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4. Is there any justification for the actions of Holmes and Balwani?
The rise and fall of Theranos is a compelling and cautionary tale that has gained the attention of
both the business world and the general public and had intriguing scenarios within it. With an
initial vision that garnered significant investments and partnerships, Theranos seemed poised
for success. It did not work like that, In 2018, The U.S. Securities and Exchange Commission
(SEC) charged Theranos and Holmes with deceiving investors by "massive fraud" through false
claims about their products, including claims that the US Defence were using it in combat
situations. Holmes settled by paying a $500,000 fine, returning 18.9 million shares to the
company, and was given a 10-year ban from serving as a director of a public company.
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But in the big case of U.S. v. Holmes, et al., which started in the same year, Holmes and her
business and personal partner, Sunny Balwani were indicted on nine counts of wire fraud and
two counts of conspiracy to commit wire fraud, with the victims being both investors and
patients. The trial didn't end until January 2022, when Holmes was convicted of four counts of
defrauding investors - but, crucially for the people whose lives she ruined with false medical
diagnoses, she was found not guilty of defrauding patients.
Therefore, we think there is no justification for the action of Holmes and Balwani in the ethical
context due to continuing deceive and mislead investors, patients, and doctors even after it
became clear that the technology did not work is indefensible even if they strongly believed
their vision. if the allegations of fraud and deception are proven true, they will have to face the
legal consequences untill proven guilt.
Expert Solution

Step 1: Introducing the case of Holmes v/s U.S:
- In January 2022, Holmes was found guilty of four checks of defrauding investors, while being vindicated of defrauding patients.
- The case underscored the importance of transparency and ethical conduct within the healthcare and technology segments and served as a stark update of the legal consequences for people who lock in in misleading practices, especially when investors' believe and understanding well-being are at stake.
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