Former Theranos CEO Elizabeth Holmes leaves federal court in San Jose, California, Thursday, December 23, 2021.
Nic Coury / AP
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Nic Coury / AP
Former Theranos CEO Elizabeth Holmes leaves federal court in San Jose, California, Thursday, December 23, 2021.
Nic Coury / AP
The image of Elizabeth Holmes as a disgraced former startup founder who brought her once-flying blood-testing company off the cliff has been etched into Silicon Valley history.
Many people formed an opinion about Holmes after watch documentaries, Read the best-selling book or listen to podcasts About her old startup, Theranos didn’t understand why the jury had argued the case against her for five days and still couldn’t decide.
Part of the reason: The story of Theranos over the past four months looks so different inside the federal courthouse in San Jose, California, than it does outside.
There’s no question that Theranos, once valued at $9 billion, blew up after failing to live up to its promises. Its blood tests are often conducted secretly on commercial third-party blood analyzers without the knowledge of investors and patients, who consider the company’s “innovative” device processing is in progress. And when the results came back, patients reported inconsistent, omission, or misleading results.
Less obvious is what went through Holmes’ mind as she advertised the possibility of her so-called Edison device, or what she was thinking when she talked to investors about the job. of Theranos with the army. Investors say they’ve left the impression that Theranos is at the cutting edge of deploying its technology on the battlefield, and in helicopter support, in the Middle East to save lives when it doesn’t. Holmes said that was never her intention when she spoke about the company’s work with the Department of Defense, which is significantly restricted.
Holmes testified that problems arose with financial projections that were either overblown, or that laboratory errors contributed to inaccurate test results. But how much did she know and if anything, did she hide what she knew?
Is she a swashbuckler trying to trick investors, or a startup executive who’s always been a truth-teller who believes that one day questionable bragging will become a reality? reality?
In short, the image of Holmes as a con man in popular culture is not so obvious when viewed through a legal lens.
“The difference in this case from someone dealing in cocaine is if you get caught with a suitcase,” said Brian Klein, a former federal prosecutor who is now a defense attorney in Los Angeles. cocaine, that’s a problem. “While here, running a startup, trying to develop a new technology for blood testing, it’s all very legit. The question becomes ‘what do you think about doing these things?’ And that’s really hard to achieve.”
Holmes took the stand as a witness, a rare move for a defendant in a white-collar crime case
During more than 15 weeks of testimony, prosecutors summoned nearly 30 witnesses to stand to bring the case that Holmes misled investors and patients about her blood-testing technology, and that she knew exactly what she was doing all this time: lying about her company to create. hype and hundreds of millions of dollars in investment. If it can be believed, prosecutors say a grand jury should convict her of 11 counts of telephone fraud and conspiracy to commit electronic fraud, which carries a penalty of up to 20 years in federal prison. .
But that aspect of Holmes’ story adds complexity to what the government is trying to sell to jurors. She took a gamble and testified more than seven days. It is rare for a defendant in a white-collar criminal case to stand in front of a witness, as it exposes them to occasional scrutiny by the government.
Still, Holmes put in an impressive performance, legal experts say. When she testified, she was focused and thorough. She says that the company’s responsibilities are shared by other managers and deputies. Looking back, she says, she wishes she would have handled various things, like getting the consent of drug companies before sticking their logos on Theranos technology validation reports, and not retaliated. ex-employees blew the company whistle.
Holmes talks about Erika Cheung, who has become a key whistleblower for Theranos.
Holmes also gave fiery and tearful testimony, accusing her ex-boyfriend and No. 2 at Theranos, Ramesh “Sunny” Balwani, of emotional and sexual abuse. (Balwani, who denies abuse, is also facing a fraud trial on the same charges in February. Since the two were pointing fingers at each other, the judge agreed to allow them to be heard. separate treatment).
Holmes’ testimony may have shaped how jurors viewed her and how they felt about her, which underpins this aspect of how believable her story is, according to Caroline Polisi. , a New York white collar crime defense attorney.
“She has a well-groomed personality,” says Polisi. “She’s gone through a long time to be seen as a powerful, controlling person. We see a softer side to her and I think that counts,” she said. “And it’s hard for jurors to separate their personal feelings about a defendant from their disdainful view of the law.”
For the jurors, there was a lot of mix: the alleged charges, the high standard of the law and the persuasion of Holmes, a seasoned pitchgirl who brought home nearly 1 billion dollars in investments after becoming the company’s eccentric public face.
For five days, jurors considered Holmes’ fate privately, trying to reach a consensus on charges after the judge in the case, Edward Davila, read 39 pages of instructions about the rules of their debate. They only returned two notes to the judge. First, about whether they can get the jury instructions home. Answer: no. The second question was about a 2013 recording of Holmes talking about Theranos with potential investors. The recording was played back to jurors.
Don’t read too much about the time the jury will weigh
While it is not rare Polisi, who was a former prosecutor, said watching juries in high-profile court cases for five days or so. She cautions against reading too much while the jury deliberates.
“As a prosecutor, I’m always very nervous when jury deliberations go on for a long time, but it’s almost impossible to figure out what it means,” Polisi said. “But remember, for the jury, there’s a lot to remember during the four-month trial.”
Klein adds: “It’s possible that the judges agreed on almost everything, but there are just a few things they’re trying to work out.”
If all the juries cannot come together, called a suspended jury, the judge can declare one untrue. But Klein said because the jury did not send a letter to the judge indicating they were at an impasse, that shouldn’t be assumed.
“Cheating is complicated,” said Amanda Kramer, a New York-based white-collar defense attorney. “There’s a lot of dry evidence when it comes to trial, and jurors take a long time to put together all the evidence they’ve seen and heard.”
The judges on Wednesday will return to San Jose federal court to continue the work of synthesizing the evidence against Holmes.
