Elizabeth Holmes - Theranos Fraud Trial

[Howl]

Jury selection begins today (Tuesday, Aug 31, 2021) for Elizabeth Holmes' Theranos fraud trial.  Trial begins Sept. 8.  No TV, cameras or other recording media allowed in the courtroom, so reporters will be taking notes. 

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Elizabeth Holmes, the disgraced founder and former CEO of Theranos, is set to go to trial this week, more than three years after being indicted on multiple federal fraud and conspiracy charges over allegations she knowingly misrepresented the capabilities of her company's proprietary blood testing technology.

Unsealed filings point to a possible defense: Elizabeth was manipulated and emotionally abused by that dreadfully mean Svengali,  Sunny Bulwani, so how could she possibly be responsible for 10 years of epic fraud?    At trial, Elizabeth Holmes may claim Theranos partner and onetime beau abused her  If this doesn't seem to play well to the jury, they'll probably won't continue pursuing it. 

And the strategic OOPS! I'm pregnant! move so she begins the trial as the mother of a new born tells me that the evidence against her is absolutely overwhelming and they're desperate. 

My personal opinion: I think she's a full blown sociopath. 

Read:  Bad Blood: Secrets and Lies in a Silicon Valley Startup  – January 28, 2020, John Carryou

Watch on Prime: The Inventor: Out for Blood in Silicon Valley, 2019,  Directed by Alex Gibney

Edited August 31, 2021 by Coconut Flan

[Howl]

The trial is rolling right along.  Too bad there are no cameras in the courtroom. It would make for fascinating watching.

From ABC Channel 7 coverage at the trial's beginning this week. 

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 U.S. Attorney Robert Leach told the jury that Holmes engaged in a scheme of fraud and misleading claims to attract investors and to expand the availability of its testing device into Walgreen's and Safeway stores. Leach claimed the test results were inaccurate, and the jury will hear from patients who were misdiagnosed. A trail of emails will be shared that pointed out those issues with Holmes at the same time she was continuing to attract more money from investors.

On day two,  former lab associate Erika Cheung was called to the stand. She worked in R & D but quit after 6 months because lab tests were inaccurate and quality control tests were failing on a daily basis.  She saved her emails! 

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She later quit after a meeting with Sunny Balwani, Theranos' COO. Cheung described Balwani as irritated and angry over coming to him with her complaints. She said he told her that her job was to process patient blood tests.

This is key, I think:

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Cheung also testified that she shared her concerns with a fellow lab associate, Tyler Shultz, who had special access to Elizabeth Holmes because his grandfather, the late George Shultz, was on the Theranos board of directors.

Tyler Shultz (23),  the Theranos whistleblower who worked with the Wall Street Journal on a series of articles, started the process of bringing down Theranos. 

Tyler took his concern concerns to his grandfather, but had a very very difficult time convincing him that there were major problems. Shultz had a lot of confidence in Holmes.   This is covered in a 2019 article: Takeaways From a Theranos Whistleblower: Tyler Shultz

And BOOM! ex Sec Def Mattis, who was on the board with Shultz, testified for three hours yesterday about his experience with Holmes. He invested $85,000 of his own money in the company; however, his board compensation was $150,000 a year, so there's that.  Obviously he had no medical experience but "Mattis testified that Holmes wanted him on the board to help teach her about leadership and team building."

James Mattis, former defense chief, testifies at Elizabeth Holmes fraud trial  The U.S. government alleges that Holmes duped sophisticated investors, patients and customers regarding her startup, Theranos

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By the time he left Theranos in late 2016, Mattis testified he had lost faith in Holmes. His disillusionment began a year earlier after a series of explosive articles published in The Wall Street Journal exposed troubling flaws and inaccuracies in Theranos' blood-testing technology.

 

Edited September 23, 2021 by Howl

[clueliss]

Just started a podcast about her.  The Dropout.

[Howl]

30 minutes ago, clueliss said:

Just started a podcast about her.  The Dropout.

I'll check it out.  I'm going to find the documentary on Prime (The Inventor: Out for Blood) and maybe binge watch that with Lula Rich. 

[cacophony_grey]

The Droput was a really good podcast. I followed this case pretty carefully for awhile when I discovered the podcast but had forgotten the trial was this month. Thanks @Howl for the reminder!

[Howl]

Odds and ends. 

Elizabeth Holmes arrives at the courthouse with either her mother, her spouse Billy Evans or both.  Whatever combination it is, they arrive at the court house holding  hands. 

