Elizabeth Holmes Has Started Testifying in Her Defense

Nov. 19, 2021, 9:02 p.m. ET

Nov. 19, 2021, 9:02 p.m. ET

At the end of a grueling five days of testimony this week, the defense in the case of United States v. Elizabeth Holmes on Friday called Ms. Holmes, the founder of the failed blood testing start-up Theranos, to the stand.

A flutter of typing and murmuring washed over the gallery, which had been packed with spectators early in the day, before the audience dwindled as the weekend crept closer. Ms. Holmes has been charged with 11 counts of defrauding investors about what Theranos’s technology could do and about its business.

Ms. Holmes, 37, spent only an hour on the stand before the court closed for the day, so her testimony was truncated. What she discussed were the early days of Theranos and why she had set the company up — and used the opportunity to present herself in her own terms after her emails, texts and other communications were dissected over the trial’s nearly three months of testimony.

Ms. Holmes’s lawyers have argued that she was merely a young, naïve, ambitious founder who relied too much on others who gave her bad advice. Her lawyers have also hammered on her lack of experience and expertise. But on Friday, she presented herself as an expert on her company’s technology.

She testified about the early days of Theranos, which started out as Realtime Cures in 2003. She testified about a patent she had created while a student at Stanford, which led her to drop out and work on the company full time. She also briefly discussed demonstrations of Theranos’s early technology and the early rounds of investment she raised to develop it.

Ms. Holmes’s lawyers indicated that her initial testimony is likely to take up Monday and Tuesday next week. That means that the prosecution’s cross-examination, which is expected to be lengthy, won’t begin until after Thanksgiving.

Ms. Holmes was the third witness to be called by her defense team.

Nov. 19, 2021, 7:19 p.m. ET

Nov. 19, 2021, 7:19 p.m. ET

Erin Griffith

San Jose, Calif.

After the judge finished speaking, Ms. Holmes stood to leave after an hour on the witness stand. Her lawyer, Lance Wade, gave her a reassuring pat on the back, and she chatted briefly with her partner, Billy Evans, before leaving through the courtroom’s side door.

Nov. 19, 2021, 7:09 p.m. ET

Nov. 19, 2021, 7:09 p.m. ET

Erin Woo

The trial is scheduled to be in session Monday morning and Tuesday of next week. We expect the defense to try to establish that Ms. Holmes was a hard-working entrepreneur whose failure did not constitute a crime, and that blame for her company’s downfall rests with former business partner and boyfriend, Ramesh “Sunny” Balwani. They are likely to also argue that Mr. Balwani was abusive and controlling toward Ms. Holmes, based on court filings. Mr. Balwani has denied these claims.

Nov. 19, 2021, 7:06 p.m. ET

Nov. 19, 2021, 7:06 p.m. ET

Erin Griffith

San Jose, Calif.

Ms. Holmes left the stand for the day and will resume testimony Monday. The furious typing from the press gallery that accompanied her testimony died down as the judge addressed the jury with his usual instructions to avoid media about the trial.

Nov. 19, 2021, 7:05 p.m. ET

Nov. 19, 2021, 7:05 p.m. ET

Erin Woo

Earlier in the trial, jurors heard Chris Lucas say that Ms. Holmes had “a firm grasp on the company” in a call with other investors that was recorded and played in court. The prosecution called six investors out of their 29 witnesses.

Nov. 19, 2021, 7:04 p.m. ET

Nov. 19, 2021, 7:04 p.m. ET

Erin Griffith

San Jose, Calif.

In “Bad Blood,” the book about Theranos by The Wall Street Journal writer John Carreyrou, a Novartis demonstration is described as a disaster, where a machine malfunctioned and a fake result was beamed in from California.

Nov. 19, 2021, 7:02 p.m. ET

Nov. 19, 2021, 7:02 p.m. ET

Erin Griffith

San Jose, Calif.

In 2006, Ms. Holmes demonstrated Theranos’s blood analyzing book to the pharmaceutical company Novartis. She sent an email to all Theranos employees afterward that said: 

Team. We nailed this one. You all did an incredible job in making this happen — this is the theranos way.

Soon after, Theranos raised its Series C round of funding from investors including Larry Ellison, the billionaire co-founder of the software giant Oracle, whom she met through Mr. Lucas, and his nephew Chris Lucas, who testified earlier in the trial.

Nov. 19, 2021, 6:53 p.m. ET

Nov. 19, 2021, 6:53 p.m. ET

Erin Griffith

San Jose, Calif.

