At trial, Theranos founder Elizabeth Holmes accused of ‘lying and cheating’

San Jose: Prosecutors at the trial of Theranos founder Elizabeth Holmes on Wednesday accused the former Silicon Valley star of “lying and cheating” for money as they gave their opening statement detailing the federal fraud charges arising from her actions at the now-defunct blood-testing startup once valued at $US9 billion ($12.2 billion).

In one of the most closely watched trials of a US corporate executive in years, Holmes is accused of making false claims about the company, including that its devices designed to draw a drop of blood from a finger prick could run a range of tests more quickly and accurately than conventional laboratory means.

Elizabeth Holmes walks into the federal courthouse for her trial in San Jose, California on Wednesday.Credit:AP

“This is a case about fraud – about lying and cheating to get money,” Robert Leach, a member of the prosecution team, told jurors at the outset of his opening statement.

Holmes, 37, has pleaded not guilty to 10 counts of wire fraud and two counts of conspiracy.

Holmes sat in the courtroom in San Jose, California, at a table flanked by her attorneys, Kevin Downey and Lance Wade. She earlier arrived at the courtroom, wearing a white blouse and greyish-blue skirt suit, with a face mask amid the COVID-19 pandemic. The hallway, filled with observers chatting and waiting to get in, hushed as she passed.

The trial is being presided over by US District Judge Edward Davila, with a 12-member jury along with five alternate jurors. The defence is due to deliver its opening statement after the prosecution.

Former Theranos executive Ramesh “Sunny” Balwani, scheduled to be tried separately, has also pleaded not guilty.

Former Theranos COO Ramesh “Sunny’ Balwani, pictured in 2019, will be tried separately. Credit:Getty Images

Leach told jurors the evidence will show that Holmes agreed with Balwani to carry out a scheme to defraud Theranos investors and patients, executed through a number of false and misleading claims.

In 2009, after losing interest from Pfizer and other pharmaceutical companies, Holmes turned to fraud, Leach said.

“Out of time and out of money, Elizabeth Holmes decided to lie,” Leach said.

Holmes “dazzled” companies such as Walgreens and Safeway and other investors with false claims including suggesting that the company’s technology had been vetted by pharmaceutical companies, Leach said.

Prosecutors have said Holmes and Balwani defrauded investors between 2010 and 2015 and deceived patients when the company began making its tests commercially available, including via a partnership with the Walgreens drugstore chain.

Court filings unsealed last month showed that Holmes, who had been in a romantic relationship with Balwani, has alleged that he abused her emotionally and psychologically. Balwani has denied the allegations.

Before the opening statements, the judge instructed the jurors about the charges, telling them that Holmes is presumed innocent and asking them not to be swayed by “sympathy, prejudice” or “unconscious biases”.

Journalists and others hoping to attend the trial lined up outside the courthouse hours before the proceedings were set to begin, some arriving as early as 2am.

Holmes’ attorneys have said in court papers she is “highly likely” to take the witness stand and testify about how the relationship affected her mental state. Defendants rarely testify at their own trials because it opens them up to potentially risky cross-examination by prosecutors.

Legal experts expect her defence lawyers to raise questions about what Holmes knew and believed during the alleged scheme. To convict Holmes of fraud, prosecutors must prove her intent.

A Stanford University dropout who started Theranos in 2003 at age 19, Holmes once grabbed headlines with her vision of a small machine that could run blood tests in stores and homes.

The Wall Street Journal in 2015 reported that the Theranos devices were flawed and inaccurate, setting off a downward spiral for a company that had drawn investors including media mogul Rupert Murdoch and Oracle co-founder Larry Ellison.

The saga has become the subject of documentaries, podcasts and books. A TV miniseries and a Hollywood film based on Holmes’ story are in the works.

The defence and prosecution have identified more than 140 potential witnesses in the case, including investors and former Theranos employees.


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