SAN JOSE, Calif .– In the past 11 weeks, prosecutors have revealed emails from desperate investors. They kept forged documents side by side with the originals. They called dozens of witnesses who laid charges of deception and evasion.
And on Friday, after questioning their 29th witness, prosecutors concluded their arguments against Elizabeth Holmes, the founder of the failed blood testing start-up Theranos. Ms Holmes has pleaded not guilty to 11 counts of defrauding investors over Theranos’ technology and business, in a case that has been touted as a referendum on Silicon Valley start-up culture.
The end of her prosecution evidence is a major turning point in Ms Holmes’ trial, whose rise and fall captivated the public and who has been seen as a symbol of the pride of the tech industry. and the scam culture of the past decade.
For weeks, prosecutors sought to portray Ms Holmes, 37, as a liar who turned Theranos into a $ 9 billion startup despite knowing from the start that the company’s blood tests, billed as revolutionaries, did not work. Prosecutors methodically described six main areas of Ms Holmes ‘deception, including lies about Theranos’ work with military and pharmaceutical companies, his business performance, and the accuracy of his blood tests.
Her lawyers are now expected to argue that Theranos was just a failure and not a fraud, raising the question of whether Ms Holmes will take a stand in her own defense. In the documents filed, her lawyers have indicated that she is likely to testify.
The stakes in the trial are high. If Ms Holmes is convicted, she faces up to 20 years in prison on each count of fraud, and prosecutors could be emboldened to go after other start-ups that twist the truth to raise concerns. funds. An acquittal could send the message that Silicon Valley start-ups, which have exploded in power and wealth over the past decade, are hard to hold accountable.
“When prosecutors finish their case, they are basically saying they have enough to ask the jury to convict the accused on the spot,” said Andrey Spektor, lawyer at Bryan Cave Leighton Paisner and former federal district attorney for the Eastern District. from New York. He said he expected the defense to present a case, rather than simply letting the jury decide whether prosecutors failed to prove theirs.
Ms Holmes, a Stanford University dropout who founded Theranos in 2003 and raised $ 945 million from investors, was charged with fraud charges in 2018. Her case has been stuck in delays for years: d ‘first about the process, then the pandemic and finally Ms. Holmes. Holmes gives birth to a baby in August.
When the trial finally began in September, prosecutors called former investors, partners and employees of Theranos to testify. Jim Mattis, the retired four-star General of the Marine Corps and former Secretary of Defense who was director of Theranos, spoke, as did a former laboratory director of Theranos who endured six days of grueling interrogations. In a surreal moment, a forensic expert recited text messages between Ms Holmes and her then-boyfriend and business partner in Theranos, Ramesh Balwani, known as Sunny.
This week, Alan Eisenman, an early investor in Theranos, said Ms Holmes cut him off and threatened when he asked for more information about the company. Yet even after this treatment, Mr. Eisenman invested more money in the startup, believing his seemingly fast-growing business would bring wealth to funders like him.
Asked about his understanding of the value of his Theranos stock today, Mr. Eisenman said, “It’s not a deal, it’s a deal. It’s worth zero.
The prosecution’s most compelling evidence included a series of validation reports that Ms Holmes sent to potential investors and partners, which gave the impression that pharmaceutical companies, including Pfizer and Schering-Plow, had endorsed the technology of Theranos. Representatives from each company testified that they did not approve Theranos’ blood test and were surprised to see their company logos added to the report.
Daniel Edlin, who worked at Theranos and was a brother-in-law to Ms Holmes’ brother Christian, said the start-up had faked demonstrations of its machines for potential investors, hid technology failures and released test results abnormal blood.
Mr Mattis testified that he was not aware of any contracts between Theranos and the military to install his machines on medevac helicopters or on the battlefield, as Ms Holmes had often told to investors.
The prosecution concluded its case with the testimony of Roger Parloff, the journalist who wrote a magazine cover about Ms Holmes, helping her gain acclaim. Mr Parloff’s article was sent to many investors as part of Ms Holmes’ pitch.
Yet particularly absent from the courtroom were some of the most prominent witnesses on the prosecution list. Ms Holmes’ rise has been aided by her association with business giants such as media mogul Rupert Murdoch, older statesmen such as Henry Kissinger and Admiral Gary Roughead, and lawyer David Boies . Theranos was shot, in part, by whistleblowers such as Tyler Shultz, the grandson of George Shultz, the former secretary of state who sat on Theranos’ board of directors. None of them testified.
Mr Balwani was also absent, who has been charged with fraud alongside Ms Holmes and is due to stand trial next year. His role as a staunch advocate for Theranos who lashed out at anyone questioning the company has been behind much of the testimony.
At almost every turn, Ms Holmes’ attorneys have sought to limit testimony and evidence. They attacked investor credibility, using legal notices to show investors knew they were betting on a young startup. Lawyers also dug holes in limited investor due diligence over Theranos’ claims. At one point, they asked Erika Cheung, a key whistleblower who worked in Theranos’ lab, to read the entire flowchart of people employed in the lab to show that she played a small role in it. whole operation.
The defense successfully argued that a count of fraud against Ms Holmes was dropped. A patient who received a suspicious test from Theranos was barred from testifying earlier this month.
Ms Holmes’ lawyers will likely attempt to shed light on her relationship with Mr Balwani. The two dated in secret. In court records, Ms Holmes alleged he was emotionally abusive and controlling. Mr. Balwani’s lawyers have denied the allegations.
Ms Holmes’ testimony is likely to reignite the media circus surrounding the early days of the trial, which died down over the weeks of testimony. It would also expose him to potentially damaging cross-examination by prosecutors or perjury.
“Most defendants do not testify, especially in white collar cases where the government has many challenges to overcome, such as proving intent, and sometimes even simply proving that a crime has been committed,” Mr. .Spektor. Ms Holmes’ case is different, he said, as the offense is clear and the evidence is fairly easy to understand.
Throughout the proceedings, Ms Holmes remained silent in the courtroom, whispering only to her lawyers or family members. But the jury heard her forcefully defend Theranos against fraud charges in video interviews played in court. They also heard her take the blame.
“I am the founder and CEO of this company,” she said in one of the videos. “Everything that happens in this business is my responsibility. “