During jury selection, a overly friendly older man dressed in casual clothes and a baseball cap chatted up reporters  to the extent that they really started to wonder who the heck the guy was.  When he turned up in an expensive tailored suit on Day 1 of the actual trial, they discovered it was Bill Evans,  the father of E. Holmes' spouse.  Billy's father, Bill Evans, is a hotel magnate; young Billy is the heir apparent to the hotel franchise. 

Elizabeth Holmes has groupies -- a group of young blond women who attend the trial. They wear their hair like she did in her heyday and dress in black with turtlenecks, like E. Holmes did before she became the defendant in an epic fraud trial. They all think she's the most amazing woman, a "queen".  

There are no cameras allowed in the courtroom, so there's a courtroom artist, who, frankly, sucks at depicting actual faces. 

Testimony has been damning so far and the trial is only a few days in.  Not sure who will testify in her defense.  It will have to be people who will testify she ran the company, was firmly in control of the company, but didn't know squat about the massive fraud underlying every aspect of her company's operations.  

ETA:  Holmes' lawyers are trying to block testimony about her lavish spending habits -- private jets, jewelry,  lavish everything, when, at times, her company was unable to make full payroll.  According to the accountant (CFO?) at Theranos, there was no budget for Holmes' expenses, she just...spent money. 

The judge is allowing testimony, but limiting it. For example, the brands that she bought can't be detailed, although her spending on it can be. 

Edited September 26, 2021 by Howl

[Mela99]

Husband and I just finished the documentary. This is really freaking interesting.

[Howl]

15 hours ago, Mela99 said:

Husband and I just finished the documentary. This is really freaking interesting.

Isn't it?  Epic fraud of the century.  One thing I find fascinating is her voice.  She cultivated an unusually deep voice for a woman, thinking it gave her more gravitas.  Her normal speaking voice is not in a low register. I wonder which voice she'll use if she takes the stand. 

More people are testifying she was in control as the go-to person.  

I wonder at what point her lawyers will play the mother-of-an-infant card.  She had a baby in July, I think.  I'm curious what strategy her lawyers will use as a defense, because no one currently testifying thinks she was in the dark about anything. 

[ManyGoats]

On 10/9/2021 at 10:27 AM, Howl said:

I wonder at what point her lawyers will play the mother-of-an-infant card.

This sounds harsh but I hope she doesn't get leniency on the basis of that. "I have a child so I shouldn't have to pay for my crime." No. No, that's not right. I suppose it's possible she didn't plan the pregnancy but it's also possible she did plan it for the mother-of-an-infant card.

[Howl]

Elizabeth Holmes has been on the stand for one day, but her hours of testimony just covered her early years, pre Theranos.  I think she'll be testifying for two more days next week.  I'm sure her lawyers will work in somehow that she is the mother of a five-month-old infant -- the baby was born in July.

Lots of speculation on whether Holmes' lawyers will play the "Sunny Balwani was a svengali who emotionally abused and manipulated poor little naive Elizabeth. It's all his fault.   Poor little naive Elizabeth? Totally in the dark on Edison blood testing fraud" card.  Not sure what else they've got, though.

Edited November 26, 2021 by Howl

[SassyPants]

She’s a psychopath 

[Howl]

Multiple days on the stand.   Yesterday was the defense's turn. They did get a bit into the Sunny Balwani angle.  She claimed on the stand that she'd been raped at Stanford and that was the reason she'd dropped out...and that Sunny B. helped her deal with the aftermath of the rape. 

Today she's going to get relentlessly grilled by the prosecution, I'm hoping they fillet her first.  She's smart, though, and could be a wily opponent.  Plus, there have been months of prep by her lawyers for every conceivable question; she's not likely to be caught unawares by anything. 

[Howl]

Early on, so many jurors quit for various reasons that there was a possibility that the trial would run out of alternates.  However, the trial is wrapping up; closing arguments tomorrow.   

Elizabeth Holmes just spent 7 days on the stand. 

I'm at 50/50 on a conviction. 

Although she's 37, she still looks like the blond, attractive young woman who started the company. I can easily see at least some people on the jury who just can't bring themselves to sentence her to prison because she doesn't look like a criminal.  On the other hand, there is a LOT of evidence that she knew what was going on and deliberately (and obviously) misled investors about the fact that they were actually running blood tests on 3rd party machines and not Edison. 

I though this was one of the most damning details:

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Prosecutors have repeatedly suggested Holmes doctored documents while she was running Theranos. In her testimony, Holmes owned up to -- but reframed -- some of those allegations.

On her second day of direct examination, she said she placed the logos of two pharmaceutical companies on blood-testing validation reports. She acknowledged she did this without the drugmakers’ permission and before she sent them to Walgreens...Leach also pointed to a third altered pharma report, which had been originally created by the drugmaker, GlaxoSmithKline, after the company evaluated Theranos' technology. Like the other reports, the changes Holmes said she made to this document included the company’s logo.

