Theranos founder Elizabeth Holmes goes to trial. What to expect

After resignations, an HBO special, a book, a pandemic, and a pregnancy, Theranos founder and former CEO Elizabeth Holmes is about to stand trial on a variety of federal charges.

Prosecutors charge that Holmes and her No. 2 two executive, Ramesh “Sunny” Balwani, “not only defrauded investors, but also consumers who trusted and relied upon their allegedly revolutionary blood testing technology.”

The Silicon Valley blood testing company raised more than $700 million from investors as it came to prominence. It shut down in September 2018 with less than $5 million in its coffers and substantially more debt.

Founded in 2003 by Holmes, then a 19-year-old Stanford University dropout, Theranos looked as if it was poised to shake up the lab industry by making blood tests easier and less expensive. At one point, the company was valued at $9 billion and Holmes was touted as a Steve Jobs–like figure.

Questions were eventually raised about the accuracy of the company’s tests, though, followed by questions about whether Theranos was actually conducting tests via conventional, third-party analyzer machines.

The Securities and Exchange Commission charged Holmes with fraud in 2018. She settled the charge and then resigned. Three months later came the criminal indictments.

Now, finally, Holmes is about to stand trial. And it’s bound to be one of the most-watched business cases in years. Curious about what to expect? We’ve got answers.

When does the Theranos trial start?

After many, many delays, jury selection will begin on Aug. 31 in San Jose.

The trial is currently scheduled to begin on Sept. 7 at 9:00 a.m. PT.

What are prosecutors alleging?

Holmes and Balwani are facing charges of two counts of conspiracy to commit wire fraud and 10 counts of wire fraud. The indictment, from the U.S. attorney’s office in the Northern District of California, alleges the pair defrauded investors and patients over a five-year period, claiming that Theranos’s analyzer could perform a wide range of tests from a finger-prick amount of blood at faster speeds than the competition. It couldn’t. And prosecutors say the two defendants knew about the reliability and accuracy problems.

Who’s on trial here?

This trial is focused on company founder Holmes, who faces nine counts of wire fraud and two counts of conspiracy to commit wire fraud. A separate trial for Balwani, her former boyfriend and a former Theranos executive, is scheduled to take place next year.

Both are facing up to 20 years in prison as well as financial penalties.

What is Elizabeth Holmes’ defense strategy?

In documents released days prior to the beginning of jury selection, Holmes’ attorneys said she plans to defend herself by arguing that Balwani emotionally and sexually abused her, which impaired her state of mind. Holmes will reportedly testify that Balwani controlled how she ate, how she dressed and with whom she spoke, as well as monitoring her calls, texts and emails. Holmes’ lawyers say the alleged abuse lasted for nearly a decade.

Balwani’s legal team called the allegations “salacious and inflammatory.”

How long will the trial last?

The court has cleared time through mid-December. Testimony will be heard on Tuesdays, Wednesdays, and Fridays.

Why is the Theranos trial just taking place now?

Theranos dissolved in 2018 following a number of civil and criminal probes. At the time, Holmes agreed to pay a $500,000 fine to the SEC, neither admitting nor denying wrongdoing to civil securities-fraud charges.

The pandemic forced several delays for this trial, then things got pushed back even further when Holmes informed the court she was pregnant. She gave birth in July.

Who will be called as witnesses in the Theranos trial?

The witness list could change throughout the course of the trial, but expected to take the stand are ex-Theranos directors Henry Kissinger and Jim Mattis, ex-Theranos lawyer David Boies, and investors in the company Riley Bechtel (Bechtel Corp. chairman) and Rupert Murdoch (chairman of Fox Corp.).

Former patients of the company are also expected to testify after the judge blocked a move by Holmes’s attorney to prevent that.

Holmes’ attorneys, in a filing released Aug. 28, said she is likely to take the stand and testify during the trial.

Can I watch the Theranos trial online?

It’s not likely. Public access to the trial will be in-person only (including an overflow room at the courthouse). There will be no live remote public access via Zoom or telephone. Any updates can be found on the court’s web page for the trial.