Opening arguments in the highly anticipated trial of Elizabeth Holmes began on Wednesday, as jurors heard prosecutors argue the case before them was about "fraud, about lying and cheating to get money".
Ms Holmes, 37, arrived early at the San Jose courtroom on Wednesday and sat flanked by her lawyers. Media has flocked to the case, with more than 100 people waiting in line outside the courthouse hours before doors opened and nearly a dozen cameras stationed outside.
In a trial closely watched across the US, the former Theranos chief executive is facing accusations the blood testing company knowingly defrauded its clients and investors.
Ms Holmes founded the company after dropping out of Stanford University at age 19 and quickly became a star in the startup world, fashioning herself as the female Steve Jobs. She graced the cover of a number of magazines, and tests were rolled out in Walgreens stores.
Theranos dazzled Silicon Valley and was valued in the billions before its bold claims about revolutionary blood testing machines were revealed to be largely false. When the company fell from grace and folded in 2018, it became a cautionary tale about the Silicon Valley hype machine.
Federal prosecutors argued that Ms Holmes and her alleged co-conspirator, her former romantic partner and business associate Ramesh "Sunny" Balwani, defrauded investors and deceived patients when the company began making its tests commercially available.
‘Decided to lie’
"Out of time and out of money, Elizabeth Holmes decided to lie," the US attorney Robert Leach said.
Lionising media coverage of the company and its chief executive were crucial in polishing Theranos’s image, prosecutors alleged.
“Her deceit of reporters was an important way that she executed her fraud,” Mr Leach said.
As the trial gets under way, early court filings suggested lawyers for Ms Holmes would try to prove she was manipulated by an “abusive” relationship with Balwani into over-promising the capabilities of Theranos devices. Mr Balwani, who faces his own trial in 2022 for fraud, has strongly denied these claims.
On Wednesday, the defence did not explicitly make the argument that Ms Holmes was a victim of domestic abuse but alluded to it in opening statements. Speaking for Ms Holmes, lawyer Lance Wade said “trusting [Balwani] as her primary advisor was one of her mistakes”.
“There was another side of Holmes’ relationship with Balwani that the public never saw,” he added.
Prosecutors have sought to refute that argument, introducing into their evidence dozens of text messages between Mr Balwani and Ms Holmes suggesting a loving relationship.
“You are the breeze in desert [sic] for me – my water, and ocean,” she texted Mr Balwani in May 2015, according to a recent court filing.
Ms Holmes told a psychologist that Mr Balwani was controlling, “monitoring her calls, text messages, and emails; physical violence, such as throwing hard, sharp objects at her; restricting her sleep”, according to a February 2020 filing from Balwani’s lawyers, who said the allegations required separate trials.
Hardworking
Mr Wade painted a picture of Ms Holmes as a hardworking young woman who did not understand that the technology at Theranos could not live up to her lofty ideals.
He said she “worked herself to the bone” for 15 years trying to make lab testing cheaper and more accessible. “She poured her heart and soul into that effort,” he added.
“In the end, Theranos failed, and Ms Holmes walked away with nothing,” he said. “But failure is not a crime – trying your hardest and coming up short is not a crime.”
“By the time the trial is over, you will see the villain the government just represented is actually just a living, breathing human being who did her very best each and every day - and she is innocent,” he added.
He also argued that the investors who were allegedly defrauded by Ms Holmes were aware of the dangers of Silicon Valley investing and recognised that Theranos was a speculative investment.
“The investors in this case are incredibly sophisticated people who knew the risks of investing,” he said.
After both sides concluded their opening statements, the prosecution called its first witness: Denise Yam, a corporate controller at the company from 2006 to 2017, who detailed some financial figures from that time before proceedings came to a close for the day.
Delays
Ms Holmes's trial comes after months of delays caused first by the global pandemic and then Ms Holmes's own pregnancy. She had her first child with her partner, the hotel heir Billy Evans, on 5th August. Mr Evans was in attendance at the trial, sitting several rows behind Ms Holmes with the public.
Legal experts say beyond the alleged abuse defence, it appears Ms Holmes will argue she did not fully understand the complex science behind the devices and believed they worked.
In court filings, Ms Holmes’s lawyers have also argued there is a missing link between what Ms Holmes herself knew and what Theranos employees told doctors and regulators about the company’s technology.
The most serious charges of wire fraud require prosecutors to prove Holmes acted with intent to defraud. To convict Ms Holmes, the jury of 12 must unanimously find her guilty beyond a reasonable doubt of intending to defraud customers and investors.
Ms Holmes’s lawyers said last year that she was “highly likely” to take the stand in her own defence, a move that experts called risky. It could backfire if jurors do not view her as credible and give prosecutors latitude to bring in a broader range of evidence, they said.
The trial officially began last week with three days of jury selection, in which more than 200 people were called and dozens were questioned. The court struggled to find jurors who had not heard about the widely covered case, asking many prospective jurors if they could set aside what they think they know and judge Ms Holmes fairly.
Others were asked if they had experience with domestic violence that would affect their judgment, given the defence Ms Holmes is expected to use.
The trial is anticipated to last 15 weeks. – Guardian Service
