Prosecutors on Wednesday called Theranos founder and CEO Elizabeth Holmes a liar and cheater, while her lawyers argued that the company’s failure was not a crime.
“Due to lack of time and money, Elizabeth Holmes decided to lie,” said Robert Leach, a deputy US lawyer, while exposing the case that Theranos ran out of money in 2009 and knowingly misled investors in error to keep the company afloat.
Prosecutors said Holmes was not only the face of Theranos, the blood testing startup she founded, but also oversaw everything related to the business, from “dazzling” investors like Walgreens and Safeway with false claims.
“She owned it, she controlled it, the male stopped with her,” Leach said. “And as you’ll hear from insiders, she wasn’t an absent CEO, she was there all the time. She worried about details. She was in charge.”
Long-awaited opening arguments were heard during a five-hour hearing. Holmes arrived in court alongside her partner Billy Evans, mother Noel Holmes and Evans’ father William Evans. She wore a gray skirt suit with a cream-colored blouse and a light blue mask. It was a very different image from his signature black turtleneck in his heyday at Theranos.
The crowd outside was the largest since the start of the criminal trial last Tuesday. Among the onlookers were three blonde haired women who mimicked Holmes’ signature look wearing black with their hair pulled back in a bun. They were seated next to Holmes’ family in the courtroom.
Elizabeth Holmes, founder and former CEO of blood testing and life science company Theranos, arrives for the first day of her fraud trial in Federal Court in San Jose, California. September 8, 2021.
Nick Otto | AFP | Getty Images
Inside the courthouse before opening statements, Holmes was spotted kissing his mother. During the hearing, she sat between her lawyers and occasionally glanced at her family who were seated directly behind her.
Evans, with whom Holmes shares a newborn baby, was seen consoling Holmes’ mother during breaks. At least seven of Holmes’ friends and family were in the courtroom filled with mostly media members in San Jose, where Holmes is fighting a dozen charges of fraud and conspiracy.
Lance Wade, an attorney for Holmes, argued that she “made mistakes, but mistakes are not crimes”, adding that “a bankrupt company does not make a CEO a criminal. Ms. Holmes did not go to work every day with the intention of lying, cheating and stealing. “
“Mrs. Holmes walked away with nothing,” Wade told the jury of seven men and five women. “But failure is not a crime. Doing your best and failing is not a crime.”
Prosecutors said in 2013 that Theranos only had $ 13 million in cash and told jurors the company was spending between $ 1 million and $ 2 million per week. They alleged that Holmes and Balwani, an executive of Theranos and for a time her boyfriend, raised hundreds of millions of dollars from investors by promoting the company’s technology in press interviews.
“The accused’s fraudulent scheme made her a billionaire,” Leach said. “At one point, his actions in Theranos were worth billions. The ploy brought him fame, honor and worship.”
Holmes rose to fame almost a decade ago, covering Fortune and Forbes magazines, appearing on television news programs and even hailed as the next Steve Jobs, whom prosecutors said she “admired a lot” .
“She has been touted as one of the most powerful women in business. She has been sought after as one of the most famous CEOs in Silicon Valley and around the world,” Leach said. “But beneath the facade of Theranos’ success, there were brewing issues.”
Defense lawyers told jurors that Theranos employed hundreds of people in Silicon Valley.
“It was real. It was innovative,” Wade said, adding that the well-known list of investors knew the risks of investing in a start-up.
“To invest in Theranos you had to be a multimillionaire. In many cases, they were billionaires, among the richest and most sophisticated people in the world,” said Wade. “They were sophisticated and they knew what they were buying.”
Theranos has raised more than $ 700 million from investors including media mogul Rupert Murdoch, former Education Secretary Betsy DeVos and the Walton family of Walmart Fame. Some of the investors are expected to testify in the lawsuit.
Theranos founder Elizabeth Holmes appears at the Robert F. Peckham courthouse for the opening of her trial pleadings, in San Jose, California, United States on September 8, 2021 in this courtroom sketch hearing.
Vicki Behringer | Reuters
His defense also highlighted Holmes’ relationship with Balwani, laying the groundwork for blaming him.
“You will hear that trusting and relying on Mr Balwani as a senior advisor was one of his mistakes,” Wade said, telling jurors that the two met when Holmes was 18 and Balwani 37.
“Sometimes he would get angry, he would run wild. He didn’t always treat people with kindness,” Wade said of Balwani. “You will learn how he tested the limits of how he treated certain employees. You will have to wait for all the evidence, and then decide how to fairly view this relationship as a whole.”
CNBC confirmed that during the trial, Holmes and Evans stayed in a house on the grounds of the historic Green Gables Estate in Silicon Valley. The 74-acre property is currently on sale for $ 135 million. During a court break, CNBC asked Evans’ father William Evans if he was paying the couple’s rent for the house. Evans remained silent.
After five hours, Holmes left the courthouse, ignoring reporters’ questions while holding his partner’s hand.