The Theranos Case: United States v. Holmes and Balwani - Example Timeline | Boromlia
The Theranos fraud case event by event, with a primary source on each: the investor wires behind the counts, the whistleblowers, the regulators who shut the lab, the civil suits, both criminal trials, the $452 million restitution order, the appeal and the 2026 sentence reduction.
A Stanford Sophomore Asks Her Professor to Start a Company
In the autumn of 2003 Elizabeth Holmes, a 19-year-old chemical engineering student, sat down in the office of her professor Channing Robertson and proposed they start a company. She called it Real-Time Cures, then Theranos. A semester later she left Stanford to run it. Robertson told Fortune in 2014 that when he looked at her he could have been looking at Steve Jobs or Bill Gates. He became the company's first board member. The Fortune writer who quoted him published a long correction in December 2015.
Sunny Balwani Joins, and Lends the Company Money
Ramesh "Sunny" Balwani, a software executive nearly 20 years older than Holmes, joined Theranos in September 2009, when the company was short of cash. In a 2017 SEC deposition he said he had given it a $13 million personal loan, interest free. About six months later the board made him president and chief operating officer. Holmes and Balwani were a couple. They did not disclose the relationship to investors. It ended in 2016, the year he left the company.
Pfizer and Schering-Plough Logos Go Onto Theranos Reports
Walgreens and Theranos began signing confidentiality agreements in April 2010. In the talks that followed, Holmes sent Walgreens executives validation reports bearing the logos of Pfizer and Schering-Plough. Theranos had written the reports. Witnesses from both drug companies testified in 2021 that nobody had authorized the logos. On the stand Holmes said she added them herself, to show the work had been done in partnership, and that she wished she had done it differently. The same year, the government showed at trial, she told one investor that Theranos would earn $223 million in 2011. Its revenue had been $2.8 million in 2009. In 2011 it was under $600,000.
The First Wellness Center Opens Inside a Palo Alto Walgreens
Theranos had issued no press releases for ten years. On 9 September 2013 it announced a long-term partnership with Walgreens and a first Theranos Wellness Center, opening that month in the Walgreens at 300 University Avenue in Palo Alto. The release promised tests from a sample as small as a few drops of blood, results for doctors within hours, and prices at half of Medicare rates or less. The stated plan was Walgreens pharmacies nationwide. The rollout reached one store in California and 40 in the Phoenix area.
Three Wires the Jury Could Not Decide
On 30 and 31 December 2013 three investors wired money to Theranos: $99,990 from Alan Jay Eisenman, $5,349,900 from Black Diamond Ventures and $4,875,000 from Hall Phoenix Inwood. Each transfer became a wire fraud count against Holmes. Eight years later her jury could not reach a verdict on any of the three. The judge declared a mistrial on them, and the government dismissed them.
PFM Wires $38.3 Million
Partner Fund Management, a San Francisco hedge fund, wired $38,336,632 to Theranos on or about 6 February 2014, part of $96.1 million it invested that year. Brian Grossman, a managing partner at the fund, testified in 2021 that Holmes told him major drug companies had verified the technology and that the military was using it. He said he believed Theranos could run about 1,000 blood tests and had no idea it used modified third-party analyzers for many of them. The jury convicted Holmes on this wire.
A Lab Associate Quits Over Failed Quality Controls
Internal data from March 2014, shown to the jury in 2021, recorded about one in four quality-control runs failing on Theranos's own devices. Erika Cheung, a lab associate hired out of college, left the next month. She testified that staff deleted outlier data points until runs passed, a practice she called cherry-picking, with no rules and no protocols. Cheung said Balwani was irritated and angry when she raised the failures with him. She also took her concerns to board member George Shultz. His grandson Tyler Shultz, a fellow lab associate, had emailed Holmes about the same problems. In June 2015 Cheung received a warning letter from David Boies, the company's lawyer.
Fortune Puts the Valuation Above $9 Billion
Fortune's cover story of 12 June 2014 reported that Theranos had raised more than $400 million and that investors valued it at more than $9 billion. An outside director confirmed the numbers. Holmes owned about half the company. Months later Forbes put her fortune at $4.5 billion. The author, Roger Parloff, published a long correction on 17 December 2015 under the headline "How Theranos misled me".
