The long anticipated fraud trial of Elizabeth Holmes, the founder of biomed upstart Theranos, got underway in San Jose, California, on Tuesday with Judge Edward Davila asking prospective jurors whether they have experienced "intimate partner violence or abuse" or know anyone has.
Holmes, 37, who served as CEO of the blood-testing biz before doubts about the startup's business surfaced – leading to a civil complaint from the US Securities and Exchange Commission, the shutdown of the company in 2018, and criminal charges brought by the US Department of Justice – is expected to claim she was abused by Ramesh "Sunny" Balwani, 56, her former boyfriend who was also president and chief operating officer of Theranos.
Documents unsealed over the weekend at the request of a lawyer for Dow Jones, parent company of the Wall Street Journal which exposed the problems at Theranos, indicate that Holmes intends to base her defense on her mental state.
One of those documents, filed on February 24, 2020, and unsealed on Saturday [PDF], reveals Balwani's attorneys arguing to have his criminal case severed from Holmes's so the two can be tried separately to avoid unfairly prejudicing the jury against their client.
"For instance, Ms Holmes plans to introduce evidence that Mr Balwani verbally disparaged her and withdrew 'affection if she displeased him'; controlled what she ate, how she dressed, how much money she could spend, who she could interact with – essentially dominating her and erasing her capacity to make decisions," the filing says.
The filing contends that it's nearly impossible to imagine in this era of smartphones and social media that Holmes's anticipated "inflammatory defense" will go unnoticed by jurors. So to avoid unfairly biasing jurors against Balwani, his attorneys asked last year that Balwani and Holmes get separate trials, with Balwani to be tried first.
The two will be tried separately, though Holmes is heading to court before Balwani. Once a jury is selected, Holmes's trial should begin on September 8, 2021, and is expected to take 13 weeks. Balwani's trial is scheduled to begin in January, 2022.
Proceedings against Holmes were pushed back from July to this month after she announced she was pregnant; records show Holmes and her partner Billy Evans had a baby on July 10 at a Silicon Valley hospital.
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The Justice Department has charged Holmes and Balwani with two counts of conspiracy to commit wire fraud and nine counts of wire fraud, for allegedly defrauding investors and misleading doctors and patients.
Founded in 2003 when Holmes was a 19-year-old college student, Theranos purported to offer rapid blood testing using its own Edison devices, in addition to standard diagnostics with common healthcare industry machinery. At one point, after receiving about $750m in investment, the company was valued at about $9bn. But by 2015, an investigative report by Wall Street Journal reporter John Carreyrou turned up inconsistencies in the startup's boasts, and things began to unravel.
Now the Feds must convince twelve people that Holmes and Balwani knowingly misled investors, clinicians, and patients. And they must do so without the Laboratory Information System (LIS) database that stored supposedly damning inaccurate test results. It just so happens the company's database was destroyed in 2018.
Sketch from inside Judge Davila’s courtroom for jury selection in Elizabeth Holmes’ trial. pic.twitter.com/wIltSPURJQ— Yasmin Khorram (@YasminKhorram) August 31, 2021
The challenge faced by the court in shielding jurors from exposure to potentially prejudicial coverage of the trial was demonstrated with the first dismissal from the jury pool of almost 200 people.
As noted by New York Times writer Erin Griffith, a potential juror said he worked for a news radio station and his computer screen was filled with Theranos stories. Another juror was dismissed for not only having watched a documentary about Theranos but also for the financial hardship they would experience by not working for four months.
Several potential jurors admitted to personal knowledge of abusive relationships or knowledge of someone with that experience. It's unlikely government prosecutors will want those individuals on the jury for fear they'll be predisposed to sympathize if Holmes tries to exculpate herself by claiming abuse.
If convicted, Holmes faces up to 20 years in prison and a fine of $250,000 for each fraud count. ®