This could be bloody.
The opening statements will be delivered on Wednesday in the trial of Elizabeth Holmes, the founder of the defunct blood testing company Theranos, which according to prosecutors became the world’s youngest female billionaire by lying to investors about the technology of your company.
The 37-year-old founder faces two conspiracy offenses for cable fraud and ten cable fraud offenses, and could be sent to prison for 20 years.
The trial comes after multiple delays due to the coronavirus pandemic and Holmes giving birth to a baby in July, and after a jury selection process that last week checked potential jurors if they knew Holmes. from the book “Bad Blood” or the HBO documentary “The Inventor”.
Meanwhile, while awaiting trial, Holmes has lived with his partner William “Billy” Evans, heir to a hotel, in a 135-acre, $ 135 million home outside Palo Alto, CNBC reported Tuesday. .
The trial is expected to last several weeks, with hearings set for Tuesday, Wednesday and Friday.
Lawyers for Theranos founder, who was once valued at $ 9 billion in the north, have told the Northern California judge overseeing the case that the founder herself is “very likely” to take a stand and defend herself. She is expected to accuse her ex-boyfriend and former Theranos executive Ramesh “Sonny” Balwani of abuse as part of her defense.
The trial may also see testimonies from strong fighters in the world of politics and the media who were affiliated with Theranos, including former Secretary of State Henry Kissinger, former Secretary of Defense James Mattis and Rupert Murdoch, owner of the company parent company of the New York Post News Corp. – Judicial documents show. The two former U.S. officials were members of the company’s board; Murdoch was an investor.
Holmes ’supervised trial will be a dramatic example of what happens when the culture obsessed with the Silicon Valley founder goes wrong.
Here’s what’s happened so far and what to expect.
What did Elizabeth Holmes and Theranos do?
In 2003, Elizabeth Holmes, 19, left Stanford University to start a blood test company. He later called it Theranos, a combination of the words “therapy” and “diagnosis.”
Holmes’ plan was to create a machine called “Edison” that could quickly run dozens of tests, from diabetes to cancer, based on a touch of blood. The convenience and speed of the devices Edison, according to Holmes, told potential investors, that they would disrupt the multimillion-dollar lab testing industry dominated by giants like Quest Diagnostics. It would save lives and make a fortune at the same time.
Theranos operated in secret for nearly a decade, and generated bubbles among investors that brought its valuation to $ 1 billion in 2010 before the company even had a website.
In 2013, Holmes, known for wearing thick eye makeup and a black turtle neck similar to Steve Jobs, decided to bring the company’s technology to the press, amassing funny interviews and profiles while adorning the covers of magazines like Forbes, Fortune and New York Times Style Magazine.
Politically connected men like Kissinger, Mattis, and former U.S. Senators Sam Nunn and Bill Frist joined Theranos’ board of directors as the company secured alliances with Walgreens, Safeway and the Cleveland Clinic.
Strengthened by the favorable press and connected board members, Theranos secured even larger investments from powerful sponsors, including $ 125 million from Murdoch and $ 100 million from the family of former Education Secretary Betsy DeVos. Other prominent investors were the founding Walton family of Walmart, the owner of the New England Patriots, Robert Kraft, and the richest man in Mexico, Carlos Slim, according to the Wall Street Journal.
In early 2015, Forbes had crowned Holmes the title of world billionaire woman with a net worth of $ 4.5 billion.
How did Theranos unravel?
Theranos ’spell was broken in October 2015 when a series of reports in the Wall Street Journal showed that most of the tests the company claimed to have performed on Edison machines were being performed on traditional lab equipment.
That day, Holmes published CNBC’s “Mad Money” program with Jim Cramer to dismiss the charges, claiming the newspaper had been to stifle innovation.
“First they call you crazy, then they fight you, and then you change the world,” he told CNBC, paraphrasing a quote that is often poorly attributed to Mahatma Gandhi.
But the newspaper’s revelations undermined everything Holmes had been claiming for years, and irritated investors saw their once-lucrative stakes in the company crumble to zero-dollar valuations.
Theranos gradually bled employees and officially disappeared in 2018. That same year, the Securities and Exchange Commission officially accused Holmes of “mass fraud,” accusing the founder of taking more than $ 700 million from investors while lying about the technology of your company.
Holmes avoided admitting guilt and dodged jail in a separate deal with the SEC, but now faces a separate charge of federal prosecutors’ fraud charges in northern California.
What about Sunny Balwani and allegations of abuse?
Another key figure in Theranos is Ramesh “Sunny” Balwani, who served as president and chief operating officer of the company while also dating Holmes. The couple met when Holmes was 18 and Balwani was 37.
The couple broke up in 2016 when Theranos broke up, before Holmes met her now husband, hotel heir Billy Evans.
Like Holmes, Balwani has also been charged with fraud and will have to go to trial in a separate trial in January 2022.
A key aspect of Holmes’ defense will be accusing Balwani of subjecting her to a “decade-long campaign of psychological abuse,” according to court documents.
Holmes’ lawyers said in unsealed court records in August that they would introduce evidence showing that Balwani “controlled what [Holmes] she ate, how she dressed and how much money she could spend, with whom she could interact, essentially dominating her and erasing her ability to make decisions. “
The documents indicate that at least part of Holmes’ defense will be based on convincing the jury that her alleged abusive relationship with Balwani affected her mood, which led her to turn a blind eye to the deficiencies of the your blood test start-up.
Balwani has denied the allegations, which his lawyer described as “deeply offensive” and “personally devastating” for the former Theranos executive.
Additional reports from Will Feuer