As Elizabeth Holmes’ trial began Wednesday, defense and prosecution attorneys created dueling portraits. They alternately described Holmes as a villainous greedy woman who feigned her way to the top or as a determined underdog who spent many years trying to reform the health care sector.
The two sides will now spend the next three month trying to persuade a jury of 12 people to hear the evidence in a case involving allegations that Holmes used Theranos, her startup, to achieve her dreams of becoming rich and famous like her role model, the late Apple co-founder Steve Jobs.
Holmes was once hailed as a billionaire. If convicted of the felonies, he could face a sentence of up 20 years.
Holmes’ rise to fame and fall have been covered in books, podcasts and documentaries. This has fuelled the excitement surrounding a trial that was delayed twice since her arrest nearly three years ago. People began to gather outside the San Jose courthouse, California, before 5 a.m. on Wednesday, with only 75 spots for media and the general public to view the proceedings.
After the jury had been seated and U.S. district Judge Edward Davila gave his pre-instructions, Robert Leach, the federal prosecutor, wasted no time in vilifying Holmes.
Holmes was cast in a shadowy light by him, portraying her as a conniving entrepreneur that duped customers, investors and patients for years. Despite knowing her startup, Theranos was almost bankrupt and her much-hyped blood-testing technology a failure.
Leach stated that the case was about fraud and about lying to get money during his approximately 45-minute opening statement.
He stated that evidence would prove that Theranos had been in serious trouble since 2009, six years after Holmes founded Palo Alto’s California-based company. Leach stated that Holmes used lies and hyperbole to fool major media outlets, wealthy investors like Rupert Murdoch and well-connected Theranos board member such as former U.S. Henry Kissinger and George Shultz, Secretaries of State, as well as Walgreens customers.
Leach said that one former top finance officer at Theranos will testify that Theranos had only $650,000 in revenue between 2011 and 2014. Leach stated that Holmes told investors and others that Theranos would bring in $140 million in revenue for 2014.
Holmes, 37, was also accused of promising Theranos that Theranos could quickly test small vials with blood using a small company-designed machine named for Thomas Edison. Leach claimed that the samples were sent to outside parties for testing with standard-issue machines that he called “big” or “clunky”.
Theranos finally failed in 2018 after several explosive stories in The Wall Street Journal revealed serious flaws with its technology. This led to regulatory investigations and the closure of Theranos.
Leach stated to the jury that Holmes’ fraud was “a fraud on Main Street” and “a fraud in Silicon Valley”.
Holmes’ defense team responded with a heroic story about Holmes, describing her as a relentless worker who spent more than 15 years trying to find a quicker, cheaper and more effective way to screen for diseases and test blood samples.
Lance Wade, a defense attorney, claimed that Holmes was trying to take over the market for blood-testing technology from Labcorp and Quest Diagnostics. Wade stated that Holmes did “her best” to make Theranos successful during a 90-minute presentation.
Wade maintained that Holmes believed she was close to a breakthrough that would fulfill her dreams, even though she failed. Holmes was a popular investor, which is why Theranos was once valued at $9 billion. Holmes was worth half of that.
Wade stated that failure is not a crime. “Trying your best is not a crime.” A CEO who fails to succeed in a business is not a criminal.
Holmes’ lawyers revealed that Holmes may testify in court to prove some of her statements and actions during Theranos were the results of “intimate partner abuse” by Ramesh Balwani, the chief operating officer of the company, and her secret lover Ramesh Balwani.
Wade stated to the jury, without going into detail, that she believed Balwani was the best businessman she knew when she hired her. However, she now realizes that it was one of most costly mistakes she made.
Wade stated that Mr. Balwani was not a good listener to those who disagree with him.
Wade stated that Balwani was also responsible for overseeing Theranos Lab, which the government claims provided false results from blood tests that could have endangered some lives.
Wade stated that “if what the government wants to prove is that Theranos’ clinical lab was not run well from 2013 to 2016, then we will likely agree to what they have to tell us.” Poor operations in Theranos’ lab were one of their biggest failures, however it wasn’t fraud.
Balwani is facing multiple fraud charges in a separate case that will begin next year. Holmes’ allegations have been denied by Holmes’ attorney.