Ex-Theranos CEO Elizabeth Holmes’s Fraud Trial Is Postponed for Virus

(Bloomberg) -- A federal judge postponed the criminal trial of former Theranos Inc. CEO Elizabeth Holmes because of the coronavirus pandemic, even as Holmes urges the court to throw out government evidence and a witness list she says are too massive to defend against.

At an online hearing Monday, U.S. District Judge Edward Davila in San Jose, California, put off the trial, which was scheduled to start in October, and gave no new date.

Holmes and her former boyfriend, ex-Theranos president Ramesh “Sunny” Balwani, are accused of falsely claiming that the company’s devices could perform myriad tests with a single drop of blood and of duping investors and defrauding doctors and patients who trusted the results. Theranos, which attracted the backing of high-profile investors and leading venture capital firms, was valued at $9 billion before unraveling over the alleged fraud.

At the hearing, Davila began hashing out what jurors will see and hear from more than 20 million documents and 150 witnesses. Lawyers for Holmes say prosecutors are relying on “vague themes” that fail to back up their fraud charges and that the evidence they propose to marshal lacks the detail required to give the former chief executive officer a fair chance to defend herself.

“Given the scope of this case, the volume of discovery, and the expansive, vague nature of the government’s notice, the risk of unfair surprise to the defense is immense,” they said in a filing in federal court in San Jose, California.

Davila was sympathetic to the argument. The judge refused to exclude evidence or witnesses but told prosecutors they’d have to turn over to Holmes more information about the government’s witness testimony.

“I think the court will ask for some additional specificity as to some of these categories,” he said.

Davila has been asked to sort through a broad range of information. The government says News Corp. chairman Rupert Murdoch may be called to testify about Theranos threatening journalists in response to critical coverage. Star lawyer David Boies, who represented Theranos, may be called to testify about the company’s “culture of secrecy” and nondisclosure agreements employees were forced to sign, according to court filings.

Holmes’s lawyers object to some doctors’ testimony about the accuracy and reliability of Theranos blood tests. Theranos board members Henry Kissinger, James Mattis and George Shultz, among others, may also testify about how Holmes misled company directors, according to the filing.

Prosecutors told Holmes’s lawyers in a filing that they “dispute any claim that you are surprised” by any of the potential evidence that they turned over. Since July 2018, they said, the government has sent 16 letters describing the material. The information was “disclosed out of an abundance of caution and to avoid surprise about the government’s intentions.”

The case is U.S. v. Holmes and Balwani, 18-cr-00258, U.S. District Court, Northern District of California (San Jose).

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