Top Boston Criminal Defense Lawyer

Wire Fraud and Conspiracy to Commit Wire Fraud – Understanding Silicon Valley’s Biggest Fraud Trial

How did Elizabeth Holmes, who dropped out of Stanford at 19 to form a multi-million dollar company, find herself, at 37, facing nine counts of wire fraud and two counts of conspiracy to commit wire fraud? 

The alleged actions charged in the Theranos trial hinge on a blood test that was supposed to deliver faster and more accurate results than standard blood tests with just a few drops of blood. The Theranos test failed so spectacularly the company started replacing their blood testing technology with commercially available ones. The consequences hinge on intent. Did Elizabeth Holmes intend to spin a web of lies that defrauded investors, doctors and the public? 

One important thing to note about the trial is that Elizabeth Holmes didn’t act alone. Theranos’ former COO Ramesh “Sunny” Balwani will go on trial in January 2022. The influence of Balwani matters to the outcome of Elizabeth Holmes’ trial. In Holmes testimony, she alleges that Balwani emotionally and sexually abused her throughout their ten year romantic relationship. Holmes alleges that Balwani was in charge of the company’s labs and financial projections, and that Holmes had no idea about the conditions at the labs until the Centers for Medicare and Medicaid Services came in for an inspection. The prosecution alleges that Holmes knew what she was doing and was the final decision-maker and undisputed leader of the company.

The prosecution alleges that Holmes and Balwani engaged in two separate schemes: to defraud investors by making false claims and omitting information about the company’s product, and to defraud Doctors and patients by claiming the technology was fast and accurate when they knew this wasn’t the case.

Why Wire Fraud? 

Wire fraud involves intent to defraud for the purposes of obtaining money or property via communication and advertising in “interstate or foreign commerce.” The indictment of Holmes and Balwani alleges that the defendants used interstate electronic wires to purchase ads that were intended to induce individuals to buy Theranos blood tests at Walgreens stores in California and Arizona. These ads made the cheaper price of the Theranos blood tests a selling point to induce customers to buy the blood tests. 

To defraud investors, the indictment alleges, the defendants used marketing materials, statements to the media, financial statements and various forms of information to paint a false picture of the company’s prospects. The revolutionary analyzer the defendants promised, known by the TSPU, Edison, or minilab, was represented as a device that was more accurate, reliable and quicker than conventional methods at performing a full range of clinical tests. 

The prosecution alleges that the defendants went as far as claiming that the company used its own analyzers in conducting patients’ tests, while in reality the company was actually using third party, commercially available analyzers. The defendants are also alleged to have told investors that Theranos would generate over 100 million in revenue in 2014 when they only expected modest revenues.

In the HBO documentary about Theranos, The Inventor some of the most iconic images are of Theranos’ marketing materials, featuring Elizabeth Holmes holding a vial of blood and appearing to promise a revolutionary technology. The big role that Theranos’s aggressive marketing, advertising and other commercial communications played in the alleged fraud is the reason why Holmes and Balwani are being charged with so many counts of wire fraud. 

Is Conspiracy to Commit Wire Fraud Less Serious Than Wire Fraud?

A conviction of wire fraud carries potentially life-changing penalties of up to 20 years in prison, $250,000 in fines and restitution for each count of fraud. Elizabeth Holmes is also charged with 2 counts of conspiracy to commit wire fraud. Anyone who isn’t found to execute wire fraud in full is still eligible for the same penalties as if they had completed the crime. However, to prove both of these crimes beyond reasonable doubt, the prosecution has to prove intent. 

Elizabeth Holmes’ Defense

Elizabeth Holmes’ defense attorney has argued that Holmes did not intend to defraud investors and the public. The defense has painted a picture of an idealist who believed Theranos’s technology would “change the world.” Holmes’ attorneys have claimed investors knew the technology was highly speculative, and that Holmes had no intent to defraud investors. Rather, she was speaking of the potential of the Theranos blood test technology to improve on past versions of the technology. 

Holmes’ attorney has also criticized the government for not introducing statistical analysis or computation of the rate of the test’s errors and for calling only three patient witnesses to talk about 7 test results.

Why Does Intent Matter?

According to the defense, Elizabeth Holmes had believed that Theranos blood tests would be a revolutionary technology and that the company could expect a successful future. Holmes’ defense attorney argued that investors were not being misled by Elizabeth Holmes, but rather made their decisions based on Walgreens confidence in the product. He represented Holmes as a true believer, and argued that the motive of fraud doesn’t make sense because she didn’t “cash out,” instead she championed the company to the bitter end. One detail that emerged during the trial was that Holmes didn’t sell her stock to investors when she had a chance to do so. Her 50 percent stake in the company, giving her a net worth of $4.5 billion, was worthless one year later.

The importance of intent in any charge of fraud cannot be overstated. Elizabeth Holmes’ defense completely rejects the state of mind the prosecution ascribes to Holmes – that she was fully aware that the Theranos technology was a flop, and was deceiving investors for personal gain.

Elizabeth Holmes is a new mother who gave birth to a child during the pandemic. She could go to jail for decades if the Jury decides in favor of the prosecution’s arguments. A charge of wire fraud or conspiracy to commit wire fraud is one of the most serious white collar crimes a defendant will face. However, the motive matters. If you are charged with wire fraud or conspiracy to commit wire fraud, the prosecution will make every attempt to prove that your intent was inherently deceptive and self-interested. 

An accusation of fraud is a grueling and demoralizing experience. At Dhar Law, LLP, we have intensive experience defending the most complex cases of fraud and white collar crime. No matter the seriousness of the charge, we put all our resources into fighting for anyone accused of a serious crime. Please contact us so we can get to work on your case. 


Have you or a family member been charged or arrested? It’s important not to make mistakes early on in your case. Download our PDF on the top 3 things to do to help your defense or if you have been arrested by the State Police or FBI or you are the subject of an FBI Arrest Warrant.

Get Dhar Law

Heading up the firm, Vikas Dhar is widely recognized as a leader in the New England legal community. An accomplished business litigator and a “Top 40 Under 40” criminal defense attorney, he has also been honored as a New England Super Lawyer/Rising Star in the area of White-Collar Criminal Defense for each of the past six years by Boston Magazine.

I have the power and the skill to be able to save people from themselves. I can be your guide during the darkness. I can hold your hand and navigate you out of the darkness into the light.

— Vikas Dhar
Abstract gradientAbstract gradientAbstract gradientAbstract gradient