The DeVos and Mosley Wires
On or about 31 October 2014 Lakeshore Capital Management, a fund connected to the DeVos family office, wired $99,999,984 to Theranos. Mosley Family Holdings, tied to the estate lawyer Daniel Mosley, wired $5,999,997. The jury convicted Holmes on both transfers. Lisa Peterson of RDV, the DeVos family office, testified that the family had planned to invest $50 million and doubled it after meeting Holmes. On cross-examination she said RDV hired no regulatory, legal or medical experts for its due diligence. Investors had been told to expect more than $100 million of revenue in 2014. The SEC later put the year's revenue from operations at a little over $100,000.
The Wall Street Journal Publishes
On 15 October 2015 The Wall Street Journal published John Carreyrou's report that Theranos ran only a handful of its tests on its own device and relied on conventional analyzers for the rest. Theranos called the story "factually and scientifically erroneous". Holmes went on CNBC that evening. Six days later, on stage at a Journal conference, she accused the paper of tabloid journalism. Earlier that year Theranos had moved into its new headquarters at 1701 Page Mill Road, Palo Alto. Dow Jones had printed the Journal on that site for 45 years.
The FDA Flags the Nanotainer
On 26 October 2015 the FDA posted its reports from inspections of Theranos in August and September. Inspectors classed the nanotainer, the tiny tube that held a finger-prick sample, as an uncleared medical device. After the visits Theranos stopped collecting finger-prick samples for all but one of its more than 200 tests. Walgreens, the Journal reported, had not known the FDA had been there.
CMS Finds Immediate Jeopardy at the Newark Lab
Federal surveyors finished their onsite inspection of the Theranos laboratory in Newark, California, on 20 November 2015. On 25 January 2016 the Centers for Medicare and Medicaid Services wrote that the lab failed five condition-level requirements and that its hematology deficiencies posed immediate jeopardy to patient health and safety. CMS gave Theranos ten days to respond. Three days later Walgreens told Theranos to stop sending its customers' samples to Newark and suspended testing at its Palo Alto store.
CMS Proposes Banning Holmes From Running a Lab
Theranos asked for an extension and answered CMS on 12 February. On 18 March 2016 the agency wrote that the submission was not a credible allegation of compliance and did not show the jeopardy had been removed. It proposed sanctions that included revoking the Newark lab's certificate and barring its owners and operators, Holmes among them, from the lab business for at least two years. The letter became public in April.
Federal Prosecutors and the SEC Open Investigations
On 18 April 2016 Theranos told its partners in a memo that the SEC and the US Attorney's Office for the Northern District of California were investigating it. The Journal reported that a federal court in San Francisco had issued grand jury subpoenas in March, that the FBI and the Postal Inspection Service were assisting, and that Walgreens and the New York State Department of Health had received subpoenas. Hours earlier Holmes had told NBC's Today that she was devastated. Federal officials had started asking questions informally in January.
Two Years of Edison Results Voided
The Journal reported on 18 May 2016 that Theranos had voided or corrected two years of results from its Edison devices and sent tens of thousands of corrected reports to doctors and patients. A week earlier the company had announced Balwani's departure. Kenneth Das, the company's last lab director, ordered the results voided. At trial he testified that the machines did not work. On appeal Holmes argued that this was improper expert testimony, and the Ninth Circuit held that any error was harmless.
Walgreens Ends the Partnership
Walgreens terminated its relationship with Theranos on 12 June 2016 and said it would close all 40 Theranos Wellness Centers in its Arizona stores. Theranos said it was disappointed. Eleven days earlier Forbes had cut its estimate of Theranos's value from $9 billion to $800 million and put Holmes's net worth at zero. She held common stock, and preferred investors stood ahead of her in any payout.
CMS Revokes the Lab Certificate and Bans Holmes
On 7 July 2016 Theranos disclosed that CMS would impose every sanction it had proposed. The Newark lab lost its CLIA certificate and its approval to receive Medicare and Medicaid payments, and Holmes was barred from owning, operating or directing a lab for at least two years. The agency also imposed a civil money penalty. Theranos said it accepted full responsibility for the issues in Newark. On 26 August it said it would appeal.
Theranos Closes Its Labs and Wellness Centers
In an open letter on 5 October 2016 Holmes announced that Theranos would close its clinical labs in California and Arizona and its blood collection sites. The company laid off about 340 people and turned to a new device, the miniLab. Holmes had unveiled the miniLab on 1 August at the annual meeting of the American Association for Clinical Chemistry, where lab scientists had expected data on the tests Theranos was already selling.