We were shown an image of an early version of Theranos’s blood analyzer machines that had an antenna connecting it to a cell network to transfer data to the cloud. Ms. Holmes testified that Theranos entered into a contract with GlaxoSmithKline and an agreement with Pfizer in 2006. Ms. Holmes said the agreements were something she talked to investors about when she was raising money for the company in 2006.

Nov. 19, 2021, 6:50 p.m. ET

Nov. 19, 2021, 6:50 p.m. ET

Erin Griffith

San Jose, Calif.

Ms. Holmes looked relaxed. When she was eager to answer a question, she said “yes” with great relief and smiled.

Nov. 19, 2021, 6:48 p.m. ET

Nov. 19, 2021, 6:48 p.m. ET

Erin Woo

Ms. Holmes’s team pushed for her and other witnesses to be able to testify without a mask.

Nov. 19, 2021, 6:45 p.m. ET

Nov. 19, 2021, 6:45 p.m. ET

Image

Credit…Justin Sullivan/Getty Images

The fraud trial of Elizabeth Holmes, who founded the failed blood testing start-up Theranos, has plenty of implications for Silicon Valley.

Her rise and fall has been held up as the ultimate test of Silicon Valley’s fake-it-until-you-make-it culture. At some hot start-ups, it is not uncommon for founders to inflate their revenue or hype their company’s products to raise money and secure deals, even if their products may not quite do what was advertised, said Margaret O’Mara, a University of Washington professor who has written a book on the history of Silicon Valley.

Ms. Holmes also wrapped herself in the mythology of the tech industry. The Stanford University dropout styled herself after the late Apple co-founder Steve Jobs, headquartered her company in Palo Alto, Calif., and benefited from a laudatory media.

The outcome of Ms. Holmes’s trial may be a referendum on that behavior, lawyers and others said. If Ms. Holmes is found guilty, start-up entrepreneurs may be more careful with the claims they make to investors and partners, knowing that they could be charged with fraud, said Neama Rahmani, president of the West Coast Trial Lawyers and a former federal prosecutor.

But a “a non-guilty verdict will vindicate a Silicon Valley culture of celebrating aggressive innovation at the expense of the complete and whole truth,” said Jeffrey M. Cohen, an associate professor at Boston College Law School.

Still, some in Silicon Valley have pushed back against the idea that Ms. Holmes and Theranos represented the typical start-up. That’s because Ms. Holmes raised the bulk of her money from investment firms that represented wealthy families, and not traditional venture capital firms that generally invest in fast-growing tech start-ups. Ms. Holmes was also building medical devices, not software as with many other start-ups.

For that reason, Ms. O’Mara said, some Silicon Valley insiders might dismiss the importance of the outcome.

Nov. 19, 2021, 6:45 p.m. ET

Nov. 19, 2021, 6:45 p.m. ET

Erin Griffith

San Jose, Calif.

Aside from a video, this was the first time jurors were seeing Ms. Holmes without a mask on. They were all looking on closely and taking some notes.

Nov. 19, 2021, 6:42 p.m. ET

Nov. 19, 2021, 6:42 p.m. ET

Erin Griffith

San Jose, Calif.

A 2006 email showed Ms. Holmes sending Mr. Lucas detailed financials from Theranos as part of his diligence. This stands in contrast to prior testimony that showed her withholding information from investors who requested it. Mr. Lucas ultimately invested and became Theranos’s chairman. Pete Thomas, a venture capitalist at IVP who started a firm called ATA Ventures, also invested.

Nov. 19, 2021, 6:40 p.m. ET

Nov. 19, 2021, 6:40 p.m. ET

Erin Woo

Ms. Holmes’s father, Christian Holmes IV, was a vice president at Enron, the energy company that collapsed in scandal. He went to Wesleyan University.

Nov. 19, 2021, 6:39 p.m. ET

Nov. 19, 2021, 6:39 p.m. ET

Erin Griffith

San Jose, Calif.

Mr. Lucas “began a very comprehensive diligence process” before investing, Ms. Holmes said. He hired a law firm to review patents, did an audit of financials, and asked for copies of contracts and other information about the business. A major theme of the defense so far in the trial has been to point out how little diligence some of Theranos’s later investors did on the company.

Nov. 19, 2021, 6:37 p.m. ET

Nov. 19, 2021, 6:37 p.m. ET

Erin Griffith

San Jose, Calif.

Ms. Holmes testified that she began to talk to venture capitalists to raise her “Series B” funding based on this prototype. She met Don Lucas, a legendary V.C. who backed Oracle, Adobe and others, through “someone who had gone to college with my dad.”

Nov. 19, 2021, 6:36 p.m. ET

Nov. 19, 2021, 6:36 p.m. ET

Erin Griffith

San Jose, Calif.

