HITTING HOLMES
Theranos founder vilified in trial opener
Prosecutors at Elizabeth Holmes’ federal fraud trial hammered the founder of blood-testing startup Theranos in opening statements, telling the jury she lied and cheated her way to fortune and fame as she duped investors and patients alike.
Holmes’ defense retorted that she’s no villain but rather a hardworking businesswoman whose company failed.
“This is a case about fraud — about lying and cheating to get money,” Assistant US Attorney Robert Leach told jurors at the start of his opening statement.
“The scheme brought her fame, it brought her honor and it brought her adoration,” Leach added.
“She had become, as she sought, one of the most celebrated CEOs in Silicon Valley and the world,” he said. “But under the façade of Theranos’ success there were significant problems brewing.”
By 2009, six years after Holmes founded Theranos, major pharmaceutical companies were turning the company away and business was dwindling, Leach said as he painted a bleak picture.
“Out of time and out of money, Elizabeth Holmes decided to lie,” Leach told the jury.
Holmes managed to “dazzle” major companies like Walgreens and Safeway by lying about Theranos’ technology, including by suggesting that the company’s machines had been vetted by pharmaceutical companies, Leach said.
At the same time, Holmes knew the company’s devices were “plagued by issues and repeatedly failing quality control,” Leach said.
He added that Holmes fabricated a report about her company’s devices that purported to show Pfizer claiming Theranos’ machines had “superior performance,” but the pharma giant never issued the report.
Holmes also deceived reporters in order to secure glowing coverage that she and her partners then used to attract bigger and bigger investments, Leach said, adding that she then turned around and lied to investors about basic financial figures.
Leach told jurors that evidence to be presented over the coming months will show that Holmes and then-boyfriend and Theranos COO Ramesh “Sunny” Balwani carried out a scheme to defraud Theranos investors and patients.
But Lance Wade, a lawyer for Holmes, volleyed back: “Elizabeth Holmes did not go to work every day intending to lie, cheat and steal. The government would have you believe her company, her entire life, is a fraud. That is wrong. That is not true.”
“In the end, Theranos failed and Ms. Holmes walked away with nothing,” Wade added. “But failure is not a crime. Trying your hardest and coming up short is not a crime. And 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.”
Wade noted that Holmes did not operate her company alone.
Judge Edward John Davila is presiding over the case in the United States District Court for the Northern District of California.