Here’s What Happened in the Theranos Securities Fraud Case

by Silver Law Group

Last Updated November 18, 2025 In News, Securities Fraud

Elizabeth Holmes became a media darling and the world’s youngest self-made female billionaire. Her cultivated public image, from her deep baritone voice to her black Steve Jobs-style turtlenecks, created an irresistible persona. The Theranos securities fraud case exposed how Silicon Valley’s high-risk, high-reward mindset could allow fraud to go unchecked. This high profile investment fraud captured the attention of investors around the world.

The fraud resulted in significant financial losses for investors, ranging from over $600 million to upwards of $1 billion by some estimates. The fact that so many wealthy and powerful people could be fooled demonstrated the power of Holmes’s deception and heightened public interest. The securities fraud attorneys at Silver Law Group are ready to investigate and take legal action against those who exploited your hard-earned money, and we work on a contingency fee basis, so do not wait to contact us if you believe you have a class action securities claim.

What Was the Theranos Securities Fraud Case?

Elizabeth Holmes founded Theranos in 2003 at age 19 after dropping out of Stanford University. The company promised to revolutionize the healthcare industry with a device called the Edison that could perform numerous blood tests using only a few drops of blood from a finger prick.

CEO Elizabeth Holmes and President Ramesh “Sunny” Balwani raised hundreds of millions of dollars from investors using false claims about the company’s blood-testing technology:

• Fabricated validation reports: Theranos provided reports to investors that included the logos of major pharmaceutical companies like Pfizer, implying that these companies had validated its technology. In reality, the drug companies had not approved the reports, and in some cases, had even raised concerns about the technology.
• Overstated capabilities: The company falsely claimed that its analyzer could perform a full range of lab tests accurately and reliably. Prosecutors later showed that the Edison device had major accuracy and reliability problems and was used for only a small fraction of the tests Theranos offered.
• Misrepresented partnerships: Holmes and Balwani misled investors about partnerships and financial performance. For instance, they used a partnership with Walgreens to attract other investors, claiming that Theranos would generate $1 billion in revenue by 2015.

Theranos attracted significant investment and credibility from a star-studded board of directors. By 2015, the company was valued at nearly $10 billion.

How Did the Theranos Securities Fraud Case End?

The fraudulent enterprise unraveled in 2015 after a series of investigative reports by The Wall Street Journal revealed that Theranos was conducting most of its tests using conventional lab equipment, not its proprietary technology. In March 2018, the Securities and Exchange Commission (SEC) charged Holmes and Balwani with fraud. Holmes settled the charges, agreeing to a $500,000 fine, relinquishing control of the company, and accepting a 10-year ban from serving as an officer or director of a public company. Balwani chose to fight the charges.

Then, in June 2018, Holmes and Balwani were indicted on federal charges of wire fraud and conspiracy to commit wire fraud. In January 2022, a jury found Holmes guilty on four counts of defrauding investors, although she was acquitted of charges related to defrauding patients. She was later sentenced to 11.25 years in prison. In July 2022, Balwani was found guilty on all 12 counts of defrauding both investors and patients, and sentenced to nearly 13 years in prison.

In addition to their prison sentences, a court ordered Holmes and Balwani to pay $452 million in restitution to victims of the fraud, which included investors like Rupert Murdoch and the Walton family. While Holmes was once a billionaire on paper, her net worth plummeted to zero after the company failed, and her lawyers have stated she has limited financial resources to pay restitution. Likewise, Balwani is not believed to have the personal resources to cover his share.

Contact Our Experienced Securities Fraud Attorneys for Legal Help

If you have lost money to a fraud similar to that of Theranos or countless other endeavors, the experienced securities fraud attorneys at Silver Law Group can help you recover your losses and hold the responsible parties accountable. Our managing partner, Scott Silver, is an attorney who previously worked at a Wall Street law firm defending brokerage firms before starting his own firm to represent investors. Scott is currently the chair of the Securities and Financial Fraud Group of the American Association of Justice and a board member of PIABA (the leading bar association of lawyers who represent victims of investment fraud).

We represent investors on a contingency fee basis nationwide in securities and investment fraud cases, including in class action litigation. Contact our firm today to request your free case consultation and discuss how we can help you.