Theranos lost its $945 million raised from wealthy investors

How Theranos burned through $945M in investment while Elizabeth Holmes lived in luxury $5,000-a-month apartment in San Francisco: Fraudsters’ firm was losing $2 million a week in 2013 and had a $585 million deficit by 2015

  • Elizabeth Holmes’s five month trail revealed the troubled Theranos founder courted billionaires who sunk more than $945 million into the failed company
  • Investors included media mogul Rupert Murdoch, Walmart’s Walton Family, and former Secretary of Education Betsy DeVos 
  • Holmes submitted financial projections of success while the company loss millions every year, and was loosing nearly $2 million every week in 2013
  • By 2015, the company had a $585 million deficit and only $429,000 in revenue
  • Despite the financial troubles, Holmes lived in a San Francisco luxury apartment with a view of the Golden Gate Bridge and owned a $9 million home 
  • Holmes was found guilty on Monday of four counts of wire fraud, and could face 20 years in prison for each count
  • The jury was unable to reach a verdict on three other counts, with the judge expected to declare a mistrial, but the government can choose to retry    

Theranos, the troubled Silicon Valley startup headed by now convicted fraudster Elizabeth Holmes, burned through the $$945 million it raised through wealthy investors, all while she lived in a $5,395 a month San Francisco suite with a jaw dropping view of the Golden Gate Bridge. 

Holmes, 37, was found guilty of four counts of wire fraud by a California jury on Monday after deceiving investors into sinking more than $945 million into her faulty blood testing machines. 

Theranos raised nearly all of its capital from investing titans including media mogul Rupert Murdoch who lost $125 million, former Secretary of Education Betsy DeVos who gave $100 million, former Secretary of State Henry Kissinger who invested $3 million and Walmart family heiress Alice Walton who lost $100 million. 

The five month trial that exposed Holmes’s dubious claims about financial success ultimately revealed the company was a money sinkhole that lost nearly $2 million a week in 2013 and reported only $429,000 in revenue before going under in 2015.  

Elizabeth Holmes (center) was found guilty on four counts of wire fraud by a California jury on Monday after deceiving wealthy investors into sinking more than $945 million into Theranos

Some of the wealthy investors included (L-R) media Mogul Rupert Murdoch, Walmart family heiress Alice Walton and former Secretary of Education Betsy DeVos

Holmes lived in the Lombard Place luxury apartments with a $5,395 monthly rent 

Theranos investors: 

  • Rupert Murdoch: $125 million  
  • The Walton Family: $150 million 
  • Former Secretary of Education Betsy DeVos: $100 million 
  • Cox Communications heirs: $100 million 
  • Partner Fund Managment firm: $100 million 
  • Carlos Slim, media investor: $30 million 
  • Andreas Dracopoulos, Greek shipping heir: $25 million 
  • The Oppenheimer family:  $20 million 
  • Riley Bechtel, former chairman of the Bechtel Corp: $6 million 
  • Daniel Mosley, lawyer and power broker: $6 million 
  • Former Secretary of State Henry Kissinger: $3 million 
  • Robert Kraft, New England Patriots owner: $1 million 
  • Former Defense Secretary James Mattis: $85,000 

In late September, Theranos Controller Danise Yam, who was in charge of overseeing the company’s finances since 2009, testified that Theranos was hemorrhaging big losses since 2010. 

The company recorded $16.2 million losses in 2010, then another $27.7 million in 2011. The following year, the company recorded no revenue and a lost of $57 million. 

In 2013, which was when the company was losing nearly $2 million every week, Yam said the company lost a total of $92 million. 

By 2014, the company accumulated a deficit of $376 million, with a measly $14,000 recorded in revenue. 

Yam said the losses stemmed from the company’s investment into research and development of the failed blood testing machines.

Holmes, who painted herself as a young tech billionaire and modern version of Bill Gates and Steve Jobs, was only a billionaire on paper due to her shares and actually only received a $200,000 salary from the failing company in 2013 and 2014. 

