Elizabeth Holmes Abuse Defense Remains Veiled at Start of Trial

(Bloomberg) -- The big mysteries hanging over Theranos Inc. founder Elizabeth Holmes's criminal trial -- whether she'll claim she was abused by her former romantic partner and whether she will testify in her own defense -- remain unresolved even after her lawyers presented opening arguments to a jury.

Holmes's lawyer, Lance Wade, twice came close Wednesday to placing the blame for her alleged fraud on her ex-boyfriend and former Theranos president Ramesh “Sunny” Balwani, as he wove a narrative of her life.

“You'll learn that certain aspects of that relationship had a big impact on Ms. Holmes,” Wade told jurors. “You'll learn that trusting and relying on Mr. Balwani as her primary adviser was one of her mistakes.”

Holmes has marshalled considerable resources and court time testing an argument that she couldn't have formed the intent to defraud patients and investors in her blood-testing startup because she was manipulated and traumatized by Balwani. 

While not uncommon in domestic violence cases, the argument is unprecedented in a white-collar criminal case -- and some law professors have said it may be hard for Holmes to pull it off given that she was such a dynamic, highly functional advocate for her company.

Read More: Holmes Wrongly Depicted as Theranos ‘Villain,' Lawyer Tells Jury

Though Wade didn't directly point to the types of abuse Holmes has previously raised in pretrial arguments and hearings, that doesn't mean the defense won't resurface when it comes time for her lawyers to make her case, said Amanda Kramer, a former prosecutor turned criminal defense lawyer at Covington & Burling in New York.

“Holmes' attorney never uttered the word abuse, but he made a number of references that effectively laid a solid foundation for the abuse allegations,” Kramer said. “If the jurors later hear more on this subject, they won't feel blindsided.”

Balwani denies Holmes's allegations and faces a separate fraud trial next year.

Holmes, 37, the company's former chief executive officer once dubbed the world's youngest female self-made billionaire, is charged with a dozen counts of fraud and conspiracy that could send her to prison for as long as 20 years if she's convicted. 

She's accused of lying to patients, doctors and investors about the accuracy and capabilities of Theranos blood-testing machines. Media exposes and regulatory investigations led to the collapse of Theranos, which was dissolved in 2018.  

Wade didn't make clear whether Holmes herself will take the stand -- which may serve to keep the government guessing. If she does, prosecutors will be able to question her, which carries big risks. Still, as a public figure with a gift for persuasion, Holmes might be predisposed to try to win over jurors. 

As Wade asserted his client's innocence Wednesday, he repeatedly referenced Balwani. As Holmes sat next to her lawyers, Wade explained that she now lives in Silicon Valley with her partner, Billy Evans, and their baby. But in the summer of 2002, when she was 18, she met Balwani, then 37, Wade said. Prosecutors have said Holmes and Balwani were romantically involved for years before Theranos was formed and while they worked together there.

Read More: Elizabeth Holmes Transforming From CEO to Victim for Jurors

When Theranos was struggling and needed business expertise, Holmes turned to Balwani, Wade said. He was “relentless,” the lawyer told jurors, and his drive helped push the company forward. Wade also touched on another way in which Holmes might deflect the government's allegations: by explaining that it was Balwani who was responsible for financial modeling and the clinical laboratory at Theranos.

At the same time as Balwani was “hard-charging” and demanded devotion and long hours from everyone including Holmes, Wade said, Balwani sometimes “did not take well to people who disagreed with him.” He had a temper, was prone to lashing out, and tested the limits of employees, prompting defections “often times on bad terms,” Wade said, before returning to the theme of the romantic relationship with Holmes.

“There was a side of that relationship that many people saw and may talk about during this case,” Wade said, adding that there was another side that “most people never saw.”

“You'll have to wait for all of the evidence and then decide how to fairly view that relationship,” he said.

The case is U.S. v. Holmes, 18-cr-00258, U.S. District Court, Northern District of California (San Jose).

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