Jury begins deliberations in fraud trial of Theranos CEO Elizabeth Holmes

After three months and dozens of witnesses, Elizabeth Holmes’s fate will be decided by 12 jurors.

Closing arguments concluded Friday in the Theranos founder’s criminal fraud trial in San Jose, California. After receiving instructions from the judge, the jury can begin deliberations. 

The jury must decide whether the 37-year-old entrepreneur is guilty of fraud and conspiracy charges filed in 2018, the same year that her blood-testing startup collapsed after previously reaching a valuation of $9 billion. Holmes is facing a maximum sentence of 20 years in prison if convicted.

Throughout the trial, prosecutors have portrayed Holmes as grossly exaggerating the capabilities and reliability of Theranos testing machines she pitched as revolutionary. Jurors also heard from several Theranos employees that the company’s lab took dangerous shortcuts to conceal shortcomings with the analyzers, and from patients who recounted receiving inaccurate test results that left them anxious about their health.

Holmes spent seven days on the witness stand testifying in her own defense. She alternated between deflecting blame, failing to remember certain events and accepting responsibility for mistakes, even while insisting she didn’t intend to deceive anyone. 

During closing arguments, Assistant U.S. Attorney Jeff Schenk told the jury on Thursday that when Theranos was running out of money — around 2013 and 2014 — Holmes “made the decision to defraud her investors and then to defraud patients.” 

“She chose fraud over business failure,” Schenk said.

If Holmes had been honest about Theranos and its prospects, she wouldn’t have told investors that the company’s technology was endorsed by big pharmaceutical companies, or that its blood-testing devices were being used by the military, Schenk said.

Holmes’s attorney Kevin Downey, in his closing arguments to the jury, said there’s a “fundamental disconnect” in the government’s claim that she intentionally deceived investors about what her startup’s analyzers could do.

Downey told the jury that the government’s fixation on the shortcomings of early versions of the devices misses the point that Holmes was courting investors who were looking to hold onto shares for five or 10 years by telling them what she aspired to accomplish when the machines were fully developed.

“She believed she was building a technology that would change the world,” Downey said, adding that she’d sacrificed her youth, friends and family relationships to make Theranos successful. 

The government’s version of events is that Holmes was aware of “a thousand crimes hidden under the rocks of this company,” he said. The truth is Holmes didn’t sell a single share of Theranos stock, even as her company collapsed, and hung on until through the very end, he said. “She stayed. Why? Because she believed in this technology,” Downey said. “She stayed the whole time. She went down with this ship”

He also showed the jury a graph showing that Theranos’s stock price rose from 92 cents in 2006 to $17 in 2014. He argued that investors weren’t concerned about the company’s technology. Instead, all they needed to know was that Walgreens had agreed to put the machines in its stores. It meant “a big national company” had evaluated the technology and decided to partner with Theranos, he said. 

“It’s a statement that this technology company is going to be able to make its technology available,” Downey said.

The defense attorney then took on one of the government’s most damning claims at the trial: That Holmes lied by telling investors Theranos technology was adopted and used by the U.S. military. He took specific aim at tapes the government played at trial in which Holmes is describing the military’s adoption to an investor and, separately, to a journalist. 

Downey noted that Theranos did indeed have multiple military contracts and told the jury, “her words track the contract language,” Downey said.

“They are being told, I think accurately, what the state of the business is,” Downey said. “This was not a fiction that Ms. Holmes was making up in her conversation” or an “exaggeration.”

Downey made no mention of one of the most jolting revelations of the trial, when Holmes testified she was raped as a student at Stanford University and suffered years of verbal and sexual abuse from her former boyfriend, former Theranos President Ramesh “Sunny” Balwani. By Holmes’s account, the abuse lasted throughout the decade-long relationship with Balwani and had a profound if incalculable influence on her life. 

Schenk told the jury that the rape claim had no bearing on the criminal case. “You do not need to decide whether that abuse happened in order to reach a verdict,” he said. “The case is about false statements made to investors and false statements made to patients.” 

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