The defense lawyers showed an image of an early prototype of one of Theranos’s devices. It looked like a black piece of plastic with a valve and a pump, with an electronic board on the side.

Nov. 19, 2021, 6:33 p.m. ET

Nov. 19, 2021, 6:33 p.m. ET

Erin Woo

Ms. Holmes’s status as a Stanford dropout became a central part of the narrative around Theranos. Media stories played up how she was a young, female founder.

Nov. 19, 2021, 6:33 p.m. ET

Nov. 19, 2021, 6:33 p.m. ET

Erin Griffith

San Jose, Calif.

Ms. Holmes testified that Theranos started with a pill that could sense and deliver treatment, then evolved into a patch that could be worn. “As I started talking to people about what would be useful, I learned people were interested in a benchtop or tabletop device and we moved to try and build that.”

Nov. 19, 2021, 6:31 p.m. ET

Nov. 19, 2021, 6:31 p.m. ET

Elizabeth Holmes, the founder of the failed blood testing start-up Theranos, surrounded herself with a constellation of moguls, four-star generals, venture capitalists and others during her time running the company. Ultimately, Theranos was undone after whistle-blowers who were concerned that the company was lying about its technology spoke to the media and to regulators.

Here are some of the central figures in the rise and fall of Theranos and Ms. Holmes’s fraud trial.

Who’s Who in the Elizabeth Holmes Trial

Erin Woo📍Reporting from San Jose, Calif.

Who’s Who in the Elizabeth Holmes Trial

Erin Woo📍Reporting from San Jose, Calif.

Carlos Chavarria for The New York Times

Elizabeth Holmes, the disgraced founder of the blood testing start-up Theranos, stands trial for two counts of conspiracy to commit wire fraud and nine counts of wire fraud.

Here are some of the key figures in the case →

Nov. 19, 2021, 6:30 p.m. ET

Nov. 19, 2021, 6:30 p.m. ET

Erin Griffith

San Jose, Calif.

Ms. Holmes testified that her parents let her use the money they’d saved for her college to work on her patent and she borrowed some money to start Theranos. She testified that she structured the company around three areas: chemistry, hardware and software.

Nov. 19, 2021, 6:30 p.m. ET

Nov. 19, 2021, 6:30 p.m. ET

Erin Woo

Whether or not Ms. Holmes will testify has been one of the biggest questions of the trial. As recently as this afternoon, legal experts we spoke with predicted she would not testify, because doing so opens her up to cross-examination and is a large risk for the defense.

Nov. 19, 2021, 6:29 p.m. ET

Nov. 19, 2021, 6:29 p.m. ET

Erin Woo

Ms. Holmes’s trial is taking place in a closed courtroom, so testimony is not being streamed. Spectators and media have had to line up outside the San Jose courthouse for a spot in the courtroom or an overflow room in order to view the proceedings.

Nov. 19, 2021, 6:27 p.m. ET

Nov. 19, 2021, 6:27 p.m. ET

Erin Woo

Ms. Holmes appeared in the courtroom every day of the trial. She usually appeared with her mother and often with her partner, Billy Evans. The jurors have heard her voice on recordings played during the trial, but this is the first time they are hearing from her live.

Nov. 19, 2021, 6:26 p.m. ET

Nov. 19, 2021, 6:26 p.m. ET

Erin Griffith

San Jose, Calif.

Holmes testified that Theranos/Realtime Cures’s original business plan was to “develop a library of tests and try to help pharma companies get drugs to market faster.”

Nov. 19, 2021, 6:24 p.m. ET

Nov. 19, 2021, 6:24 p.m. ET

Erin Woo

The prosecution rested just today. They put together a case involving 29 witnesses, which stretched over 11 weeks.

Nov. 19, 2021, 6:24 p.m. ET

Nov. 19, 2021, 6:24 p.m. ET

Erin Griffith

San Jose, Calif.

Ms. Holmes described dropping out of Stanford to begin working on Realtime Cures. She changed the name to Theranos in 2005, which she said with a huge smile.

Nov. 19, 2021, 6:19 p.m. ET

Nov. 19, 2021, 6:19 p.m. ET

Erin Griffith

San Jose, Calif.

Kevin Downey, one of Holmes’s lawyers, has pulled up a patent that lists Holmes as an author. We see a diagram, which Holmes describes in detail.

Nov. 19, 2021, 6:18 p.m. ET

Nov. 19, 2021, 6:18 p.m. ET

Erin Griffith

San Jose, Calif.

Elizabeth Holmes began her testimony by answering a series of rapid-fire questions about what Theranos did before launching into her background. One key question: When Holmes spoke publicly about how many tests Theranos could do, was she always limiting her comments to certain types of tests? No, she said.

