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The trial of Theranos founder and former CEO Elizabeth Holmes continues on Tuesday as prosecutors representing the US government will attempt to prove to the jury that it was the intent of Ms Holmes to mislead investors, patients, and doctors about what her blood-testing technology was capable of in order to get ahold of their money.
During the opening statement for the US government, a federal prosecutor said that Ms Holmes “decided to lie” because she was “out of time and out of money”.
“This is a case about fraud, about lying and cheating to get money,” Prosecutor Robert Leach said. He added that in 2009, Theranos was short on cash as it got less and less work, and the company could barely pay its employees.
Lance Wade, a defence lawyer for Ms Holmes, told the court: “Elizabeth Holmes did not go to work every day to lie, cheat and steal. The government would have you believe that her company, that her entire life, is a fraud. That is wrong. That is not true.”
Ms Holmes, 37, who has pleaded not guilty, founded her company in 2003 at the age of 19 after dropping out of Stanford. The goal of Theranos was to radically change how blood testing is done. She now faces up to 20 years in prison if she is found guilty of the charges.
Court documents have revealed that the defence team may argue that another Theranos executive, Ramesh “Sunny” Balwani, 56, who is also Ms Holmes’ ex-boyfriend, emotionally, sexually, and physically abused Ms Holmes. That meant that he was in control, not her, the defence may argue. Mr Balwani, who served as the president and chief operating officer after joining Theranos in 2009, is facing his own trial early next year and has forcefully rejected the claims of abuse. He has also pleaded not guilty.
Theranos was at one point valued at $9bn as the company promised that their technology could test for diseases like cancer and diabetes by just taking a few drops of blood with a finger stick. Ms Holmes partnered up with retail giants such as Walgreens and Safeway and could be seen on the covers of magazines where she was described as the richest self-made woman.
But a 2015 Wall Street Journal investigation into the company was the beginning of the end for Theranos, which was dissolved in 2018. The trial of Ms Holmes, which has been delayed several times by the pandemic and her pregnancy, is expected to take around 13 weeks.
Prosecution says Theranos lost tens of millions even as it told investors of great success
Danise Yam was in charge of the finances at Theranos for 11 years, during a time when the company lost tens of millions of dollars, according to prosecutors.
During this time, the company told investors it was making great progress with its blood-testing technology. Theranos said it could diagnose more than 200 conditions with just a finger prick of blood.
Ms Yam, whose legal name is So Han Spivey, testified on Wednesday that part of her job was to choose which vendors to pay and to reallocate funds to ensure that employees were being paid as the company didn’t have a solid source of revenue.
Prosecution set to question witnesses who have made damning statements about Theranos
The trial of Elizabeth Holmes was cancelled on Friday after a juror said he could have been exposed to Covid-19.
All jurors have been vaccinated and court officials said the pause in proceedings was “out of an abundance of caution”.
When the trial resumes on Tuesday, the prosecution is set to question a number of witnesses who have appeared in the media and in other court cases making statements that support the government’s arguments against Ms Holmes – that the secrecy at Theranos led to betrayals and concealments, and that the company misled its own investors and even disobeyed federal rules.
Theranos whistleblower allegedly threatened with legal action after leaving job
Theranos whistleblower Erika Cheung worked at Theranos in 2013 and 2014.
According to legal filings, Ms Cheung told prosecutors that she voiced concerns about some blood tests.
She also told prosecutors that she was threatened with litigation after quitting her job for allegedly violating a nondisclosure agreement.
“It was very hard to communicate information sometimes because there were so many blockades and silos and this emphasis on secrecy,” Ms Cheuing said in a 2019 HBO documentary about Theranos.
Defence tried to block testimony about Holmes’ alleged private jet flights using Theranos money
Danise Yam, who also goes by San Ho Spivey and worked at Theranos as a corporate controller, said on Wednesday during the start of her testimony that the company was struggling to pay its vendors in 2009.
The defence for Elizabeth Holmes objected to some of Ms Yam’s testimony already before the start of her statement. They attempted to block the witness from saying that Ms Holmes allegedly used company funds to pay for private jet flights and $2,000 worth of jewellery, The Washington Post reported.
