Theranos founder Elizabeth Holmes scammed Betsy DeVos’ family out of $100 million
The family of former education secretary Betsy DeVos failed to do their follow-up research after they were dazzled in a meeting with Elizabeth Holmes, who ultimately convinced the Michigan-based billionaires to invest $100 million in her now-defunct company, Theranos.
The DeVos family was just one of several high-profile investors — like the Walton family, who have more than 50% of Walmart shares as well as conservative media executive Rupert Murdoch — who funneled funds into Holmes’ blood technology startup.
Holmes, who is currently on trial in San Jose for criminal wire fraud, handpicked the DeVos family and other wealthy figures to fund Theranos, said Lisa Peterson, who oversees private equity investments at RDV Corp and handled the Theranos deal. She testified on behalf of the DeVos family on Tuesday, according to CNBC.
“She was inviting us to participate in this opportunity,” Peterson said of Holmes. “They were telling us that it worked. We relied on what they told us.”
In 2014, Peterson and several members of the DeVos family traveled to California for a meeting with Holmes and Ramesh “Sunny” Balwani, the company’s former president. They provided financial projections, showing the company would have revenue of $140 million in 2014 and $990 million in 2015 — despite netting no revenue in 2013 and 2012.
Holmes also touted her Edison technology, a compact device developed to perform a wide array of medical tests with just a few drops of blood.
Peterson also testified that she was unaware of the company’s lack of revenue in the years prior to their meeting, just as she was unaware that most of Theranos’ tests were being completed on third-party machines.
After the pitch, Peterson and the DeVos family members agreed to double their initial investment of $50 million to $100 million.
“This was going to be a game-changer for health care,” she testified, according to CNBC.
During cross examination, Peterson confessed that RDV did not hire regulatory experts, counsel or medical experts in their due diligence process because they did not believe it to be necessary.
Holmes, whose failed biotech company was once valued at $9 billion, was indicted on a dozen counts of federal wire fraud in June 2018, alongside Balwani. Both have pleaded not guilty to charges that include defrauding investors, doctors and patients by falsely claiming Theranos could revolutionize medical lab testing.
They each face up to 20 years in prison if convicted.
