Elizabeth Holmes retrial: prosecutors ‘see a lot of garbage’ at trial

The former pharmaceutical billionaire, who is charged with securities fraud, will be back in court for jury selection on Friday, after the prosecution rested on Wednesday

Elizabeth Holmes, the pharma billionaire who was once considered the youngest person to be worth over $1bn, will be back in court on Friday to conclude the trial of her securities fraud trial.

Holmes, the founder of the now-defunct Theranos, has been charged with fraud, and could face more than 20 years in prison if convicted of what the government has called the largest healthcare fraud case in US history.

Holmes stared at the floor in court on Wednesday as prosecutors laid out their case, at one point observing that some of the evidence against her was “garbage”. “We’ve seen a lot of garbage [at the trial],” a judge responded.

The prosecutor appearing for the government, Charles Stillman, said that Holmes, 34, had lied to investors and the public about how many tests were being run on the company’s blood-testing machine, the Edison. Holmes has denied all charges, claiming that she has “never invented a machine”.

At one point in her testimony, Holmes answered “No” when asked if she was an inventor.

A spokeswoman for the Federal Bureau of Investigation (FBI) testified on Wednesday that he was forced to arrest Theranos’s technology chief, Ramesh Balwani, on fraud charges. After several months of surveillance and wiretaps, Balwani resigned from Theranos in September 2016.

On Wednesday, Balwani claimed to be an inventor and admitted to having been personally reimbursed for $1m in expenses related to a $15m loan, an admission which the judge in the case, David Hurd, said was a “disgrace”.

After closing arguments were finished on Wednesday, both sides of the case will now prepare for jury selection, which should start on Friday and could last three days.

Holmes founded Theranos in 2003 when she was just 19 and raised more than $800m in venture capital. But the company’s first blood-testing device, the Edison, was a failure. It was recalled and has not been used since April 2012. Theranos collected blood from 87,000 people, ranging from ordinary adults to patients with cancer and HIV.

Holmes, who wore a black suit and white shirt for the court appearance, recalled on Wednesday that the test took only 45 minutes and that all the specimens would be returned to the consumer by the time the next day’s test came around. It was within the required “criteria” for the blood-testing machine to work, she said.

But although Holmes claimed to have earned more than $120m in compensation, about $70m of which was bonuses, she spent only about $10m, mainly on health insurance, legal fees and a new sports car, according to testimony and court documents. She also sold most of her Theranos stock in 2014 for about $400m, and made $125m selling all of the shares she owned in the company since 2012.

There were other problems with Theranos. She signed contracts with some of the world’s largest drug manufacturers, including Merck and Pfizer, to do analyses that were being performed by professionals. It is a violation of Theranos’s charter to sign those contracts.

Theranos, which had been valued at $9bn in 2014, also fell behind on its cash flow, to the point where its board of directors ended talks to sell the company to Walgreens for $9bn.

Leave a Comment