PFM Sues in Delaware
Partner Fund Management sued Theranos, Holmes and Balwani in the Delaware Court of Chancery on 10 October 2016. In a letter to its own investors the fund said the defendants had induced its investment through "a series of lies, material misstatements, and omissions". It was the first lawsuit from a Theranos investor. A second PFM suit alleged that Theranos used the threat of bankruptcy to pressure investors into dropping claims and putting in more money. Theranos settled both on 1 May 2017 on confidential terms.
Walgreens Sues for $140 Million
Walgreens sued Theranos in federal court in Delaware on 8 November 2016 for $140 million, the amount it had put into the company. The complaint was sealed. A public motion traced the companies' confidentiality agreements to April 2010. The suit settled on 1 August 2017 with no finding of liability and confidential terms. In June the Journal had reported a tentative figure under $30 million.
Settlements With CMS and Arizona
On 17 April 2017 Theranos settled with CMS. The agency withdrew the certificate revocations and lowered its penalty to $30,000. Theranos and Holmes agreed to stay out of the clinical lab business for two years. The next day Arizona's attorney general announced a $4.65 million consent judgment. Between 2013 and 2016 Theranos had sold about 1.5 million blood tests to more than 175,000 Arizonans and voided or corrected about 10 percent of them. Every customer was entitled to a full refund. Theranos also paid the state $200,000 in civil penalties and $25,000 in fees. In March 2018 the state reported nearly $1 million in refunds still unclaimed.
The SEC Charges a Massive Fraud
On 14 March 2018 the SEC charged Theranos, Holmes and Balwani with raising more than $700 million through years of false and exaggerated statements about the company's technology, business and finances. The complaints cited claims that the Defense Department used Theranos products on the battlefield in Afghanistan and on medevac helicopters. The Defense Department never did. Holmes settled without admitting or denying the allegations. She agreed to a $500,000 penalty, a ten-year bar from serving as an officer or director of a public company, the return of 18.9 million shares and the loss of her voting control. The SEC said it would litigate its claims against Balwani.
Holmes and Balwani Are Indicted
A federal grand jury returned an indictment against Holmes and Balwani on 14 June 2018, and it was unsealed the next day. Each faced two counts of conspiracy to commit wire fraud and nine counts of wire fraud, under two schemes: one aimed at investors, one at doctors and patients. The patient scheme listed tests the defendants allegedly knew Theranos could not run reliably, among them calcium, potassium, sodium, HIV and hCG. Holmes stepped down as chief executive and stayed on as chair. David Taylor, the general counsel, replaced her. Both defendants pleaded not guilty.
Theranos Tells Shareholders It Will Dissolve
David Taylor emailed shareholders on 4 September 2018 that Theranos would dissolve. The bank Jefferies had approached more than 80 possible buyers, and none had produced a deal. "We are now out of time," he wrote. Most of the two dozen remaining employees had worked their last day on 31 August. Theranos planned to pay its remaining cash, about $5 million, to unsecured creditors. Investors had put nearly $1 billion into the company. They were expected to receive nothing.
The Final Superseding Indictment
Prosecutors superseded the indictment on 14 July 2020 and again on 28 July. The operative version charged Holmes with two conspiracy counts and ten wire fraud counts. One patient count was dismissed during trial, which left eleven for the jury: seven about investors and four about patients. The court tried the defendants separately after Holmes's lawyers said she would accuse Balwani of abuse during their relationship. His lawyers denied the allegations. The pandemic and Holmes's pregnancy pushed her trial back by more than a year.
Holmes Goes on Trial, and Cheung Testifies
Jury selection in United States v. Holmes began on 31 August 2021 in San Jose before Judge Edward Davila. Opening statements followed on 8 September. Erika Cheung testified from 14 to 17 September, and prosecutors showed a chart of March 2014 data with about a quarter of runs on Theranos devices failing quality control. On cross-examination defense lawyer Lance Wade had her name the doctorates and medical degrees of her former supervisors, and showed calibration tables that recorded when outliers were removed. Over three months the jury heard 32 witnesses.
Holmes Takes the Stand
The government rested on 19 November 2021, and Holmes was sworn that afternoon. She testified for seven days and more than 25 hours. On 23 November she said she had put the Pfizer and Schering-Plough logos on the 2010 reports herself. She said Theranos stopped running patient samples on its own devices soon after the Walgreens launch and, to protect trade secrets, did not tell Walgreens or investors. On 29 November she testified that Balwani had controlled and abused her during their relationship. She also testified that he had not forced her to make the statements charged in the case. Balwani, in court filings, called the allegations false and inflammatory. Her lawyer did not mention him in his closing argument.
