Theranos founder Elizabeth Holmes ‘lied and cheated’, trial hears

Theranos founder Elizabeth Holmes ‘lied and cheated’, trial hears
By Daniel Thomas
Business reporter, New York

Published9 hoursTheranos founder Elizabeth Holmes “lied and cheated” for money and fame, prosecutors alleged on the first day of the former Silicon Valley star’s trial.

Ms Holmes faces 12 fraud charges over her role at the now-defunct blood-testing firm which was once worth $9bn.

She is accused of deceiving investors and patients by claiming Theranos could detect common illnesses using just a few drops of blood from a finger prick.

Her lawyers said she was simply a naive businesswoman whose firm failed.

“Failure is not a crime. Trying your hardest and coming up short is not a crime,” Lance Wade, a lawyer for the defence said in his opening statement on Wednesday.

In what will be a closely watched trial in San Jose, California, Ms Holmes denies all the charges against her but could face up to 20 years in prison if found guilty.

Former Theranos executive Ramesh “Sunny” Balwani – who was romantically involved with Ms Holmes for years – faces the same charges but will be tried separately next year. He has also pleaded not guilty.

‘Fame and adoration’
Ms Holmes, who founded Theranos in 2003 aged 19, was dubbed the world’s youngest self-made female billionaire and the “next Steve Jobs” thanks to her technology.

However, she fell from grace in 2015 when it emerged her blood-testing devices did not work and Theranos was doing most of its testing on commercially available machines made by other manufacturers.

Elizabeth Holmes: The boss accused of duping Silicon Valley
On Wednesday, prosecutor Robert Leach said Ms Holmes and Mr Balwani turned to fraud in 2009 after big pharmaceutical firms declined to back Theranos and they ran out of cash.

They lied about the tests and exaggerated the firm’s performance to secure millions of dollars of investment between 2010 and 2015.

This included falsely claiming the tests had been vetted by the pharmaceutical giant Pfizer and that the technology was being used by the US military in the field, Mr Leach said.

Ms Holmes came into the court surrounded by her legal team. There’s huge interest in the case here.

Journalists had been queuing up since 5am to try and get into court. Many didn’t get in.

Eschewing the black turtleneck she had become famous for, Ms Holmes wore a grey suit and blue mask. In court, she sat bolt upright, poised, attentive, as she listened to the case against her.

The prosecution didn’t mince its words. The word “lies” was mentioned liberally. Ms Holmes watched on passively.

The case will probably take months and at some point it’s possible that Ms Holmes herself will take the stand.

If she does it will be a huge risk for her defence. But with so much evidence that the tech she flaunted didn’t work she may feel it’s a risk worth taking.

Ms Holmes also “dazzled” firms such as Walgreens, the pharmacy chain, into agreeing testing partnerships, despite being fully aware the tests were “plagued by issues and repeatedly failing quality control”, he said.

It brought her fame and adoration, Mr Leach added.

“She had become, as she sought, one of the most celebrated CEOs in Silicon Valley and the world. But under the facade of Theranos’ success there were significant problems brewing.”

Manesh Balwani
Ms Holmes claims Mr Balwani controlled and abused her. He denies the claims
‘Walked away with nothing’
However, the defence’s Mr Wade said Ms Holmes did not intend to defraud, but instead “naively underestimated” the challenges her business faced.

“In the end, Theranos failed and Ms Holmes walked away with nothing,” he told the jurors in San Jose.

He added that the former executive was motivated by Theranos’s mission, not money, and “committed to that mission until that very last day”.

“By the time this trial is over, you will see that the villain the government just presented is actually a living, breathing human being who did her very best each and every day. And she is innocent.”

According to court filings unsealed last month, Ms Holmes has alleged Mr Balwani abused her emotionally and psychologically for years. Mr Balwani has denied the allegations.

Her lawyers have said she is “highly likely” to take the witness stand and testify about how the relationship affected her mental state.

As boss of Theranos Ms Holmes is alleged to have duped a host of powerful people who invested around $700m in the company including Henry Kissinger, Rupert Murdoch, and four star general James Mattis.

Her story has become the subject of documentaries, podcasts and books. A TV miniseries and a Hollywood film based her life are in the works.

The defence and prosecution have identified more than 140 potential witnesses in the case, including investors and former Theranos employees.


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