senior public figure who lost out.
Henry Kissinger (98 year old former Secretary of State) invested $3 million into Theranos. Daniel Mosley, his lawyer, also invested $6 million.
‘Dr. Dr.
Kissinger’s worth is estimated at $50 Million.
Henry Kissinger (now 98) is seen here in January 2020. He was a board member and invested $3million in Theranos.
Alice Walton (daughter of Sam Walton founder of Walmart) invested $100 Million in Theranos following the counsel of a lawyer
“He stated that it would be great if you took the time to get to know the company and gave me your opinions.
Mosley stated that Holmes wanted to find ‘high quality families’ in order to invest.
Mosley stated that during his conversation with Holmes, he started to consider a potential investment.
Mosley stated that he was still looking at the book with the intent of telling Dr. Kissinger his thoughts about it. He also said that it was ‘personally fascinating’.
Mosley was a power broker for wealthy families and asked Holmes to audit Theranos’ financial statements in 2014. Holmes refused, so he decided to invest.
Mosley recommended to his clients that they invest in the business.
These included the Walton Family, the founders of Walmart. They were led by Alice Walton, the wealthiest woman in the world and worth $70billion.
According to investor lists, approximately $150 million was invested by the Walton Family through two distinct entities.
Mosley was also a client of the DeVos families, including Betsy DeVos (who served as Donald Trump’s education secretary). They have invested around $100 million.
Greg McNeilly (chief operating officer, The Windquest Group), the holding company for DeVos, said, “It is obvious that they are very disappointed in them both as a company as well as as an investment.”
McNeilly claimed that $100 million was an investment made by multiple branches and generations of her family. She described DeVos’ share as “minor”
Betsy DeVos is worth approximately $2 billion. Her husband, and four of their adult children make up the majority.
Holmes was able to cultivate a mysterious persona and win wealthy people over.
Betsy DeVos (who was Donald Trump’s education secretary) also made investments in Theranos
Larry Ellison, Oracle founder and valued at an estimated $12Billion, advised Holmes as well as an investor
Don Lucas, a founding partner of Lucas Venture Group and one of its earliest backers, introduced Larry Ellison to Holmes. Although it is not clear how much he contributed to the company, Holmes said that he had been considering investing $20 million.
Holmes stated that Lucas was her friend when she raised Series B funding for the company.
Holmes said to Holmes that Don Lucas was one of Silicon Valley’s early VCs.
She said that she knew him because he was a person who focused on long-term growth of great companies.
“I was introduced by someone who went to college with me,” she explained. He was very curious. He started a thorough diligence process.
Ellison joined the Series C round of investment along with Lucas and Chris Lucas (his nephew), who were both called by the prosecution.
James Mattis was seen arriving at San Jose courthouse on September 22nd to witness against Holmes
James Mattis (the four-star general and defense secretary) was another Trump investor.
On the sixth day, Mattis, who was a Marine Corps four-star general, testified against Holmes. He recalled how impressed he felt with Holmes in 2011, when he met her for the first time.
Mattis retired in 2013 from the army and joined Theranos in 2013. He then invested $85,000 in Theranos, as well as his personal savings.
He was a board member at Theranos and received $150,000 each year. After becoming disillusioned in Holmes’s leadership, he quit and was elected defense secretary.
The court heard him say that he was unable to decide what to believe regarding Theranos.
19 YEARS OF THERANOS
2003At 19 Holmes left Stanford University to start Theranos. She pitched its technology to be a more affordable way to do dozens of blood test with just one fingerprick and few drops of blood. Holmes stated that she started the company because of her fear of needles.
2004 Theranos raised $6.9 million and was valued at $30million
2007Theranos’ value is $200 million
2010Investors purchased Holmes’ products and invested millions in the company. In a July Securities and Exchange Commission filing, she stated that the company had raised $45million. The company is worth $1billion.
2013 – Theranos announces partnership with Walgreens.
2014Fortune magazine hailed Holmes as the youngest female billionaire and Theranos as a company worth over $9billion.
Elizabeth Holmes, the founder of Theranos Inc. and chief executive officer, spoke at the 2015 Fortune Global Forum, San Francisco, California on November 2, 2015.
February 2015 – In The Journal of the American Medical Association, a Stanford School of Medicine professor criticizes failure to publish anything in peer-reviewed biomedical journals. Theranos, a notoriously secretive firm, shared little information about its blood-testing machines with the medical community or public.
October 2015The Wall Street Journal conducted an investigation and discovered that Theranos’ technology is at worst inaccurate. The majority of the tests were performed using routine blood testing equipment. Theranos briefly halted finger-prick tests due to concern about its accuracy in blood testing.
June 2016Walgreens has ended their partnership with the company for blood testing.
July 2016Theranos were effectively barred by the Department of Health and Human Services in 2016 from any kind of blood-testing work.
2018Holmes is forced to relinquish control over Theranos. She also agrees that she will pay a $500,000 penalty to the SEC for allegedly committing a “massive fraud” that saw $700million in investments into Theranos.