Elizabeth Holmes duped Theranos investors and patients, prosecution says at trial

Theranos founder concludes testimony after several emotional days on the witness stand

Former Theranos chief executive Elizabeth Holmes has pleaded not guilty to charges of defrauding investors and patients by failing to deliver on her company's promise to revolutionise health care. Reuters
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Theranos founder Elizabeth Holmes concluded giving evidence on Wednesday after several days of questioning by both her own lawyers and prosecutors.

Ms Holmes has pleaded not guilty to charges of defrauding investors and patients by failing to deliver on her promise to revolutionise health care with a technology able to detect a wide range of diseases and other problems by testing a few drops of blood.

She is charged with two counts of conspiracy to commit wire fraud and nine counts of wire fraud, with a maximum possible prison sentence of 20 years.

For days on the stand as the final witness at her own criminal trial, Ms Holmes deflected blame, expressed regret for mistakes and lamented that she had suffered years of abuse at the hands of her boyfriend, who was also her second-in-command at Theranos.

Theranos founder Elizabeth Holmes becomes emotional as she is asked to read romantic texts between herself and ex-boyfriend Ramesh 'Sunny' Balwani as she is cross examined by prosecutor Robert Leach during her trial. Reuters

Federal prosecutors depicted her as a conniving entrepreneur who duped investors, customers and patients for years, even though she knew Theranos was nearly bankrupt and its much-hyped blood-testing technology was a flop.

When her lawyer found a chance to change the subject, Ms Holmes returned to blaming others. She took particular aim at Theranos President Ramesh “Sunny” Balwani, her former romantic partner, for the rosy forecasts about the company’s financial prospects and its blood-testing technology, which are the basis of the fraud charges against the pair.

Mr Balwani, whom Ms Holmes accused of emotional and sexual abuse, has been banned from her trial. His lawyers have denied the allegations.

The key issue in the case remains whether Ms Holmes intended to mislead investors and patients while raising hundreds of millions of dollars for Theranos before media and regulatory scrutiny drove it into ruin by 2018.

In cross-examination, the government pressed her on two of its most damning allegations — that she falsely boasted Theranos machines were being used by the US military and forged pharmaceutical company reports. Prosecutor Bob Leach made a special point of distancing Mr Balwani from those actions.

Ms Holmes had admitted on November 30 that she had applied the logos of Pfizer and Schering-Plough Corp to the reports without their permission and said that she wished she had handled it “differently”.

The documents were intended to win over Walgreens as a partner, as well as investors, by suggesting the pharmaceutical companies endorsed the Theranos technology.

Mr Leach showed that the deception went deeper. He pointed to other portions of the reports Ms Holmes had edited but had failed to discuss in her earlier evidence, including a “conclusions” paragraph in which she had added that Theranos analysers give “more accurate and precise results” than competing “gold standard” methods.

“Is making the change to the conclusions paragraph also something that you wish you had done differently?” Mr Leach asked.

“I think this was accurately reflecting the data in the document,” Ms Holmes said. “But yes, I think that the way these reports were communicated, I absolutely wish it had been bolded that they were written by us.”

Ms Holmes told the jury she never profited from the Theranos shares she owned.

Agencies contributed to this report

Updated: December 09, 2021, 2:54 AM
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