 

 

[SassyPants]

I think she should rot in jail, but I don’t think she’ll be convicted. Rich, nice looking, new mother…plus is the woman who wanted to be dismissed d/t the fact that she’d feel guilty if she convicted EH while she, herself, still had her freedom, still on the jury? Um, are you guilty of a crime? If not, it’s an apples to elephants comparison.      
 

Also so many ESL people ( I think 2) selected for the jury. Why do that? If someone doesn’t have a decent command of the language, they can’t legitimately serve on a jury, can they?

Edited December 9, 2021 by SassyPants

[ManyGoats]

1 hour ago, SassyPants said:

…plus is the woman who wanted to be dismissed d/t the fact that she’d feel guilty if she convicted EH while she, herself, still had her freedom, still on the jury?

No, fortunately, she was dismissed.

1 hour ago, SassyPants said:

Rich, nice looking, new mother…

I'm worried about that, too. While I fully recognize the need a child has for its mother, I don't think anyone should get away with a crime because they are a parent.

Here's a quote from an interesting opinion piece by Holman W. Jenkins, Jr. from the Wall Street Journal yesterday, referring to her and her defense team.

They and she perhaps can’t believe the world and the law really want to see a pretty, young, blond female as the primary villain when Mr. Balwani, a middle-aged immigrant from Pakistan, is available for the role. 

Let's hope the jury doesn't fall for this.

[Howl]

10 hours ago, ManyGoats said:

They and she perhaps can’t believe the world and the law really want to see a pretty, young, blond female as the primary villain when Mr. Balwani, a middle-aged immigrant from Pakistan, is available for the role. 

Very powerful sentence.  E. Holmes is  37 now, not that young anymore, but she's a very fresh faced 37. I really really hope that the jury does not fall for the "ingénue manipulated by swarthy older man" trope. In her trademark black turtleneck, she was literally the face of the company. 

Just came across this summary from Day 6 of her testimony: Elizabeth Holmes admits she gave journalist incorrect info for Theranos cover story.   Holmes admits that she gave journalist Roger Parloff inaccurate information for his 2014 Fortune article.

Inaccurate information is another way of saying she lied.  This 2014 Fortune magazine cover story, “This CEO Is Out For Blood,” was a huge deal at the time.  

This snip demonstrates how she uses selective amnesia to give her distance from clear evidence that she lied to and manipulated investors and never takes responsibility for what she did. 

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[Prosecutor] Leach showed jurors part of Parloff’s feature story on Holmes in which she appears in her trademark black turtleneck: “It currently offers more than 200 — and is ramping up to offer more than 1,000 — of the most commonly ordered blood diagnostic tests, all without the need for a syringe.”

“You agree with me that this was an incorrect statement?” Leach asked.

“I believe that now,” Holmes said.

Prosecutors allege Holmes used the Fortune article to entice investors, including it in presentations and binders.

“You don’t have a memory of forwarding the Parloff article to investors or potential investors?” Leach asked.

“I don’t,” Holmes said.

“Let’s refresh your memory,” Leach said, showing the jury an email Holmes sent to Theranos shareholders on June 12, 2014, which linked to the Fortune story.

“I think I could have handled those communications differently,” Holmes told the jury.

Although mentored by her lover Bulwani, E. Holmes is a brilliant, stone-cold sociopath who knew exactly what she was doing then and and is lying her little stone cold heart out now. 

 

Edited December 9, 2021 by Howl

[ManyGoats]

4 hours ago, Howl said:

Although mentored by her lover Bulwani, E. Holmes is a brilliant, stone-cold sociopath who knew exactly what she was doing then and and is lying her little stone cold heart out now. 

Without a doubt!

[Howl]

Thursday, Dec. 9:  Defense has rested its case.  Closing arguments are scheduled for Dec. 16,  then it all goes to the jury. 

[Howl]

The Holmes trial has gone to the jury.  NYT has an article discussing the way that Holmes changed her clothes and appearance to be innocent, neutral -- the opposite of power dressing.   Not CEO, more secretarial.  She brought a diaper bag to court each day, even though the baby was never there. 

The jury has to decide whether she committed fraud or not.   Here is how the NYT explained it in late November: 

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In other words, they are accused of lying about Theranos’s business and technology to get money. The lies outlined in the indictment include claims Theranos made about its relationship with the military and the status of its partnership with Walgreens. Prosecutors also say that Theranos faked demonstrations of its technology and falsified validation reports from pharmaceutical companies and the financial health of its business.

The Harvard Gazette is clearer about the magnitude of the fraud in this article: Will fraud jury believe Elizabeth Holmes?

