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Lessons for Investors from the Trial of Theranos Founder Elizabeth Holmes Updated: 2021-09-13 17:06:18 KST

Sometimes an investment is too good to be true.
As Elizabeth Holmes, founder and former CEO of Theranos, goes on trial over allegations of defrauding investors and patients, her health-care start-up may be a prime example.
Nearly a decade ago, investors, including media mogul Rupert Murdoch, former Education Secretary Betsy DeVos and the Walton family of Walmart fame, put more than $700 million into the company.

Prosecutors allege investors were swayed by misrepresentations of Theranos’ blood-testing technology.
The SEC says the company’s claims about its technology, as well as its business and financial performance were either exaggerated or false.

The trial of Elizabeth Holmes, Silicon Valley's one-time darling for founding and leading the now failed biotech company Theranos one who's been dubbed the "youngest self-made woman billionaire" at the age of 32 by Forbes.

The Theranos story is an important lesson for Silicon Valley let's talk about it with Robert Anello. Robert is a lawyer with expertise in white-collar crimes, partner at the Morvillo Abramowitz Grand Iason & Anello PC in New York. Thank you for joining us.

First of all, give us a brief summary of the case and how the trial is being received by the public in the U.S.

What are some key arguments made from both prosecution and defense and what do the two sides' opening arguments suggest about their strategies going forward? Does either side seem to have an advantage so far?

Silicon Valley is paying attention to the case. Why and how do you think such a startup could grow in Silicon Valley culture? Will this trial be a stepping stone to changing the 'Fake it till you make it' mantra of Silicon Valley?

Theranos isn’t the only bad apple out there, it’s just the most recent example of one. What should investors learn from this case?

Holmes is arguing that she has been physically and emotionally abused by her former boyfriend and was coerced to make the wrong decisions. Defense also argues she "naively underestimated" the challenges of the business. How do you think such effort to humanize her play out?

From your experience over the past 30 years litigating white-collar crimes, and also based on data, is there an industry that is most conducive to promoting fraud? Is health-tech an industry prone to crime?

There are some female entrepreneurs in Silicon Valley who say they're already feeling greater scrutiny towards them and being compared to Holmes. Do you think this case could negatively impact female founders trying to raise money?

Robert Anello, many thanks for speaking with us tonight. We appreciate it.
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