Prosecutors and defence lawyers sketched duelling portraits of fallen Silicon Valley star Elizabeth Holmes as her trial got under way Wednesday, alternatively describing her as a greedy villain who faked her way to the top and as a passionate underdog who spent years trying to shake up the health care industry.
The two sides are now expected to spend the next three months trying to sway a 12-person jury impanelled to hearing the evidence in a case airing allegations that Ms. Holmes used her startup, Theranos, as a scheme to realize her dreams of becoming rich and as famous as one of her role models, late Apple co-founder Steve Jobs.
Once hailed as a billionaire on paper, Ms. Holmes is now facing a sentence of up to 20 years if convicted of the felony charges.
Ms. Holmes’s rise and fall has already been the subject of documentaries, books and podcasts, feeding the fervour that has built up around a trial that has been delayed twice since she was indicted nearly three years ago. With roughly only 75 spots available for the media and general public to observe the proceedings, people began to line up outside the San Jose, Calif., courthouse before 5 a.m. Wednesday.
After the jury was seated and U.S. District Judge Edward Davila gave his preliminary instructions, federal prosecutor Robert Leach wasted little time vilifying Ms. Holmes.
He cast Ms. Holmes in a dark light, depicting her as a conniving entrepreneur who duped investors, customers and patients for years, even though she knew her startup, Theranos, was nearly bankrupt and its much-hyped blood-testing technology was a flop.
“This case is about fraud, about lying and cheating to get money,” Mr. Leach said during his roughly 45-minute opening statement.
He said the evidence would show that Theranos was already in deep trouble as far back as 2009, about six years after Ms. Holmes founded the Palo Alto, Calif., company. At that point, Mr. Leach said, Ms. Holmes resorted to a pattern of lying and hyperbole in an effort to fool major media outlets, wealthy investors such as media mogul Rupert Murdoch, well-connected Theranos board members such as former U.S. secretaries of state George Shultz and Henry Kissinger, and customers such as Walgreens.
Some of the most damning evidence may be presented by a former top finance officer at Theranos who will testify that the company only had US$650,000 in revenue from 2011 through 2014, according to Mr. Leach. Yet Ms. Holmes was telling investors and other people that Theranos would generate US$140-million in revenue in 2014, Mr. Leach said.
Ms. Holmes is also accused of promising that Theranos would be able to quickly test small vials of blood in a small company-designed machine named after the famed inventor Thomas Edison. Mr. Leach said the samples were actually sent out to outside parties for testing using standard-issue machines he described as “big” and “clunky.”
Theranos eventually failed in 2018, a few years after a series of explosive stories in The Wall Street Journal exposed serious flaws in its technology and spurred regulatory investigations that shut down the testing.
The fraud committed by Ms. Holmes “is a fraud on Main Street and it’s a fraud in Silicon Valley,” Mr. Leach told the jury.
Ms. Holmes’s defence team countered with a more heroic narrative describing her as a tireless worker who poured more than 15 years of her life in pursuit of a faster, cheaper and less invasive way to test blood samples and screen for disease.
Defence lawyer Lance Wade argued that Ms. Holmes was simply trying to wrest control of the blood-testing technology market from two dominant laboratories, Quest Diagnostics and Labcorp. “She did her best day in and day out to make Theranos successful,” Mr. Wade said of Ms. Holmes as he began a roughly 90-minute presentation.
Although she didn’t succeed, Mr. Wade insisted that Ms. Holmes never stopped believing she was on the verge of a breakthrough that would realize her ambitions. Many investors thought she would, too; one of the reasons that Theranos once was valued at US$9-billion – with half that amount belonging to Ms. Holmes.
“Failure is not a crime,” Mr. Wade said. “Trying your hardest is not a crime. A failed business does not make a CEO a criminal.”
In court documents unsealed just before the trial started, Ms. Holmes’s lawyers also disclosed that she may take the witness stand to assert some of her statements and actions while running Theranos were the result of “intimate partner abuse” inflicted by the company’s chief operating officer and her secret lover, Ramesh (Sunny) Balwani.
Without going into specifics, Mr. Wade told the jury that she believed she was bringing in “the best businessman she knew” when she hired Mr. Balwani but now realizes it was one of her biggest mistakes.
“You will learn that Mr. Balwani did not take well to people who disagreed with him,” Mr. Wade said while asserting Mr. Balwani’s tempestuous behaviour caused many Theranos employees to leave the company.
Mr. Balwani also was responsible for overseeing the Theranos lab that the government alleges provided misleading results of blood tests that endangered some people’s lives, Mr. Wade noted.
“If what government is trying to show is that Theranos’s clinical lab was well run from 2013 to 2016, we will likely agree with what they have to say,” Mr. Wade said. “Poor operations in the lab was one of Theranos’s biggest failures, but it wasn’t fraud.”
Mr. Balwani faces multiple fraud charges in a separate trial scheduled to begin next year. His lawyer has denied Ms. Holmes’s allegations.
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