Opening statements to begin in Elizabeth Holmes fraud trial

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Opening statements are set to begin Wednesday in the trial of Elizabeth Holmes, the disgraced founder of blood-testing startup Theranos who prosecutors say bilked investors and made billions by lying to investors about her company’s technology.

Holmes, 37, was once among Silicon Valley’s most high-profile founders and briefly crowned the country’s youngest female self-made billionaire.

But prosecutors will seek to prove to a jury of seven men and five women that it was all a scam knowingly perpetrated by Holmes and her then-boyfriend and Theranos COO Ramesh “Sunny” Balwani in what’s expected to be among the most widely watched corporate fraud cases in years.

Both Holmes and Balwani have pleaded not guilty to two counts of conspiracy to commit wire fraud and 10 counts of wire fraud.

They will be tried separately and court documents suggest Holmes will seek to convince jurors Balwani manipulated her and was the true mastermind of the fraud.

She could be sent to jail for 20 years if found guilty.

Holmes will likely try to prove that ex-boyfriend Balwani was the mastermind of the fraud,
Holmes will likely try to prove that ex-boyfriend Balwani was the mastermind of the fraud,
REUTERS/Stephen Lam

After being delayed several times due to pandemic restrictions and Holmes’ pregnancy, the trial is expected to last for several weeks, with hearings set for Tuesdays, Wednesdays and Fridays.

As she awaits trial, Holmes has been reportedly living with her partner William “Billy” Evans — heir to the Evans Hotel Group — in a posh home on one of America’s most expensive estates.

Attorneys for the founder of Theranos — which was once valued north of $9 billion — have told the Northern California judge overseeing the case that Holmes herself is “highly likely” to take the stand and defend herself. 

High-profile investors and board members of Theranos, including former Secretary of State Henry Kissinger, former Secretary of Defense James Mattis and Rupert Murdoch, the owner of New York Post parent company News Corp., may also be called on to testify, court documents suggest.

Elizabeth Holmes Forbes magazine cover for Business
Theranos was once valued north of $9 billion.

Jurors will also likely hear from Theranos patients, including one man who was misled to believe he had prostate cancer and two other patients who got false positive HIV test results. However, the scope of their testimony must be limited to the fact that they were misled by the tests, and not the emotional impact.

Since founding Theranos in 2003, Holmes made lofty claims about the company’s machine, called “Edison,” that could quickly run dozens of tests for everything from diabetes to cancer based on a pinprick of blood.

The convenience and speed of Edison devices, Holmes told potential investors, would disrupt the multibillion-dollar lab testing industry dominated by giants like Quest Diagnostics.

But the company never published peer-reviewed studies of its product, and operated largely out of public view for years.

By 2010, the company nabbed a valuation of $1 billion — before Theranos even had a website. 

Holmes continued to use glowing press coverage and her lofty claims to bring in funding from largely East Coast investors, foregoing the traditional Silicon Valley venture capitalists.

The company’s high-profile investors and board members bolstered hype in the company and continued to drive its valuation up — until a 2015 Wall Street Journal article alleged it was all a fraud.

The same day that article was published, Holmes appeared on CNBC’s “Mad Money” with Jim Cramer to rebuff the charges, claiming the paper was trying to stifle innovation.

“First they call you crazy, then they fight you, then you change the world,” she said on CNBC, paraphrasing a quote that’s often misattributed to Mahatma Gandhi.

Defense attorneys for Elizabeth Holmes, founder of Theranos, arrive at the Robert F. Peckham Federal Building on August 31, 2021 in San Jose, California.
Defense attorneys for Elizabeth Holmes arrive at the Robert F. Peckham Federal Building in late August.
Ethan Swope/Getty Images

Theranos gradually bled employees and was officially defunct by 2018. That same year, the Securities and Exchange Commission officially charged Holmes with “massive fraud,” accusing the founder of taking more than $700 million from investors while lying about her company’s technology. 

And later in 2018, the US Department of Justice also charged Holmes and Balwani, accusing them of defrauding investors, medical professionals and customers.

Additional reporting by Theo Wayt



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