After delays — Holmes trial begins with jury selection
After four years, repeated delays and the birth of her baby, Elizabeth Holmes, the founder of the blood testing startup Theranos, is set to stand trial for fraud, capping a saga of Silicon Valley hubris, ambition and deception.
Jury selection begins on Tuesday in federal court in San Jose, California, followed by opening arguments next week. Holmes, whose trial is expected to last three to four months, is battling 12 counts of fraud and conspiracy to commit wire fraud over false claims she made about Theranos’ blood tests and business.
In 2018, the Justice Department indicted both her and her business partner and onetime boyfriend, Ramesh Balwani, known as Sunny, with the charges. Balwani’s trial will begin early next year. Both have pleaded not guilty.
Holmes’ case has been held up as a parable of Silicon Valley’s swashbuckling “fake it till you make it” culture, which has helped propel the region’s startups to unfathomable riches and economic power. That same spirit has also allowed grifters and unethical hustlers to flourish, often with little consequence, raising questions about Silicon Valley’s tightening grip on society.
But the trial will ultimately be about one individual. And the central question will be whether Holmes was a deceptive schemer driven by greed and power, or a naif who believed her own lies and was manipulated by Balwani.
The case hinges on Holmes’ knowledge of the problems with Theranos’ blood testing devices. Her lawyers could argue that she was merely the startup’s public face while Balwani and others handled the technology, legal experts said. They could make the case that the sophisticated investors who backed Holmes should have done better research on Theranos. And they could say that Holmes was following Silicon Valley’s norms of exaggeration in service of an ambitious mission.
Last year, Judge Edward Davila of U.S. District Court for the Northern District of California agreed to separate Holmes’ and Balwani’ cases. The move was unusual for such cases, legal experts said, and allows the pair to blame each other with no ability to respond.
In sealed court filings from 2020 that were made public over the weekend, Holmes said that her relationship with Balwani had a “pattern of abuse and coercive control.” The filings said Holmes’ lawyers might introduce expert testimony on her mental state and the effects of the alleged abuse. Balwani’s lawyers denied the accusations in a filing.
If convicted, Holmes, 37, faces up to 20 years in prison. While high-profile startup founders from Uber’s Travis Kalanick to WeWork’s Adam Neumann have experienced swift falls from grace over ethics scandals, Holmes may become one of the few to actually go to jail for it.
“All too often this kind of fraud doesn’t get prosecuted,” said Alex Gibney, director of “The Inventor,” a documentary about Theranos. “So many other people fake it till they make it, but that never justifies not bringing charges when someone has committed fraud.”
Holmes’ lawyers did not respond to a request for comment. A lawyer for Balwani, 56, declined to comment, as did a representative for the U.S. Attorney’s Office for the Northern District of California, which is prosecuting the case.
It is unclear whether Holmes will take the stand to defend herself.
As Theranos’ chief executive and chairwoman, she was persuasive and inspiring. She fiercely defended Theranos and dismissed any criticism as a sign that the company was changing the world.
But if Holmes takes the stand, prosecutors could use past statements to hurt her credibility. In a Securities and Exchange Commission deposition in 2017, she responded to questions by saying “I don’t know” at least 600 times.