Prosecutors on Wednesday called Theranos founder and CEO Elizabeth Holmes a liar and cheater, while his lawyers argued the company’s failure was not a crime.
“Out of time, without money, Elizabeth Holmes decided to lie,” said Robert Leach, a U.S. deputy attorney, while exposing the case that Theranos ran out of money in 2009 and consciously tricked investors into keeping the company in flotation.
Prosecutors said Holmes was not only the face of Theranos, the blood testing start-up he founded, but also oversaw everything about the company, “dazzling” investors like Walgreens and Safeway with false claims.
“He had her, he controlled her, the dollar stopped with her,” Leach said. “And as you know from the experts, she wasn’t an absent CEO, she was there all the time. She sweated the details. She was in the lead.”
The long-awaited initial arguments were heard during a five-hour hearing. Holmes arrived in court alongside his partner Billy Evans, his mother Noel Holmes and Evans’ father, William Evans. She was wearing a gray skirt dress with a cream blouse and a light blue mask. It was a very different image to the one he had the signature black neck during his heyday at Theranos.
The crowd outside was the largest since the criminal trial began last Tuesday. Among the spectators were three women with blond hair who mimicked the characteristic look of Holmes who wore all black with their hair pulled back in a bun. They sat next to Holmes’ family in the courtroom.
Elizabeth Holmes, founder and former CEO of the blood testing and life sciences company Theranos, arrives on the first day of her anti-fraud trial, before the Federal Court in San Jose, California. September 8, 2021.
Nick Otto | AFP | Getty Images
Inside the courtroom before opening statements, Holmes was seen hugging his mother. During the hearing, she sat among her lawyers and occasionally looked back at her family who was sitting behind her.
Evans, with whom he shares a newborn son, was seen consoling Holmes’ mother during the breaks, at one point putting her hand on her back as they talked to the sketch artist in the room. At least seven of Holmes’ friends and family were in the room full of San Jose media members, where Holmes is battling a dozen charges of fraud and conspiracy.
Lance Wade, Holmes’ attorney, argued that “he made mistakes, but mistakes are not crimes,” adding that “a failed business does not turn a criminal into a criminal. Mrs. Holmes was not going to work every day with the intent.” to lie, deceive and steal “.
“Mrs. Holmes left with nothing,” Wade told the jury of seven men and five women. “But failure is not a crime. Trying harder and getting short is not a crime.”
Prosecutors said in 2013 Theranos had only $ 13 million in cash and told jurors the company burned between $ 1 million and $ 2 million a week. They alleged that Holmes and Balwani, an executive at Theranos and for a time her boyfriend, raised hundreds of millions of dollars from investors through the company’s technology in press interviews.
“The defendant’s fraudulent scheme turned her into a multimillionaire,” Leach said. “At one point, his actions in Theranos were worth billions. The scheme brought him fame, honor and adoration.”
Holmes rose to fame almost a decade ago, adorning the covers of Fortune and Forbes magazines, appearing on television news programs and even hailed himself as the next Steve Jobs, whom prosecutors said he “admired a lot”.
“She was presented as one of the most powerful women in business. She was sought after as one of the most celebrated CEOs in Silicon Valley and in the world,” Leach said. “But under the façade of Theranos’ success, there were drafting issues.”
Defense attorneys told jurors that Theranos employed hundreds of people in Silicon Valley.
“It was real. It was innovative,” Wade said, adding that the well-known list of investors knew the risks of investing in a start-up.
“To invest in Theranos you had to be a billionaire. In many cases they were billionaires, some of the richest and most sophisticated people in the world,” Wade said. “They were sophisticated and they knew what they were buying.”
Theranos raised more than $ 700 million from investors, including media mogul Rupert Murdoch, former Education Secretary Betsy DeVos and the famed Walmart Walton family. Some of the investors are expected to testify at trial.
Theranos founder Elizabeth Holmes appears in the American courtroom Robert F. Peckham for opening arguments at her trial in San Jose, California, USA, on September 8, 2021 in this courtroom sketch. .
Vicki Behringer | Reuters
His defense also pointed to Holmes’ relationship with Balwani, laying the groundwork for blaming him.
“You will feel that trusting and trusting Mr. Balwani as a senior advisor was one of his mistakes,” Wade said, telling jurors that the two met when Holmes was 18 and Balwani 37.
“Sometimes he would get tempered, he would come off. He didn’t always treat people with kindness,” Wade said of Balwani. “You’ll learn how he tested the limits of how he treated some employees. You’ll have to wait for all the tests and then decide how to view this relationship fairly overall.”
CNBC confirmed that during the trial Holmes and Evans have been housed in a home on the grounds of the well-known Green Gables estate in Silicon Valley. The 74-acre property currently sells for $ 135 million. During a court break, CNBC asked Evans’ father, William Evans, if he was paying the rent for the couples in the house. Evans remained silent.
Five hours later, Holmes left the courtroom, ignoring questions from reporters as he grabbed his partner’s hand.