SAN JOSE, California. Using charisma, poise and a little scientific jargon, Elizabeth Holmes convinced investors to give her nearly $ 1 billion to build Theranos, her blood testing startup. It all came collapsing in 2018after it was revealed that the company had serious problems with technology and business.
On Tuesday, Ms. Holmes used the same methods to try to convince the jury that she was not guilty of fraud.
Taking a stand in your defense on the third dayMs Holmes has presented her most compelling arguments to refute the 11 counts of fraud she has been charged with. She looked the jury in the eye and tilted her head to the side, claiming that she could not deliberately deceive anyone about Theranos technology.
Holmes, 37, alternately gave authoritative descriptions of Theranos’ scientific research and portrayed herself as the naive and ambitious founder who believed her company’s technology worked. She tried to rethink past incidents as a misunderstanding of her intentions. She hinted that the board should have given her better advice. She suggested that she had too much confidence in the doctors, scientists, and engineers who worked at Theranos.
And she portrayed herself as an entrepreneur who cared deeply – perhaps too much – about protecting the brand and the financial future of her company, to the point where she made decisions that were later deemed fraudulent by the prosecution.
The purpose of the defense throughout the day of testimony was to challenge the prosecution’s arguments among the jury: Ms Holmes deliberately argued that Theranos could revolutionize healthcare, even if she knew the startup’s technology was lacking. White-collar criminal cases are often high-tech and complex, and prosecutors have the burden of proving that the defendant intended to cheat.
“It’s all about knowledge and intent, and that’s the hardest thing for the prosecution to prove,” said Andrei Spector, attorney for Bryan Cave Leighton Paisner and a former federal attorney for the Eastern District of New York.
Spector said the government’s best evidence of Ms Holmes’s intentions is circumstantial, based on documents and other people’s testimony. But Mrs. Holmes could testify directly to what she knew and intended, he said.
This high-profile litigation has been a warning to Silicon Valley startups, which often include the same fuss, ambition and idealism of changing the world that propelled Ms Holmes into the upper echelons of the industry. While the tech industry relies on hype, few executives have been charged with lying to investors, making Theranos special.
But as tech startups continue to grow record amounts of cashsome standard corporate governance practices and efforts went out of the window– said investors and entrepreneurs. If Mrs. Holmes is convicted and sent to jail, the verdict could darken good times, awakening a new sense of caution among the freethinking founders.
On Tuesday, Ms Holmes began a grueling day of testimony at 9am and stayed at the booth all day. She repeatedly emphasized the main theme of her defense: she believed that Theranos technology worked. The jury was shown emails from various scientists and doctors who worked in the company’s laboratory, describing successful studies, trials and other achievements.
Channing Robertson, a Stanford University professor who joined Theranos board of directors, told her that her ideas were “very promising,” Ms Holmes said. One email about Theranos tests to Ms. Holmes from Ian Gibbons, Theranos Chief Scientist, said, “Our immunoassays are the best that can be done in a clinical laboratory.”
In a concession to one of the prosecution’s most important pieces of evidence, Ms Holmes admitted that she personally added pharmaceutical company logos to Theranos inspection reports without their permission. Those reports documented studies of Theranos blood tests conducted in partnership with pharmaceutical companies and helped convince investors and partners that the startup is a real deal.
Representatives of drug manufacturers Pfizer and Schering-Pllow said earlier in court proceedings that their companies did not write or approve of the reports. But Ms Holmes sent out reports with their logos to investors and partners as part of her proposal to convince them to invest and do business with Theranos.
Ms Holmes said Tuesday that she added logos to the reports only to show that the work they describe was done in partnership with pharmaceutical companies. She said she had no intention of misleading investors.
“I heard this testimony in this case and would like me to do it differently,” she said.
In response to eyewitness testimony from lab staff who said they left disillusioned with Theranos’ poor science, Ms Holmes said she never forced anyone to sign anything they disagreed with. She added that she would not allow Theranos to run any tests not approved by the laboratory director, adding that she has no authority to approve tests herself.
She also denied one of the prosecutors’ most high-profile allegations: that Theranos secretly performed most of its blood tests on commercially available machines from companies like Siemens, rather than its own. Theranos Company has promoted its small blood analyzers, known as Edisons and MiniLabs, as capable of performing hundreds of different blood drop tests. But in reality, he could only run a dozen tests and modified Siemens machines to run tests with less blood.
Ms Holmes said she never told investors, partners, the public or her board members that the company is doing most of its testing on Siemens devices because Theranos made changes to those machines. She said she is worried that Siemens or other competitors will copy the changes.
“It was an invention that, as we understood from conversations with our lawyer, we had to protect it as a trade secret,” she said.
Ms Holmes did not go into details of her relationship with Ramesh Balwani, her boyfriend for over ten years who was the chief operating officer of Theranos. The couple was charged together, but their cases split last year. Mr. Balwani, whose name is Sunny, will be on trial next year. Both pleaded not guilty.
The couple kept their relationship under wraps, but Ms. Holmes’s lawyers said in documents that they expected her to tell the jury that Mr. Balwani, who is 18 years older than Ms. Holmes, subjected her to emotional and physical abuse during their relationships. They also said they expect to call Mindy Mechanic, an expert witness who specializes in abusive relationships, to explain Ms Holmes’ accusations.
Mr Balwani’s role in the alleged fraud was discussed almost every day during the trial, but Ms Holmes’ testimony only mentioned him when necessary, such as to describe the chain of letters used in evidence.
At the start of the trial, Judge Edward Davila of the United States District Court for the Northern District of California, who is in charge of the case, instructed the jury not to speculate as to why Mr. Balwani was not present.
At the end of Tuesday’s trial, he warned the jury not to discuss the trial with the family over Thanksgiving weekend. “Do your best to pass the mashed potatoes and No talk to anyone, ”he said.
Miss Holmes’ testimony will resume next week.
Erin Wu made reporting.