Prosecutors at Elizabeth Holmes’ fraud trial hammered the disgraced founder of blood-testing startup Theranos in opening statements, telling the jury that she lied and cheated her way to billions of dollars as she duped investors and patients alike.
“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 start of his opening statement.
By 2009, six years after Holmes founded Theranos, major pharmaceutical companies were turning the company away and business was dwindling, Leach said as he painted a bleak picture.
“Out of time and out of money, Elizabeth Holmes decided to lie,” Leach told the jury.
Holmes managed to “dazzle” major companies like Walgreens and Safeway by lying about Theranos’ technology, including by suggesting that the company’s machines had been vetted by pharmaceutical companies, Leach said.
Leach told jurors that evidence that will be presented over the coming months will show that Holmes and her then-boyfriend and Theranos COO Ramesh “Sunny” Balwani carried out a scheme to defraud Theranos investors and patients.
Judge Edward John Davila is presiding over the case in the United States District Court for the Northern District of California.
Holmes, 37, arrived at the federal courthouse in San Jose shortly after 11 a.m. ET along with her partner William “Billy” Evans — heir to the Evans Hotel Group.
The courthouse was packed and spilled into an overflow room. Attendees reportedly included at least three women dressed in Holmes’ signature all-black look who described themselves as “fans.”
Despite the fraud allegations against her, Holmes has inspired a cult-like fandom who identify on social media as “Holmies.”
Prosecutors said their opening statement will take around 45 minutes while Holmes’ defense team said their statement will take about two hours.
Holmes was once among Silicon Valley’s most high-profile founders and briefly crowned the country’s youngest female self-made billionaire.
But in what’s expected to be among the most widely watched corporate fraud trials in years, prosecutors will seek to prove to a jury of seven men and five women that it was all a scam knowingly perpetrated by Holmes and Balwani.
Both Holmes and Balwani have pleaded not guilty to two counts of conspiracy to commit wire fraud and 10 counts of wire fraud.
They will be tried separately and court documents suggest Holmes will seek to convince jurors Balwani manipulated her and was the true mastermind of the fraud.
She could be sent to jail for 20 years if found guilty.
After being delayed several times due to pandemic restrictions and Holmes’ pregnancy, the trial is expected to last for several weeks, with hearings set for Tuesdays, Wednesdays and Fridays.
As she awaited the start of the trial, Holmes has been reportedly living with her partner Evans in a posh home on one of America’s most expensive estates.
Attorneys for the founder of Theranos — which was once valued north of $9 billion — have told the Northern California judge overseeing the case that Holmes herself is “highly likely” to take the stand and defend herself.
High-profile investors and board members of Theranos, including former Secretary of State Henry Kissinger, former Secretary of Defense James Mattis and Rupert Murdoch, the owner of New York Post parent company News Corp., may also be called on to testify, court documents suggest.
Jurors will also likely hear from Theranos patients, including one man who was misled to believe he had prostate cancer and two other patients who got false-positive HIV test results. However, the scope of their testimony must be limited to the fact that they were misled by the tests, and not the emotional impact.
Since founding Theranos in 2003, Holmes made lofty claims about the company’s machine, called “Edison,” that could quickly run dozens of tests for everything from diabetes to cancer with a pinprick of blood.
The convenience and speed of Edison devices, Holmes told potential investors, would disrupt the multibillion-dollar lab testing industry dominated by giants like Quest Diagnostics.
But the company never published peer-reviewed studies of its product and operated largely out of public view for years.
By 2010, the company nabbed a valuation of $1 billion — before Theranos even had a website.
Holmes continued to use glowing press coverage and her lofty claims to bring in funding from largely East Coast investors, foregoing the traditional Silicon Valley venture capitalists.
The company’s high-profile investors and board members bolstered hype in the company and continued to drive its valuation up — until a 2015 Wall Street Journal article alleged it was all a fraud.
The same day that article was published, Holmes appeared on CNBC’s “Mad Money” with Jim Cramer to rebuff the charges, claiming the paper was trying to stifle innovation.
“First they call you crazy, then they fight you, then you change the world,” she said on CNBC, paraphrasing a quote that’s often misattributed to Mahatma Gandhi.
Theranos gradually bled employees and was officially defunct by 2018. That same year, the Securities and Exchange Commission officially charged Holmes with “massive fraud,” accusing the founder of taking more than $700 million from investors while lying about her company’s technology.
And later in 2018, the US Department of Justice also charged Holmes and Balwani, accusing them of defrauding investors, medical professionals and customers.