Yet despite the financial trouble, Holmes lived in a two-bedroom, $5,395 a month apartment at Lombard Place, in San Francisco, that had a gorgeous view of the Golden Gate Bridge. 

She also owned a $9 million home in the affluent town of Atherton, California, with her business partner Sunny Balwani in 2013. 

Holmes now resides in a nine-bedroom, $135 million at Green Gables Estate in Silicon Valley with her husband Billy Evans.  

When things finally went under for Theranos in 2015, the company, valued at $9 billion, only had $429,000 in revenue and a $585 million deficit. 

But while the company’s finances were in shambles, Holmes continued to paint rosy financial projections, claiming the company would make $122 million in 2015 in order to attract big money investors. 

Among some of the wealthy investors included the heirs of Cox Communications, who gave $100 million; media investor Carlos Slim, who lost $30 million; Greek shipping heir Andreas Dracopoulos, who put in $25 million; the Oppenheimer family, who invested $20 million; New England Patriots owner Robert Kraft, who lost $1 million; and former Defense Secretary James Mattis, who invested $85,000 of his personal savings.  

Another donor included Kissinger’s lawyer, Daniel Mosley, who invested $6 million after helping the former secretary of state secure his investment. 

‘He said it would be terrific if you would take the time to learn about the company and give me your views on it,’ Mosley said of his conversation with Kissinger.

Mosley testified that Holmes was looking for ‘high-quality families’ to invest.

During his conversations with Holmes, Mosley said he began evaluating a potential investment for himself.

‘I was still looking at it with an intent to tell Dr. Kissinger what I thought about it,’ Mosley said adding that he found it to be ‘personally interesting.’

Mosley, a lawyer and power broker among wealthy families, asked Holmes for audited financial statements of Theranos in 2014, but when she failed to supply any he invested anyway.

Lombard Place Apartments is described in the online rental listing as being ‘beautiful’ and having ‘grace’. The entrance to the building is pictured

Interior images show the bridge in the left hand corner of one of the rooms at the two-bedroom home by the bay

The biggest perk of #303 at 1340 Lombard Street is the glorious view of the Golden Gate Bridge and San Francisco Bay

The main house at Green Gables is pictured. Holmes and her husband are believed to have been renting one of the smaller properties on the grounds, of which there are six 

Holmes testified that she painted a rosy financial outlook for Theranos  while the company was hemorrhaging hundreds of millions in losses 

Former Secretary of State Henry Kissinger invested $3 million into Theranos, with his lawyer putting in $6 million and spreading the idea of investing to his other wealthy clients 

Mosley then recommended that other clients of his invest in the company.

They included the Walton family, founders of Walmart, and headed by Alice Walton – the richest woman in the world, worth $70 billion.

The Walton family invested about $150 million in 2014 through two separate entities, according to the investor list.

Another of Mosley’s clients, the DeVos family – including Betsy DeVos, who served as Donald Trump’s education secretary – invested about $100 million.

‘It’s obvious that they are highly disappointed in them as a company and as an investment,’ said Greg McNeilly, the chief operating officer of The Windquest Group, the holding company of DeVos and her husband.

McNeilly said the $100 million was a joint investment across multiple generations and branches of her family, and described the share held by DeVos and her husband as ‘minor.’

Betsy DeVos, her husband and their four adult children are worth roughly $2 billion. 

Holmes faces up to 20 years in prison for each of the four counts of fraud

Holmes faces up to 20 years in prison for each of the four fraud charges following Monday’s guilty verdict. She is unlikely to face the maximum sentence but would likely serve them concurrently.  

She was also found not guilty on four other fraud counts, and the San Jose jury were unable to reach a verdict on three other counts, which were set aside for a later date. 

Judge Edward Davila, who oversaw the case, said he planned to declare a mistrial on the three charges, which the government could choose to retry. 

A sentencing date is expecting to be set next week at a hearing on the three hung charges, which include an interview by the US Probation Office as it prepares a pre-sentence report. 

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