Holmes’ lawyers claim profane chants in meetings are ‘normal’
Federal prosecutors plan to have witnesses tell jurors in the upcoming fraud trial of Theranos founder Elizabeth Holmes that in company meetings she uttered profane chants about a competing business and a Wall Street Journal reporter, her lawyers noted in a court filing.
That kind of behavior is “normal,” her legal team argued. Holmes, who was CEO of the defunct Palo Alto blood- testing startup, and former company president Sunny Balwani, are charged with a dozen felony fraud counts.
“Ms. Holmes and Mr. Balwani allegedly led employees in a chant of ‘ F— you, Sonora Quest,'” according to the filing in U.S. District Court in San Jose, which added that Sonora Quest competed against Theranos in the blood-testing industry.
Prosecutors, according to the filing, allege that the vilification of a competitor showed awareness of guilt. “If vilifying competitors, and chanting curse words about them, were a sign of a guilty conscience, every sports team in America would be guilty of something,” the filing Friday said. “Companies and corporate officials routinely vilify competitors to motivate employees. The conclusion the government draws from this normal (even if lamentable) behavior … is completely speculative.”
The government plans to make a similar claim about the significance of trial testimony from a former Theranos employee that Holmes chanted “F— you Carreyrou” at a company meeting, after Wall Street Journal reporter John Carreyrou wrote a series of articles critical of Theranos, accord
ing to the filing.
“There would be nothing remarkable about Ms. Holmes expressing frustration to her colleagues about critical news coverage of her and their company,” the filing argued. “That normal human reaction to adversity and negative publicity would not be evidence of consciousness of guilt.”
Holmes, a Stanford University dropout, and Balwani are accused of bilking investors out of hun
dreds of millions of dollars, and defrauding doctors and patients, with false claims that Theranos machines could conduct a full range of tests on just a few drops of blood.
The two have denied the allegations, with lawyers for Holmes arguing in a court filing that the government’s case was “unconstitutionally vague” and lacked specific claims of misrepresentation. In a filing this month, Holmes claimed
that the government hasn’t done the “data- driven analysis” to determine whether the company’s tests were accurate and reliable.
Holmes’ trial is scheduled to start in March. She faces maximum penalties of 20 years in prison and a $2.75 million fine, plus possible restitution, the Department of Justice has said.