Elizabeth Holmes Prosecutors Target ‘Lying and Cheating’ in Theranos Trial

(Bloomberg) -- Theranos Inc. founder Elizabeth Holmes isn't the “villain” prosecutors have depicted, her lawyer told a jury, while warning that the “reality” behind the most highly anticipated criminal trial in Silicon Valley history is “technical and boring.”

With the benefit of knowing that the blood-testing startup failed, prosecutors have previewed the fraud case against Holmes through a “dirty lens” by “pointing to select facts to portray the company unfavorably,” attorney Lance Wade said during opening arguments Wednesday in federal court in San Jose, California.

“When you view the world through a dirty lens, everything looks dirty,” Wade said. “When you consider all of the facts through a clean lens you will see a different picture. The reality of what happened at Theranos is far, far more complicated than what you've heard so far.” 

Wade was countering the argument presented earlier by prosecutor Bob Leach that the rise and fall of Theranos -- which was once valued at $9 billion before it collapsed  -- is a story about “lying and cheating.” 

Starting in 2009, Holmes made “grandiose claims” about how Theranos blood-testing machines would be on helicopters in various locations around the world and that the company would soon achieve revenue of hundreds of millions of dollars, Leach said in his opening argument.

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.  

The task for both sides Wednesday is to outline a narrative of events to the jury of seven men and five women. In a trial expected to go until December, a successful opening explains generally what the case is about, the key players and what jurors should be looking out for, said Amanda Kramer, a former prosecutor turned defense lawyer.

“The opening statement is a little bit like drawing the boxes that the story is going to be sketched out in, and labeling the scenes,” Kramer said.

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

Deep into his argument, Wade brought up former Theranos President Ramesh “Sunny” Balwani, who was Holmes's one-time romantic partner. Balwani faces the same fraud and conspiracy charges as Holmes, but he is set for a separate trial next year. He has pleaded not guilty.

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

Prosecutors have signaled they intend to call Erika Cheung as one of the first witnesses. Cheung was a whistleblower and critical source for former Wall Street Journal reporter John Carreyrou's series of stories in 2015 that exposed the failings at Theranos that ultimately led to its collapse. In an HBO documentary and a TED talk she has described in great detail the “red flags” she detected and raised at Theranos labs.   

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

©2021 Bloomberg L.P.