Was Theranos a fraud or sincere failure? Attorneys lay out instances in opening of Elizabeth Holmes fraud trial

Elizabeth Holmes Trial: Lawyers issue opening statements

Lawyers issued opening statements on Wednesday in the trial against former Theranos boss Elizabeth Holmes. She faces multiple charges of alleged fraud against investors and patients in her now-defunct blood testing company.

Elizabeth Holmes has either cheated investors out of hundreds of millions of dollars because she knew her biotech startup Theranos wasn’t doing as she claimed, or she was a passionate CEO trying to disrupt the blood testing industry, but on a number of Failure failed challenging corporate landscape in Silicon Valley.

These were the competing narratives outlined by prosecutors and Holmes’ defense attorneys during Wednesday’s opening statements in a fraud trial that has gained international attention and has been the subject of books, documentaries and podcasts.

The overcrowded crowd lined up in federal court in San Jose, hoping for a coveted spot to watch the saga unfold almost three years after the Feds hit Holmes with ten cases of fraud and two cases of conspiracy.

They accused her of kidding investors and patients who used their blood testing technology, which claimed to run hundreds of complex tests with just a few drops of blood.

Elizabeth Holmes, the former CEO of Theranos, is seen on the left in this sketch of the opening arguments in her federal trial in San Jose. Image by Vicki Behringer.

U.S. Assistant Attorney Robert Leach began with a scathing picture of the 37-year-old defendant, claiming she misled investors from 2009 when she was short of cash.

“She had no time and no money,” he said.

Leach added that Holmes skewed her company’s performance to be a funder, claiming her miniature blood analyzer is used by the military and backed by pharmaceutical companies.

She landed contracts with Walgreens and Safeway and started testing even though she could only run 12 tests on the blood analyzer that was at the heart of her business.

While Holmes was told by scientists in her lab that the product was not ready for the market, she ran tests using traditional methods and used non-proprietary testing equipment that often came back with erroneous results, Leach said.

At the same time Theranos began to self-destruct from within. Whistleblowers contacted the Wall Street Journal in 2015 and exposed the issues within the company, including disputes with lab directors and Theranos President “Sunny” Blawani, Holmes’ number 2 and friend at the time.

“This is about fraud, where you lie and cheat to get money,” Leach said. “It’s a crime on Main Street and it’s a crime in Silicon Valley.”

The government said it would call former Theranos lab directors, investors, patients and doctors to testify, some who warned Homes about the poor performance of their technology.

Attorney’s for Holmes challenged any government claim, telling the story of an ambitious entrepreneur who faced challenges like so many others but ended up failing and getting away with nothing.

Follow below for live updates on the trial of Holmes by KTVU’s Evan Sernoffsky, reporting from the San Jose Federal Court. (App users Click here to follow the blog.

“Elizabeth Holmes didn’t go to work every day to lie, cheat and steal,” said attorney Lance Wade. “Elizabeth Holmes worked her way to the bone for 15 years trying to make blood tests cheaper and more accessible. She put her heart and soul into this effort and in the end it failed.”

Wade pointed out Holmes’ family on the front row of the gallery, including their baby that she gave birth to after being indicted by federal authorities in 2018.

At the center of their defense is the claim that Holmes failed in her life goal instead of cheating on investors.

“Failure is not a crime,” said Wade. “It is not a crime to do your best and come up short.”

In addition, the Holmes defense team emphasized that their investors – some who have invested more than $ 100 million – are sophisticated and understand the risks of investing in a startup that does not need to be approved by the FDA.

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Wade simultaneously admitted that there were problems with Theranos’ clinical laboratory and procedures were not followed, but Holmes was not closely associated with the laboratory and trusted doctors and Balwani to get the job done.

Sure, there have been inaccurate test results, but these are being generated every day in laboratories across the country, Wade said.

“It’s a mistake,” he said. “No cheating.”

Holmes lawyers suggested that she could try to blame Balwani on allegations of abuse during the period of alleged fraud. But during the opening statements, Wade simply said, “There was a side of the relationship that people never saw.”

Holmes attorneys are likely to wait to see how the case develops before making allegations of abuse, legal experts said.

If that happens, Holmes will likely have to take the stand in their own defense.

“Will she have to testify? Michael Cardoza, KTVU Legal Analyst.” Good litigators don’t make that decision until the entire case is closed. ”

Evan Sernoffsky is an investigative reporter for KTVU. Email Evan at and follow him on Twitter @EvanSernoffsky

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