Theranos founder to allege ex-boyfriend abused her
Part of defence in U.S. wire fraud trial
The defence team for Elizabeth Holmes, the founder of a company that promised to revolutionize the simple blood test, will argue at her fraud trial that her judgment was impaired because of physical and sexual abuse from her boyfriend and business partner.
Holmes, who stands accused of wire fraud, presided over the collapse of the heavily hyped blood-testing company, which was worth US$9 billion before it failed. Filings posted by her defence team will pin the blame on Ramesh “Sunny” Balwani, who is due to be tried separately.
Holmes is expected to take the stand at her trial, which begins in San Jose, Calif., on Tuesday.
Holmes, 37, is now accused of misleading investors by claiming her company, Theranos Inc., would generate US$1 billion in 2015 alone and lying to patients about the efficacy of the devices.
Holmes was the company's chief executive until it dissolved in 2018.
Details of Holmes's strategy transpired over the weekend, with papers filed by her legal team. She will accuse Balwani of monitoring her calls, text messages and emails. Holmes also alleges he was physically violent, throwing “hard, sharp objects” at her.
“This pattern of abuse and coercive control continued over the approximately decade-long duration of Ms. Holmes and Mr. Balwani's relationship, including during the period of the charged conspiracies,” they wrote.
Holmes and Balwani have each been charged with 10 counts of wire fraud — using telecommunications for dishonest financial purposes. They are also accused of two charges of conspiring to commit wire fraud.
If convicted, they could be jailed for up to 20 years.
They also face massive fines — US$250,000 for each offence — as well as being ordered to repay the investors they allegedly conned. Both have pleaded not guilty.
The key to Theranos was a device known as Edison which, it was claimed, was capable of running multiple tests on a pinprick of blood and delivering rapid results to the patient and doctor.
However, the device didn't work. A pathologist called Adam Clapper noticed there had never been any peer-reviewed data of the Edison.
The Wall Street Journal then began its own investigation, which led to a blizzard of litigation, culminating in the criminal case in California.
Legal experts believe one option for Holmes would be to seek a plea deal, which would involve some jail time — but considerably less than she would face if convicted by a jury.
The Daily Telegraph has approached lawyers acting on behalf of both defendants for comment.
Balwani has not publicly responded to Holmes's new claims. He has won the judge's approval for his trial to be conducted separately from Holmes's.
Holmes's trial opens with jury selection.
Two hundred potential jurors filled out questionnaires designed to weed out bias against either Holmes or the government. About half have already been eliminated, with those remaining facing some further questioning by prosecutors and attorneys representing Holmes, but mostly from the judge handling the trial. The final panel will consist of 12 jurors and five alternates.
Holmes's lawyers didn't include any queries related to a possible mental-health defence in the questionnaire they proposed for jurors, but U.S. District Judge Edward Davila has said he plans to raise the issue during the juror screening process, which is expected to take about two days.
Lawyers for Holmes have complained that years of “inflammatory” publicity will make it hard to find unbiased jurors.
But legal experts say what Holmes needs are jurors wellversed in the startup scene who will be open to the idea that the blood-testing company was an innocent failure rather than a massive fraud.
According to this view, Holmes may be able to prevail if her account of the collapse of Theranos resonates with jurors' understanding of how entrepreneurs make sales pitches to attract investors — and how best-laid plans can go awry.
Mark MacDougall, a former federal prosecutor who is now a white-collar criminal defence lawyer in Washington, said jurors familiar with the culture of startups can be convinced that “puffery in sales doesn't equate to deception.”
They understand that in starting a company “all you have is an idea,” and that pitching a new technology means “you're going to pump that idea full of promise and expectation — because that's what you do.”