has been found guilty on four out of the 11 charges

related to defrauding investors,

and while the verdict sheds light

on the legal accountability of making faulty promises,

it actually further complicates the difference

between the fake-it-till-you-make-it mindset and fraud.

- When I heard that she was guilty,

I wouldn't say that I was surprised,

but I was interested in the way that it had broken down.

(dramatic music)

- [Narrator] The 11 charges against Elizabeth Holmes

fell roughly into two buckets:

defrauding patients and defrauding investors.

- She was found innocent of all of the patient stuff,

all three of the underlying counts

plus the conspiracy charge, and then on the investor side,

she was found guilty of conspiracy

and three of the charges against her,

and the jury hung on three other charges.

- [Narrator] Liz Lopatto is deputy editor at "The Verge"

and has been covering Theranos since 2015.

- We heard only a very little from the patients.

We heard from three patients,

and their testimony was maybe an hour total,

unlike the rest of the counts where we heard from

some of these people for days,

but there also wasn't a direct connection made

between Holmes and the patients,

and we didn't get enough about how involved Holmes was

with the advertising and how much she had chosen

to include or not include, how much of that was deliberate.

I think it was easier to prove the charges against

the investors because Holmes was literally

in the room with them.

We don't have to question where they got their information.

We know. - But that's not to say

the patients' testimony didn't aid in the final verdicts.

- They heard from people who were having a hard time.

They knew Holmes knew that people were having a hard time.

Stuff was getting forwarded to her for about retesting,

about taking certain tests off the menu.

The jury knew that she knew everything was not right

in the clinical lab even if she wasn't

intentionally defrauding patients.

It's not a great outcome for her.

The maximum she can be charged for each one

of those wire fraud counts is 20 years.

Now, I don't think she's going to get 20 years

on each one of those counts.

I could be wrong.

It's possible that she won't see jail time.

I don't think that's likely either.

I think she is probably now looking at jail.

- [Narrator] Over the course of the trial,

hundreds of people flocked to San Jose to catch a glimpse

of Holmes and follow the courtroom drama.

- There were so many people who had read "Bad Blood"

in their book clubs and just wanted to come see,

people who are just interested.

There was a person who worked in the biotech industry

and was retired, and this had been the subject

of huge gossip in her friend group,

and then there was one woman outside who was like,

"We love you, Elizabeth! You're a good mom,"

and the judge actually mentioned that doing that

could potentially cause a mistrial if the jurors hear you

and scolded her in court.

We watched her get up and leave. (laughs)

So it was a mix. We had a little bit of goofiness.

We had a little bit of seriousness.

- [Narrator] And on the stand,

Holmes displayed the same control and image

that she had become known for.

- In the courtroom,

Elizabeth home seemed immaculately controlled.

Her posture was perfect.

Even though the day was running really long,

you could see her lawyers starting to wilt next to her,

and she's sitting just like this,

just absolutely straight up.

She was pleasant. She was focused.

She was keeping an eye on things.

She was certainly engaged,

but she also was a little distant,

which again, I understand this.

If you're in a room full of reporters,

maybe you don't want to engage with us.

That might be the wisest move if you're on trial.

That's fine.

But the overall impression I got was

that she seemed like she had a tremendous amount

of self-possession and self control,

and that that was really the thing

that I was struck by throughout.

- [Narrator] But as the reality of the trial

began to set in, there was a shift.

- There was a period where she was undergoing

her direct questioning by her lawyers

where I had this impression that she was realizing

how serious the situation was in real time

as she was trying to respond to some of the things

that she'd heard the other witnesses saying,

and it was sort of horrible to have somebody realize

how serious things are for them when they

are literally on the witness stand.

That was sort of awful to watch.

I can't help but think that it was partially because

of this impression I got of her as somebody

who really prepares, who's probably an A student

who brought the teacher in apple who really gave

great testimony when she had prepared it

and kind of knew what she was going to say,

but whenever there was a question

that was kind of on the fly, she got nervous,

and she was really nervous during her cross-examination,

but there was certainly a kind of waiver in self-control

when she was testifying and had been up there

for a couple of hours and was clearly getting tired.

- [Narrator] As we await Holmes' sentencing

and inevitable appeals, the trial of Sunny Balwani,

Theranos' former president and chief operating officer,

is about to begin.

He's facing the same charges.

- Sunny and Elizabeth were originally

going to be tried together,

but because of her allegation of abuse

which was raised in sealed pretrial motions,

their trials were severed.

Now, this is actually a pretty good thing for both of them

because it gave them the freedom to blame each other

when in their separate trials.

Elizabeth Holmes definitely did.

She definitely said, "Oh, Sunny was responsible for this.

"Oh, Sunny was responsible for that.

"Oh, the financial projections that were weird?

"That was Sunny."

It wasn't super credible,

but I imagine he's gonna do the same thing and say,

"Look, she was the CEO. This was Elizabeth.

"This was Elizabeth.

"Elizabeth was the one who talked to these people.

"This was Elizabeth."

So, I imagine that's probably good for him.

- [Narrator] But the guilty verdict for Holmes

might cue us into the outcome of the case against Balwani.

- Finding her guilty on the conspiracy count

is bad news for him.

It suggests that there's enough evidence of the conspiracy

on at least one end to convict,

and if there's enough evidence on one end,

there's probably enough evidence on the other.

I am interested about the patient stuff.

He was more directly involved with the clinical lab,

and so that may work out differently for him,

but in terms of the investor counts,

some of these investors testified

that they were dealing directly with Sunny,

and I am curious to see how his trial is different.

- [Narrator] Regardless of her sentencing

or the outcome of Balwani's case,

having a CEO or COO of a company on trial

is a rare spectacle,

and it's unlikely to happen again for a long time,

but not necessarily because anyone will actually

learn anything from Theranos' mistakes.

- A lot of people wanna say,

"Well, she's not Silicon valley,"

and I understand that impulse because I wouldn't say

she's representative of Silicon Valley,

but she's certainly a product of it in the same way

that Bernie Madoff is not representative of Wall Street,

but he's certainly a product of it.

But because so many people don't seem to want to acknowledge

that she's even a part of this world,

I don't think we're gonna see a lot of behavior changes.

- [Narrator] And even with the verdict,

investors might not change their tune in investing

in future companies with such bold claims.

- We're in this very frothy period

where there's a lot of money available,

and investors really aren't doing as much

due diligence as they should be.

That worries me

because that's the kind of situation

where fraud can potentially flourish.

With Theranos, it just looked like a successful company

until all of a sudden it wasn't,

and I don't know how many of those kinds of things

are out there lurking around right now,

but I do find myself wondering if we're going to see changes

in terms of compliance or in terms of what lawyers recommend

to their clients as a result of that

because I don't see investor behavior changing.

I don't necessarily see founder behavior changing.

(soft dramatic music)