Theranos was a troubled Silicon Valley startup led by Elizabeth Holmes. She spent $$945 millions through wealthy investors while living in an expensive San Francisco apartment with a breathtaking view of the Golden Gate Bridge at $5,395 per month.
On Monday, a jury in California found Holmes guilty of wire fraud after she deceived investors and sunk more than $945 million in her flawed blood testing machine.
Theranos gained almost all its capital from investors titans such as Rupert Murdoch, media mogul and former Secretary to Education Betsy DeVos, who donated $100 million, Henry Kissinger, who spent $3 million, Alice Walton, Walmart Family Heiress, who lost $100 millions, and Rupert Murdoch, who lost $125m.
Holmes’s false financial claims over success were exposed in a five month trial. In the end, Holmes revealed that Holmes was an economic sinkhole. They lost $250,000 per week on average in 2013, and only reported $429,000 of revenue.
A California jury found Elizabeth Holmes guilty Monday of four wire fraud charges. Elizabeth Holmes deceived investors to sink more than $945 millions into Theranos.
Holmes lived at the Lombard Place luxury apartments for $5,395 a month
Theranos Controller Danise Yam was charged with overseeing finances of the company since 2009. She testified in September that Theranos had suffered large losses from 2010 to 2010.
Company suffered losses of $16.2 Million in 2010 and $27.7M in 2011. In 2011, the company lost $16.2 million and then made another $27.7 million in losses. The next year saw no revenues, with a loss of $57 millions.
Yam stated that the company had lost $92 million in 2013, when it was losing almost $2 million per week.
The company had a deficit in 2014 of $376 millions and a mere $14,000 revenue.
Yam explained that losses were due to the investment of company funds in the research and development failed blood-testing machines.
Holmes, who claimed to be a young tech billionaire, modern Bill Gates, and Steve Jobs’s daughter, wasn’t actually a billionaire. Instead, her shares made her a billionaire. In fact, Holmes received only $200,000 in salary from the failing business between 2013 and 2014.
Yet despite the financial trouble, Holmes lived in a two-bedroom, $5,395 a month apartment at Lombard Place, in San Francisco, that had a gorgeous view of the Golden Gate Bridge.
Sunny Balwani was her business partner and she also had a $9-million home in Atherton in California.
Holmes lives now in Green Gables Estate, Silicon Valley. She shares it with her husband Billy Evans.
Theranos was valued at $9 billion and had only $429,000 of revenue. It also suffered a $585m deficit when the business collapsed.
Holmes continued to make optimistic projections about the future, even though the company’s financial situation was dire. Holmes claimed that Holmes would be able to raise $122million in 2015, in an effort to attract high-profile investors.
Some of the wealthiest investors were the Cox Communications heirs, which gave $100m; Carlos Slim, a media investor, lost $30 million; Andreas Dracopoulos (Greek shipping heir) who made $25 million; Oppenheimer, who had $20 million invested; Robert Kraft (New England Patriots owner), who lost $1M; and James Mattis, former Defense Secretary, who invested $85,000 from his own savings.
Kissinger’s attorney, Daniel Mosley was another donor. He invested $6 million in Kissinger after helping him secure his investment.
Mosley shared his thoughts with Kissinger about their conversation.
Mosley testified Holmes was seeking ‘high-quality families to invest’.
Mosley stated that during his conversation with Holmes, he started to consider a potential investment.
Mosley explained that he had been looking at it for a while with the intention of telling Dr. Kissinger my thoughts.
Mosley is a wealthy lawyer who asked Holmes for Theranos audited financial reports in 2014. However, she refused to provide any and he nevertheless invested.
Lombard Place Apartments can be found on the internet rental listings as being “beautiful” and possessing ‘grace”. You can see the entry to the building.
Images of interior show the bridge at the left corner of one room in the 2-bedroom bayside home.
#1303, 1340 Lombard Street has the greatest perk: The magnificent view over the Golden Gate Bridge.
Pictured is Green Gables’ main house. Holmes and her husband were believed to be renting one the six properties located on the grounds.
Holmes testified that she painted a rosy financial outlook for Theranos while the company was hemorrhaging hundreds of millions in losses
Henry Kissinger, former Secretary of State, invested $3 Million in Theranos. His lawyer contributed $6M and spread the idea to other rich clients.
Mosley also recommended that his other clients invest in the company.
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 an investor list, the Walton family spent approximately $150 million through two entities in 2014.
Mosley also had clients in the DeVos Family, which included Betsy DeVos who was Donald Trump’s education secretary. They invested approximately $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 is facing up to 20 year imprisonment for each one of the four charges of fraud
Following Monday’s guilty plea, Holmes could spend up to 20 years prison time for each of four fraud-related charges. Although she is not likely to receive the maximum sentence, Holmes would most likely serve her sentences concurrently.
Also, her convictions on 4 other fraud cases were not affirmed. Three other charges were also thrown out by the San Jose juries.
Judge Edward Davila was the judge in the matter and declared a mistrial for the charges. The government can choose to retry the cases.
Next week, a sentencing hearing will be held to determine the sentence for the three hung cases. This includes an interview with the US Probation Office while it compiles its presentence report.