Elizabeth Holmes, the founder and CEO of Theranos, a health technology company, was convicted of conspiracy to defraud investors and wire fraud. While we can all be happy that Holmes was caught in the act and has fallen from her perch of wealth and power, we should not lose sight of the larger lessons – that Holmes and her company are a part of a much larger problem that this verdict does nothing to address.
When it was founded in 2003, Theranos claimed to have developed a blood testing device that was smaller, less invasive, and more efficient than what existed, and that would revolutionize healthcare technology. Holmes went so far as to say “it is the most important thing humanity has ever built.”
The only problem: the device was only in development and didn’t actually work! Despite these tiny facts, Holmes corralled hundreds of investors, including Silicon tech billionaires, hedge fund managers, members of the Walton family, the founders of Amway and Cox Enterprises, Bill Clinton’s former Secretary of Defense, Ronald Reagan’s former Secretary of State, and many others. The stock price of the company shot up and was soon valued at nearly $10 billion. It wasn’t until 2015 that a Wall Street Journal article uncovered that her device barely even existed, much less worked. The stock prices plummeted, and she and her investors lost hundreds of millions of dollars. Soon after, some of these investors filed the lawsuit, accusing her of defrauding them of their investment money.
The stunningly quick ascent of Theranos, the “fake it till you make it” mentality, the skyrocketing stock prices, and the fall, are nothing new or unique. They are a completely normal part of the Silicon Valley world, which prizes flash and quick profit over everything else. And these characteristics are also completely normal parts of our profit-driven capitalist economy. Whether we look at the “snake oil” salesmen of the 1848 California Gold Rush, the promoters who drove up the value of stocks in the 1920s leading to the Crash, the fake financial reports on Enron in the late 1990s, the lending practices of the big mortgage companies in the early 2000s, or Elizabeth Holmes and Theranos, the entire capitalist system is riddled with thousands of examples of fraudulent capitalists, salespeople, and corporations, all trying desperately to drive up stock prices and increase their profits, all defrauding other human beings along the way. And the system itself still stands, even as Holmes and her company have fallen.
And the worst part of it all? Even the court and jury, which was supposed to dispense justice, did not convict her of defrauding or lying to patients and the public, whose lives might have actually been helped by a new, functioning healthcare technology. Instead, she was found guilty only of lying to and defrauding her investors, leaving us with the feeling that only capitalists get “justice” in our capitalist world, and even then only when they are gouged by another capitalist.
The Theranos verdict not only shows that profits and investors matter more than people in this society. It also shows once again that lying and fraud are an everyday part of life in our capitalist economy. And until we get rid of it, we’ll see many more like Elizabeth Holmes and Theranos in our future.
