Prosecution and defense make opening statements

Prosecution and defense make opening statements

Prosecutors on Wednesday called Theranos founder and CEO Elizabeth Holmes a liar and fraud, while her lawyers argued that the company’s failure was not a crime.

“For lack of time, of money, Elizabeth Holmes decided to lie,” said Robert Leach, a deputy US lawyer, who argued that Theranos ran out of money in 2009 to keep the business afloat. Deliberately misleading investors.

Prosecutors said Holmes was not only the face of Theranos, the blood testing start-up he founded, but that he also oversaw everything related to the company, with false claims about investors. “shiny” like Walgreens and Safeway.

“He owned it, he controlled it, the male stayed with him,” Leach said. “And as you’ll hear from insiders, she wasn’t the absent CEO, she was there all the time. She sweated the details. She was in charge.

The long-awaited preliminary arguments were heard during a five-hour hearing. Holmes arrives in court with partner Billy Evans, mother Noel Holmes and Evans’ father William Evans. She wore a gray skirt suit with a cream-colored blouse and a light blue mask. It was a very different image from his signature black turtleneck in his heyday at Theranos.

The crowd outside was the largest since the start of the criminal trial last Tuesday. In the audience were three blonde women, who mimicked Holmes’ signature look, pulling their hair up into a bun. They were seated next to Holmes’ family in the courtroom.

Elizabeth Holmes, founder and former CEO of blood testing and life science company Theranos, arrives on the first day of her fraud trial in Federal Court in San Jose, California. September 8, 2021.

Nick Otto | AFP | Getty Images

Inside the courthouse, Holmes was seen hugging his mother before she began her statement. During the hearing, she sat among her lawyers and sometimes looked back and looked at her family who were sitting right behind her.

Evans, who Holmes shares a newborn with, was seen comforting Holmes’ mother during the break, placing his hand on her back as they spoke with the courtroom designer. At least seven of Holmes’ friends and family were in a courtroom filled with mostly members of the media in San Jose, where Holmes is fighting a dozen charges of fraud and conspiracy.

Holmes lawyer Lance Wade argued that she “made mistakes, but mistakes are not crimes,” adding that “a bankrupt company does not criminalize a CEO. Mrs Holmes is at work every day with the intention of lying. She didn’t go, cheat and steal.

“Mrs. Holmes left with nothing,” Wade told a jury of seven men and five women. “But failure is not a crime. Doing your best and failing is not a crime.

Prosecutors said Theranos only had $ 13 million in cash in 2013 and told jurors the company is burning between $ 1 million and $ 2 million a week. They alleged that Holmes and Balvani, executives of Theranos and her boyfriend for a time, had raised millions of dollars from investors by promoting the company’s technology in press interviews.

“The accused’s fraudulent scheme made him a billionaire,” Leach said. “Once upon a time, his shares in Theranos were worth billions. This plan won him fame, respect and worship.

Holmes rose to fame almost a decade ago, appearing on the covers of Fortune and Forbes magazines, in television news programs, and was even hailed as the next Steve Jobs, which prosecutors have said he said. did. “Much appreciated.”

“She was known as one of the most powerful women in business. She was in demand as one of the most famous CEOs in Silicon Valley and around the world, ”said Leach. “But under the pretext of Theranos’ success, there have been some brewing issues.”

Defense lawyers told jurors that Theranos employed hundreds of people in Silicon Valley.

“It was real. It was innovative, ”said Wade. He said the renowned list of investors knows the risks of investing in start-ups.

“You have to be a millionaire to invest in Theranos. In many ways, they were billionaires, among the richest and most sophisticated people in the world, ”Wade said. “They were sophisticated and they knew what they were buying.”

Theranos has raised more than $ 700 million from investors, including media mogul Rupert Murdoch, former Education Secretary Betsy DeVos and the Walton family of Walmart. Some investors are expected to testify at trial.

Theranos founder Elizabeth Holmes Robert F. Peckham appears at the U.S. courthouse to present her case at her trial in this courtroom sketch on September 8, 2021 in San Jose, California, United States.

Vicki Behringer | Reuters

His defense also highlighted Holmes’ relationship with Balwani, which laid the groundwork for the blame game on him.

“You will hear that relying on Mr. Balwani as a senior advisor was one of his mistakes,” Wade told jurors when Holmes was 18 and Balwani was 37. Were.

Wade said of Balwani, “Sometimes he would get angry, he would break out. He didn’t always treat people well. “You will learn to test the limits of how he treated certain employees. You have to wait for all the evidence, and then decide how to view this relationship as a whole. “

CNBC confirmed that during the trial, Holmes and Evans lived in a house on the grounds of the historic Green Gables Estate in Silicon Valley. The 74-acre property is currently on sale for $ 135 million. During the court hiatus, CNBC asked Evans’ father William Evans if he was paying the couple’s rent for the house. Evans was silent.

After five hours, Holmes left the courthouse, shaking hands with his partner, ignoring the reporter’s questions.

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