Elizabeth Holmes was the entrepreneur who dropped out of Stanford University to found Theranos. The idea was to be able to do a complete set of blood tests on a single drop of blood.
Some very high profile investors poured money into Theranos, board members and investors included George Schultz, Henry Kissinger, Larry Ellison and Rupert Murdoch. Total investment was $1.3 Billion.
Unfortunately, her tech team could not get it to work.
Instead of admitting it and saying “Sorry kids” it doesn’t work and your money is gone,” she covered this up in the hopes that it would eventually work. In fact, she was using other people’s equipment to make the measurements.
She was busted. Mostly by the Wall Street Journal.
She and her partner/lover Sunny Balwani were arrest.
She was just sentenced to 11 years in federal prison. There is no parole in federal prison, so she is in for the duration. And she is currently pregnant.
I know they wanted to make an example of her, but frankly this kind of behavior goes on all the time. An entrepreneur accepts an investment, things go south, the money is gone. The entrepreneur will hide problems until the bitter end because they honestly believe their idea was perfect and it just needs a little more work.
And yes, very often initial investors will advise their investees to keep problems quiet. This is not that unusual.
But Liz got caught!