Holmes Testimony in Theranos Fraud Trial Nears End
Holmes Testimony in Theranos Fraud Trial Nears End
(Bloomberg) -- Elizabeth Holmes wrapped up her testimony Wednesday in a California federal court, where the Theranos Inc. founder has been on trial since September for alleged fraud after the collapse of her once high-flying startup.
Over more than six days testifying in her own defense, Holmes, 37, has deflected blame, offered regrets and tearfully described a decade of alleged abuse by her former boyfriend, Ramesh “Sunny” Balwani, who was her second-in-command at Theranos. Holmes also said she’d been raped while a student at Stanford.
Prosecutors spent 10 weeks laying out the case against her, claiming the startup she founded was built on lie after lie. Theranos, which peaked at a valuation of $9 billion, collapsed in 2018. Holmes is accused of deceiving investors, board members and companies about the capabilities of Theranos blood-testing devices. She faces as long as 20 years in prison if convicted.
Key Developments:
Holmes Wraps Up (1:45 P.M. NY)
Elizabeth Holmes finished her testimony on a high note, telling the jury her vision with Theranos was to change health care and that she never attempted to mislead investors who poured hundreds of millions of dollars into the startup before it collapsed in 2018.
Holmes testified that when she asked others to back her company, the understanding was that was she was working on a five- to 10-year horizon and “they were interested in what kind of change we could make.”
“I talked about what we created, what it could do, what was possible,” she said, summing up the aspirations she conveyed for the startup.
In final questioning from her lawyer, Holmes told the jury she never cashed out on the several hundred million Theranos shares she owned.
In a question from prosecutor Bob Leach, Holmes was asked if investors are “entitled to truthful answers about Theranos’s capabilities?”
“Yes, of course,” she replied.
Balwani Breakup ‘Process’ (1:28 P.M. NY)
Holmes said the 2015 breakup of her romantic relationship with Balwani didn’t end their ties over Theranos.
“It was a process,” she said under questioning from her lawyer, adding that texts between them expressing affection reflected her “trying to be supportive” of the person who had been her most important advisor at Theranos.
After the end of their romantic relationship -- she moved out of the home they shared while he was traveling in Asia -- “he showed up at the church I would go to at night and the dish, where I’d run at Stanford.”
Management Tension (12:30 P.M. NY)
Holmes depicted Theranos President Ramesh “Sunny” Balwani as frequently angry and prone to seizing control of various aspects of company operations when she was questioned Wednesday by her own lawyer.
While prosecutors have tried to cast doubt on the notion that Balwani was hiding his actions, Holmes sought to show that he was often ornery and critical of her performance as chief executive of the blood-testing startup.
Balwani would “blow off steam or vent through texts,” Holmes said, adding that “I was trying to be supportive.”
Sometimes he would personally take over whatever area he was upset about, including the company laboratory, she said.
Testimony Resumes (12:09 P.M. NY)
Elizabeth Holmes has resumed her testimony. She is expected to finish a final round of questioning by her lawyer and a prosecutor on Wednesday, which would bring her a step closer to finishing her defense and the start of closing arguments in the case.
The only mystery remaining is whether Holmes will call a mental-health expert to the witness stand to bolster her claims that Balwani manipulated her through sexual and emotional abuse. Balwani is set for a separate trial next year over the same fraud charges Holmes faces and he has denied the abuse allegations.
Court filings indicate that the psychologist Holmes has lined up would testify that “intimate partner abuse” by Balwani over a decade-long relationship led her to trust and defer too much to him. In turn, the government might call its own witness to argue against that theory.
“If there is evidence that the abusive relationship caused her to view facts and make decisions through a lens that Sunny created, that gives the defense a clear avenue to cast doubt on whether Elizabeth had the requisite intent to commit the crimes,” said Mark MacDougall, a former federal prosecutor turned criminal defense lawyer.
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