Nov. 19, 2021, 6:13 p.m. ET

Nov. 19, 2021, 6:13 p.m. ET

Image

Credit…Carlos Chavarria for The New York Times

It’s Silicon Valley’s trial of the decade.

Since opening statements began on Sept. 8, Elizabeth Holmes, the founder of the failed blood testing start-up Theranos, has been standing trial in federal court in San Jose, Calif., for 11 counts of fraud (a 12th count was removed). If convicted, she faces up to 20 years in prison. She has pleaded not guilty.

Her case has captivated the public — and spawned books, documentaries and even a fan club for Ms. Holmes, 37 — because she was a young female entrepreneur in heavily male Silicon Valley and because she appeared to push the boundaries of start-up culture and hubris to the limit.

Her story initially seemed like the stuff dreams are made of. Ms. Holmes dropped out of Stanford University at 19 and founded Theranos, which promised to decipher people’s health problems with just a drop of their blood. The company raised $945 million from famous venture capitalists and from powerful tech and media moguls such as Larry Ellison and Rupert Murdoch. At its peak, Theranos was valued at $9 billion. Ms. Holmes was lauded as one of the youngest self-made female billionaires.

But it all came crashing down after a 2015 investigation from The Wall Street Journal found that Theranos’s blood-testing technology didn’t work. Theranos shut down in 2018.

Now Ms. Holmes is on trial over a central issue: Did she intentionally mislead doctors, patients and investors as she sought investments and partnerships?

The prosecution spent weeks arguing that Ms. Holmes purposely deceived investors and others while knowing that Theranos’s blood tests were often inaccurate and that the company relied on third-party commercial machines. In opening statements, Ms. Holmes’s lawyers asserted that she was simply a hardworking entrepreneur whose failure to achieve lofty aims did not constitute a crime.

Ms. Holmes vocally defended herself in the media after The Wall Street Journal’s revelations about Theranos. The jury — and public — will be eager to hear directly from her and to see whether she continues that stance or instead points fingers at others, such as her former business and romantic partner, Ramesh Balwani, who is known as Sunny.

The trial has played out inside a courtroom presided over by Judge Edward J. Davila of the U.S. District Court for the Northern District of California, with no live broadcast of the proceedings. Jury selection began on Aug. 31 and the case is scheduled to finish on Dec. 10.

Nov. 19, 2021, 6:12 p.m. ET

Nov. 19, 2021, 6:12 p.m. ET

Image

Credit…Justin Sullivan/Getty Images

From the start, prosecutors have argued that Elizabeth Holmes intentionally deceived investors, doctors and patients as she sought investments and partnerships for Theranos, her once highflying blood testing start-up.

In opening statements on Sept. 8, Robert Leach, the assistant U.S. attorney who is the lead prosecutor in the case, laid out the government’s central thesis: that Ms. Holmes courted investors and commercial partners with false claims about her company’s technology and its relationships with pharmaceutical companies and the military.

“Out of time and out of money, Elizabeth Holmes decided to lie,” he repeatedly declared.

To make that case, prosecutors called 29 witnesses to the stand. They included eight former Theranos employees, six investors, three commercial partners, two doctors and three patients. From a star-studded list of nearly 200 people the government had listed as potential witnesses, the highest-profile person to appear was former Defense Secretary James Mattis, who had served on Theranos’s board.

Prosecutors presented evidence to show that Ms. Holmes perpetrated deceit, including that she knew of technology demonstrations that hid Theranos’s failures and was aware the company made false claims of working with the military. They also showed that Theranos had used a report with a pharmaceutical company’s logo to imply it had that company’s backing, even though the firm had not signed off on the report. Investors and partners testified that those claims had helped persuade them to give Theranos their business and money.

The prosecution also detailed the dysfunction within Theranos’s lab, which handled the blood tests. Theranos had trumpeted its claim that its tests could discern various illnesses in patients with just a drop of blood.

But Adam Rosendorff, one of Theranos’s former lab directors, spent six days on the stand explaining that the tests repeatedly produced inaccurate and irregular results. Other lab directors testified that they had essentially been figureheads; one spent just five to 10 hours at Theranos over his tenure.

Daniel Edlin, a former senior product manager and Holmes family friend, testified that Ms. Holmes had signed off on Theranos’s marketing and investor materials. He also said Ramesh Balwani, the chief operating officer and Ms. Holmes’s onetime boyfriend, who is known as Sunny, had deferred to her when the two of them disagreed.

“Generally, she was the C.E.O., so she had the final decision-making authority,” Mr. Edlin said.

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