The Verdict: Four Guilty, Four Not Guilty, Three Undecided
The jury of eight men and four women deliberated for more than 50 hours over seven days and returned its verdict on 3 January 2022. During deliberations it had asked to hear a 2013 recording of Holmes speaking with prospective investors a second time. • Guilty: conspiracy to defraud investors, 2010 to 2015; wires from PFM ($38,336,632), Lakeshore Capital ($99,999,984) and Mosley Family Holdings ($5,999,997) • Not guilty: conspiracy to defraud patients, 2013 to 2016, and three patient-related wire counts • No verdict: wires from Alan Jay Eisenman, Black Diamond Ventures and Hall Phoenix Inwood • Dismissed during trial: one patient wire count The three wires behind her convictions totaled more than $140 million.
Balwani Is Convicted on All 12 Counts
Balwani's trial opened on 22 March 2022 in the same courthouse, before the same judge. The government called 24 witnesses. His lawyers told the jury he believed in the technology and had put millions of his own money into the company. On 7 July the jury found him guilty on all 12 counts, two of conspiracy and ten of wire fraud, covering investors and patients alike. Balwani showed no reaction as the verdicts were read. Judge Davila raised his bond to $750,000 the same day.
Holmes Is Sentenced to 135 Months
Judge Davila sentenced Holmes on 18 November 2022 to 135 months in federal prison and three years of supervised release, with no fine. He set her offense level at 33, which gave a guidelines range of 135 to 168 months, and chose the bottom of it. Prosecutors had asked for 15 years. Before the sentence Holmes told the court she took responsibility for Theranos and was devastated by her failings. She was pregnant with her second child. The judge ordered her to surrender on 27 April 2023.
Balwani Is Sentenced to 155 Months
On 7 December 2022 Davila sentenced Balwani to 155 months, nearly 13 years, and three years of supervised release. Prosecutors had asked for 15 years and the probation office for nine. His lawyers had asked for four to ten months, preferably in home confinement. He was ordered to report on 15 March 2023. Davila refused to let him stay free during his appeal, and he entered a federal prison in Southern California in April.
$452 Million in Restitution
On 16 May 2023 the Ninth Circuit refused to let Holmes stay free during her appeal. Late the same day Davila ordered her and Balwani, jointly, to pay $452 million in restitution. Prosecutors had sought about $800 million. • Rupert Murdoch: $125 million, the largest award • Walgreens: $40 million • Safeway: $14.5 million Both defendants had told the court they were nearly broke after years of legal bills.
Holmes Reports to Federal Prison Camp Bryan
Holmes reported on 30 May 2023 to Federal Prison Camp Bryan, a minimum-security camp for women in Bryan, Texas. Her April surrender date had been suspended while the appeals court considered her bail request. Judge Davila had recommended Bryan. Her register number is 24965-111.
The Ninth Circuit Affirms
A Ninth Circuit panel of Judges Jacqueline Nguyen, Ryan D. Nelson and Mary M. Schroeder heard argument in June 2024. On 24 February 2025 it affirmed both convictions, both sentences and the restitution order. Nguyen's 54-page opinion called the promise of the technology a "mirage". The panel held that any evidentiary errors were harmless and that the investors' actual losses equaled the full amounts they had invested. In May 2025 the court denied Holmes's petition for rehearing. No judge asked for an en banc vote.
Holmes Asks the President to Commute Her Sentence
Justice Department records reported on 21 January 2026 showed that Holmes had asked President Donald Trump in 2025 to commute her sentence. The Office of the Pardon Attorney listed the request as pending. The Bureau of Prisons then gave her release date as 30 December 2031. A commutation would shorten the prison term and leave the conviction in place, and she would still owe restitution. A pardon would cancel that debt.
A Year Off Under the Zero-Point Offender Rule
On 26 March 2026 Davila cut Holmes's sentence from 135 to 123 months under U.S.S.G. section 4C1.1, the retroactive 2023 amendment that gives a two-level reduction to first offenders who did not personally cause substantial financial hardship. Her new guidelines range was 108 to 135 months. Prosecutors opposed the cut and pointed to more than $450 million in losses. The judge found no evidence that any of the 12 investor victims had suffered hardship of the kind the guideline describes. Investors in the C-1 and C-2 rounds had each represented that they could bear the loss of their entire investment. He wrote that the reduction did not diminish the enormity of her crimes.