Prosecutor in Theranos case says Holmes ‘chose fraud’ over failure
Elizabeth Holmes, former CEO of Theranos and founder of Theranos, goes through security when she arrives at Robert F. Peckham Federal Building in San Jose on December 16, 2021.
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SAN JOSE CA — Jeffrey Schenk, assistant U.S. Atty., claimed that Elizabeth Holmes’ fraud was a result of her founder choosing to fool investors and patients. It was a decision that was “not only stupid, but it is criminal.”
Schenk gave a three-hour, blistering closing argument Thursday to support Holmes’ conviction.
Schenk stated that Holmes decided to defraud investors and later to defraud patients. She chose fraud over failure in business. She chose dishonesty with investors and patients.
Schenk advised the jury to ignore his plea. Holmes’ claims of abuseRamesh Balwani’s ex-boyfriend, and her second in command at the company. This was a common theme repeated by the prosecution throughout the trial. three-month trialHe argued that Holmes was the one in charge and called all the shots.
Holmes’ testimony lasted seven days and she at times described alleged sexual, emotional, and physical abuse by Balwani. Balwani repeatedly denied that she claimed Balwani had in some way controlled her.
Schenk said to the jury, “You don’t have to decide if this abuse took place.” False statements made by investors or patients are the focus of this case.
Defense began Thursday’s closing argument by countering the assertions of prosecution. They claimed that Holmes never intended to mislead. Her lawyer stated that Holmes was actually building a company and not a criminal enterprise.
It began just before 2 AM PT. Journalists, witnesses, and Holmes’ friends gathered in the pouring rain to enter the courthouse.
One of those who waited was Tyler ShultzShultz, who was a whistleblower and worked for Theranos. Shultz was on the list as possible witnesses, but he wasn’t called to testify. Shultz is the great-grandson of George Shultz (an early member of Theranos’ board) and former Secretary of State. He declined to comment.
Schenk was attentive to each juror during his closing arguments. He referred to Holmes’ claims about his company’s involvement with the military, and noted that all of them were false.
Schenk explained that Holmes understood these honesty statements would have no effect on revenue. Schenk stated that Holmes chose to follow a different route.
Schenk took the jurors through all 29 witnesses for the government. Schenk showed each one with a photograph and gave a summary of the testimony. The slide he showed the jury listed all of Holmes’ actions at Theranos. It covered public relations and business development as well as communicating with doctors and investors. He also included financial projections and partnerships.
Schenk stated that “there weren’t events in Theranos without her involvement or decision.” Schenk presented the jury with a chart entitled “Knowledge and falsity” that listed Schenk’s false statements along with exhibits.
Holmes pleaded guilty to eleven charges of wire fraud, conspiracy to commit wirefraud and other related charges. If convicted, she could be sentenced to up to 20 years imprisonment. Balwani is facing the same charges during a trial which will likely begin in early 2019. Balwani also pleaded guilty.
Sunny Balwani is the ex-president and chief operating officers of Theranos Inc.
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Kevin Downey (defense attorney for Holmes) told the jury that Holmes’ case was not complete.
Downey explained that “the picture can change quite significantly as a consequence of waiting for all the details,” and added that important information was withheld from the jury by the prosecutors. Downey shared with jurors 11 different successful relationships Theranos established with drug companies.
Prosecutors took aim at Holmes’ youthful, ignorant portrayal by the defense. Schenk stated that Holmes had already been the CEO of the company for nearly a decade by the time the investors invested in it in 2013, and 2014.
According to him, “Theranos doesn’t require more experience in order to avoid fraud,” he said.
Holmes’ defense lawyers said that Holmes was guilty of causing the death penalty. hardworking but young CEOBalwani and Balwani were too trusted by a certain skeptic, namely Judith.
It wasn’t about experience. Schenk said. They needed a CEO, and a COO who interacted honestly with the people.”
Downey asked the jury to close by asking them this question: If Ms. Holmes was a felon, what type of board would she have chosen? Do you think she would appoint cronies?
Downey stated, “She appointed these persons, an incredibly distinguished group of people,” pointing at a slide which named each director.
Defense will wrap up its closing arguments Friday. Following jury instructions, the jury will receive the case. It will consist of four women and eight men. The jury is expected to meet for the remainder of the holiday week.
Schenk said to them, “The story about Theranos can be tragic.” The story also includes some people who have shown remarkable integrity.