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The Department of Justice has accused Holmes of defrauding patients, physicians, and investors of more than $700 million by promoting a revolutionary blood-testing device that she knew didn’t work. 

At the end of the The Harvard Gazette article, there's a Q & A with Eugene Soltes, (McLean Family Professor of Business Administration at Harvard Business School), who studies corporate integrity and risk management and wrote the 2016 book, “Why They Do It: Inside the Mind of a White-Collar Criminal.”   Definitely worth a read; he discusses how the jury might perceive Elizabeth Holmes, especially after she took the stand for multiple days. 

There have also been fines paid and settlements but I don't know if the prosecution was able to introduce this at trial. Again, from the NYT: 

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Theranos also paid a $500,000 fine to settle civil securities fraud charges with the Securities and Exchange Commission in 2018. It also settled multiple lawsuits with investors and partners before dissolving that year.

I'll assume the jury isn't going to be sorting out  guilt or innocence over Christmas weekend.  Business Insider thinks that she'll walk.

TickTock

Edited December 18, 2021 by Howl

[SassyPants]

6 hours ago, Howl said:

The Holmes trial has gone to the jury.  NYT has an article discussing the way that Holmes changed her clothes and appearance to be innocent, neutral -- the opposite of power dressing.   Not CEO, more secretarial.  She brought a diaper bag to court each day, even though the baby was never there. 

The jury has to decide whether she committed fraud or not.   Here is how the NYT explained it in late November: 

The Harvard Gazette is clearer about the magnitude of the fraud in this article: Will fraud jury believe Elizabeth Holmes?

At the end of the The Harvard Gazette article, there's a Q & A with Eugene Soltes, (McLean Family Professor of Business Administration at Harvard Business School), who studies corporate integrity and risk management and wrote the 2016 book, “Why They Do It: Inside the Mind of a White-Collar Criminal.”   Definitely worth a read; he discusses how the jury might perceive Elizabeth Holmes, especially after she took the stand for multiple days. 

There have also been fines paid and settlements but I don't know if the prosecution was able to introduce this at trial. Again, from the NYT: 

I'll assume the jury isn't going to be sorting out  guilt or innocence over Christmas weekend.  Business Insider thinks that she'll walk.

TickTock

I listened to a podcast, saw the documentary and read the book. I think she’s guilty AF and a psychopath, but I agree with BI. I think she’ll walk.

[Howl]

15 hours ago, SassyPants said:

I think she’s guilty AF and a psychopath, but I agree with BI. I think she’ll walk.

There are nine charges to sort out.  Hoping jurors who think she's guilty on all counts will concede a little to jurors who want to let her walk (because blond! young! MOM!), and everyone will reach a compromise finding her guilty on some charges but not everything. 

E. Holmes needs to spend some years in prison.  She'll always be a sociopath, but getting her a nice stay in the gray-bar hotel will be a comfort. 

This is a Federal case; if convicted, will she be allowed to serve time in a Club Fed prison rather than a prison-y prison? 

If convicted, will she be allowed to roam free while awaiting sentencing? 

[Howl]

One more thing of note: this trial went so deep into the alternate juror pool that there was concern there wouldn't be enough jurors to complete the trial.  Hope nobody comes down with COVID over the weekend!

[Howl]

This is kind of weird.  The Holmes jury asked the judge to allow them to take home the jury instructions on Tuesday.  Oddly, if I'm understanding this correctly, they are taking off today (Wednesday, Dec. 22) and will begin deliberating again tomorrow (Thursday).  

Elizabeth Holmes trail: Judge refuses jury request to take instructions home

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The judge presiding at Elizabeth Holmes’s fraud trial declined a request by jurors on Tuesday to take their instructions home with them, before they have rendered a verdict.

 

[Howl]

There were 39 pages of jury instructions.  Although the judge didn't allow it, requesting to take that home seems reasonable. 

If the jury doesn't reach a verdict today, they are OK to continue deliberating next week.  The judge will make a decision.  S/he might decide to reconvene on Jan 3. 

I would take this is a very bad, not good sign for Holmes: 

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Jurors in the fraud trial of former Theranos CEO Elizabeth Holmes asked Thursday to replay audio recordings of Holmes boasting to investors about Theranos' progress toward developing a potentially revolutionary blood-testing technology.

In those recordings from December 2013, which were played earlier in the trial, Holmes talked up partnerships with established drug companies that didn’t pan out and contracts that never materialized because of problems with Theranos' technology.

Glad the jury is taking its time to go through these things.  Would seem to point to a serious and conscientious jury. 

Edited December 23, 2021 by Howl

[Howl]

Jury left early-ish by the back way; will return on Monday to continue deliberations.