DeVos family swindled out of $100 million by Theranos founder Elizabeth Holmes, family rep testifies

Elizabeth Holmes, founder and former CEO of Theranos, was indicted on fraud charges. (Jeff Chiu/Associated Press)

The family of former Education Secretary Betsy DeVos was duped by Theranos founder Elizabeth Holmes into investing $100 million for a biotech startup that falsely claimed it could screen for multiple diseases from a single finger prick, a family representative testified Tuesday.

Holmes, on trial in California for committing criminal wire fraud and defrauding investors, hand-picked the DeVos family and other billionaire investors to fund her company, according to testimony from Lisa Peterson, who oversees private equity investments for the DeVos family and headed the Theranos deal.

Peterson said she was told to look into Theranos after one of her bosses told her they “had one of the most interesting meetings I can recall” with Holmes.

SEC CHARGES THERANOS CEO ELIZABETH HOLMES WITH ‘ELABORATE, YEARS-LONG’ FRAUD

The company sent prospective investors a binder of information and invited members of the DeVos family to visit their lab. DeVos’s sister-in-law Cheri received a blood test during the visit, though Peterson testified she couldn’t remember if the results ever came back.

Prosecutors allege that while Holmes promoted the company’s portable blood-testing device, she knew the technology did not work and sent investors misleading financial information that supported her false claims.

“They were telling us that it worked,” Peterson said. “We relied on what they told us.”

She also testified she was unaware a third party completed Theranos’s tests.

The DeVos family had initially sought to invest $50 million, but a 2014 pitch by Holmes persuaded them to double it to $100 million.

Other investors allegedly swindled include the Walton family, which has more than 50% of Walmart shares, who invested $150 million in Theranos and media mogul Rupert Murdoch, who invested $125 million into the company. In all, Theranos raised $900 million.

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Holmes is charged with 12 counts of wire fraud and conspiracy to commit wire fraud. If found guilty, she could spend the next 20 years behind bars.

Holmes has pleaded not guilty to the charges and said she acted in good faith while running the company.

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In court documents filed before the trial, Holmes’s legal team accused her former boyfriend Ramesh “Sunny” Balwani of abusing and controlling her. Balwani has denied the claims, pleading not guilty to the charges against him. He faces trial next year.

The Holmes trial began eight weeks ago.

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Tags: News, Betsy DeVos, Theranos, California, courts, fraud, Silicon Valley

Original Author: Barnini Chakraborty

Original Location: DeVos family swindled out of $100 million by Theranos founder Elizabeth Holmes, family rep testifies