Fraud in Silicon Valley on Trial

Boardroom Governance Newsletter #16 | Sept 1 2021

Sketch from inside Judge Davila’s courtroom for jury selection in Elizabeth Holmes’ trial. By Vicki Behringer (Aug 31, 2021).

The criminal trial of Elizabeth Holmes finally started yesterday. The U.S. Department of Justice is charging Holmes with two counts of conspiracy to commit wire fraud and nine counts of wire fraud involving a scheme to defraud investors, and a separate scheme to defraud doctors and patients. The case has been closely followed in Silicon Valley (and beyond) for years now, with intense media and popular attention (here is a good take on how a generation of female entrepreneurs, particularly in life sciences, biotechnology and health care, have been impacted by Holmes’ actions). The case also highlights critical misgivings of startup governance with founder control. The board of the company was filled by an unusual roster of powerful and influential members, where Holmes served as chairman, and Balwani served on the board as well. The list includes:

1. Henry Kissinger,…