Judge Edward Davila chose to not immediately rule on the motion from the defence team, instead saying he would make a decision when and if it comes up during the questioning by the prosecution.
Former employees expected to take the stand as Theranos trial resumes
The trial of Elizabeth Holmes, charged with multiple counts of wire fraud, resumes on Tuesday as former Theranos employees and whistleblowers are expected to take the stand to confirm the prosecution’s case that Elizabeth Holmes misled investors, doctors and patients.
Whistleblower Erika Cheung relayed her issues with a company a year ago, and she could testify this week, The Washington Post reported.
Danise Yam worked as a corporate controller at Theranos and will be the first to take the stand after first testifying to the company’s financial issues last Wednesday.
Ex-Theranos CEO Elizabeth Holmes ‘decided to lie’ as she was ‘out of time and out of money,’ federal prosecutor says in opening statement
During the opening statement for the US government in the trial of Theranos founder Elizabeth Holmes, a federal prosecutor said that she “decided to lie” because she was “out of time and out of money”.
Following last week’s jury selection, the trial of former Theranos CEO Elizabeth Holmes began on Wednesday with opening statements.
The government will attempt to prove to the jury that it was the intent of Ms Holmes to mislead investors, patients and doctors about what her supposedly ground-breaking blood-testing technology was capable of in order to get hold of their money.
Ms Holmes, 37, who has pleaded not guilty, founded her company in 2003 at the age of 19 after dropping out of Stanford. The goal of Theranos was to radically change how blood testing is done. She now faces up to 20 years in prison if she is found guilty of the charges – 10 counts of wire fraud and two counts of conspiracy to commit wire fraud.
Federal prosecutor Robert Leach began his opening statement by saying that the evidence they plan to bring will show that Ms Holmes and her former business partner and ex-boyfriend Sunny Balwani, 56, performed a scheme to defraud investors and patients. Mr Balwani has also pleaded not guilty and has denied allegations of abuse from Ms Holmes. He is due to go on trial in January on charges related to Theranos.
“This is a case about fraud, about lying and cheating to get money,” Mr Leach said. He added that in 2009, Theranos was short on cash as it got less and less work, and the company could barely pay its employees.
Large pharmaceutical companies, such as Pfizer, chose not to work with Theranos. Mr Leach said that as she was “out of time and out of money, Elizabeth Holmes decided to lie”.
‘Theranos failed and Ms Holmes walked away with nothing, but failure is not a crime,’ defence argues
Inaccurate test results are not a crime, defence says
The defence counsel for Elizabeth Holmes, Lance Wade, argued on Wednesday that while some of Theranos’ tests didn’t perform as well as they had hoped, providing inaccurate test results is not a crime.
“Inaccurate results are generated every day in laboratories across America,” he said.
The prosecution is expected to call a number of witnesses who received inaccurate test results, including some who received false-positive HIV diagnoses and a woman who was wrongly told she had had a miscarriage.
Investors were ‘incredibly sophisticated and knew the risks’, defence argues
Elizabeth Holmes’ defence team has argued that the investors who put their money into Theranos were “incredibly sophisticated and knew the risks”.
They were millionaires and billionaires, lawyer Lance Wade noted, such as the heirs to the Walmart fortune, media mogul and Fox News owner Rupert Murdoch, and the DeVos family.
“They knew what they were buying,” Mr Wade said.
Defence lawyer says investors funded company mostly because of Walgreens partnership
Defence counsel Lance Wade told the court that Theranos had no retail experience or regulatory approvals.
Ms Holmes had an idea, but she was only 25 years old at the time. “Most retailers could see that,” Mr Wade said, but added that both Walgreens and Safeway were “more daring, or maybe more desperate to go after these services”.
He also said that investors put their money into Theranos “largely because they saw the Walgreens partnership as an endorsement of this young company”.
According to Law360, Mr Wade said the court would later learn that Walgreens’ “two-phase approach required Theranos to do too much too fast, far beyond its expertise. A mistake. Not a fraud”.
Defence counsel claims Theranos employees quit because of Balwani