Elizabeth Holmes’ defense makes it case to jurors in closing arguments

Over the course of roughly two hours on Thursday, Holmes’ attorney Kevin Downey attempted to undercut the government’s case that the former CEO and founder of Theranos knowingly misled investors, doctors and patients about the capabilities of her failed startup’s blood testing technology for financial gain.

Downey portrayed Holmes as a young entrepreneur “building a business and not a criminal enterprise,” and ticked through evidence that he said showed she lacked intent to deceive. In order to convict Holmes, who faces nine counts of federal wire fraud and two counts of conspiracy to commit wire fraud, prosecutors need to convince a jury of eight men and four women of Holmes’ intent.

“If someone is acting in good faith or someone does not believe that what they are doing actually is part of a scheme to defraud, then the correct verdict is a not guilty verdict,” Downey told jurors Thursday.

Downey pointed to evidence that he said shows Holmes had nothing to hide. He noted to jurors that Holmes didn’t conceal the truth about the company’s testing methods from regulators or her board of directors, that Holmes wasn’t afraid to submit Theranos’ technology for review by outsiders, and that when a regulatory audit found significant issues in its lab, she moved to have those addressed including agreeing to void two years of its blood tests at the suggestion of Theranos’ lab director.

“You’ll see that there’s a lot of just innocent events, and only when you put on the government’s lens and look through the government’s eyes will you see some nefarious intent or bad conduct,” said Downey.

The defense’s closing arguments comes at the end of week 15 of the high-profile trial of a once lauded Silicon Valley entrepreneur. The prosecution will have a chance to give a rebuttal before the case goes to the jury.

In its closing arguments earlier in the day Thursday, the prosecution painted a very different picture of Holmes. Jeffrey Schenk, assistant US attorney, portrayed the Theranos founder as an experienced executive who had been running her startup for nearly a decade by the time the alleged fraud took place, and who made a choice to lie to investors as her blood-testing startup was running out of money.

“She chose fraud over business failure,” he said. “She chose to be dishonest with investors and with patients.”

Holmes, now 37, dropped out of Stanford in 2003 at age 19 to start what would become Theranos. A decade later, she took the veil off the company, courting press and touting a Walgreens partnership while claiming to have invented technology that could accurately and reliably test for a range of conditions with just a few drops of blood. She raised $945 million from investors, catapulting the company to a $9 billion valuation, making herself a paper billionaire.

Then it all came crashing down, beginning with a Wall Street Journal investigation in 2015 that revealed the company wasn’t relying on its own technology to test blood, and that its blood tests weren’t producing reliable results.

First criminally indicted more than three years ago, the trial was delayed by the pandemic and the birth of her first child. The public interest in Holmes hasn’t faded since her downfall. There are documentaries, a forthcoming limited series and a planned feature film.

By 3:15 am local time on Friday, 34 members of the public and press had already lined up outside to get a seat in the federal courthouse in San Jose where the trial has been underway. There are just 34 seats available, plus another roughly 45 spots in an overflow room. The trial is not being televised.

Holmes faces up to 20 years in prison as well as a fine of $250,000 plus restitution for each count of wire fraud and each conspiracy count. She has pleaded not guilty.

During its case, the prosecution called 29 witnesses including former Theranos employees, scientists, investors and even a former Secretary of Defense as it sought to illustrate how Theranos’ technology fell far short of its claims as well as how it overstated its financials, misled investors about partnerships and leveraged the media to perpetuate its claims, all while pinning Holmes at the center of it all.

“Fraud is sort of like a head start on the truth. For a long time, Holmes and Balwani knew the truth,” Schenk said Thursday, referring to Ramesh “Sunny” Balwani, the company’s COO and president who was also Holmes’ boyfriend at the time of the alleged fraud.

Balwani and Holmes were indicted together but their trials were severed when she indicated she would take the stand to testify that she was a victim of their decade-long abusive relationship. Balwani has denied the abuse allegations in court filings. He is set to be tried early next year and has also pleaded not guilty.

“They knew what Theranos could do and what it couldn’t do, and the people that they interacted with, the investors and the patients, did not. And they took advantage of that sort of gap in information,” said Schenk. “And for that, they were able to commit fraud, and because of that, you should find Elizabeth Holmes guilty of the charged offenses.”