SAN JOSE — For Theranos founder Elizabeth Holmes, the stakes could hardly be higher: a new mother at 37, in a relationship with an MIT-educated hotel heir, she could find herself locked away for years in a prison cell if the jury in her trial decides she committed criminal fraud.

Holmes, whose spectacular startup crash has led to one of the most closely-watched trials in Silicon Valley history, is accused of swindling investors out of hundreds of millions of dollars and defrauding patients with false claims that her defunct Palo Alto company’s purportedly revolutionary blood-testing machines could conduct a full range of tests using a few drops of blood from a finger stick.

To convict Holmes, federal prosecutors must go beyond the well-documented deficiencies of Theranos’ technology and persuade the jury that Holmes deliberately schemed to take money from investors and patients when she knew the technology did not work.

“The question for this jury is, ‘Did Elizabeth Holmes go too far?'” said legal analyst and former Santa Clara County prosecutor Steven Clark. But with both sides having made strong cases — and the possibility that additional testimony and evidence could emerge before the trial ends — Clark said, “I can’t answer that at this point.”

SAN JOSE, CALIFORNIA – NOV. 9: Theranos founder Elizabeth Holmes walks with partner Billy Evans and mother Noel Holmes toward the Robert F. Peckham Federal Building and U.S. Courthouse, Tuesday, Nov., 2021, in San Jose, Calif. Holmes is on trial for allegedly defrauding investors and the public about the effectiveness of her now-defunct startup’s blood-testing technology. (Karl Mondon/Bay Area News Group) 

The Case Against Holmes

With a parade of 29 former Theranos employees, investors and patients, prosecutors have sought to portray Holmes as a greedy CEO who was in full control of her company, spinning a web of lies about the capability of her machines that ensnared investors and put patients’ lives and health in jeopardy.

Ex-laboratory staff and lab officials detailed serious problems with the accuracy of Theranos’ machines. Internal emails showed that Holmes —who has sought to distance herself from lab operations — was told about the issues, but she concealed them from investors and her board. Patients and a doctor also told jurors about test results from Theranos’ own machines that falsely indicated possible HIV infection and cancer.

The prosecution, said Bay Area legal analyst Michele Hagan, presented the jury with “consistent and corroborating testimony from one witness after another that showed that Holmes knew the problems were not being addressed and was still representing … that everything was A-OK.”

Investors testified about the promising and persuasive claims Holmes made, and expressed bitterness at what she left out, including that Theranos’ technology was unreliable, and that even as the company was claiming its blood tests could perform all the offerings of laboratory giants, it was relying on other firms’ machines for dozens of tests it could not actually perform.

In some of the most damning testimony, former U.S. Secretary of Defense James Mattis and an investment manager for the family of former U.S. Education Secretary Betsy DeVos testified that Holmes’ insinuations about the military using Theranos devices on medevac helicopters were misleading. A long-time lawyer for former U.S. Secretary of State Henry Kissinger — who, like Mattis, was a Theranos board member and investor — and former Walgreens chief financial officer Wade Miquelon also testified that Holmes had sent them glowing reports about Theranos altered to look like they came from major pharmaceutical firms.

“What the government spent a lot of time doing was showing that Ms. Holmes was intimately involved with the day-to-day activities at Theranos, and she’s apprised of these problems and at the same time she’s making all these statements,” Clark said.

Holmes’ Defense

In a surprising move, Holmes’ attorneys almost immediately put their client before the jury as a witness in their case — a decision Clark believes was driven largely by the strength of the government’s case.

Defendants take a huge risk in testifying, Hagan noted, but Holmes “has the tool set to do it. She’s had years of experience answering difficult questions and persuading and convincing people, so why should a jury be anything different?”

Responding with ready answers and a frequent small smile, Holmes took aim at the evidence against her, claiming that she truly believed Theranos had developed technology capable of performing any blood test.

Then, point by point, she sought to explain away the alleged evidence of deception, at several moments expressing regret for her actions as Theranos’ CEO. She admitted applying the stolen company logos from Pfizer and Schering-Plough to Theranos reports, but said it was only to highlight the work done with those companies. She also conceded that Theranos had mishandled its response to whistleblowers amid a federal probe and imminent media exposé from the Wall Street Journal, and that she erred in hiding the company’s use of third-party machines from investors.

“There are many things I wish I did differently,” she told the jury.

“She’s acknowledging that mistakes were made,” Clark said. “She was able to artfully do it in such a way that she said, ‘I made mistakes but I didn’t commit a crime,’ and that’s the theory of her case.”

Then, on the fourth day of her testimony, Holmes, in tears, dropped a bombshell, accusing former company president Sunny Balwani, with whom she had a secret intimate relationship for more than a decade, of controlling her life, her work, and forcing sex on her when she displeased him, she claimed.

“He impacted everything about who I was, and I don’t fully understand that,” Holmes told the jury.

A lawyer for Balwani, who also faces fraud and fraud-conspiracy charges and will be tried separately, has declined to comment on the allegations.

“There’s this public persona of Elizabeth Holmes and then there’s this young, fragile woman — she’s been able to change the narrative through the allegations of abuse,” Clark said.

Will her defense work?

The narrative presented by Holmes’ lawyers bolstered the notion that she was not in control of her company, and raised the idea that her traumatized mental state may have affected her decision-making and her intentions, Hagan said.

More importantly, Hagan added, it may have provoked feelings of sympathy among the jurors who hold her future in their hands.

The question looming over the government’s cross-examination of Holmes, which resumes Tuesday, was whether they could switch the focus back to the damning evidence against Holmes that they presented.

And on the first day of cross-examination, Clark said, they made a big mistake when prosecutor Robert Leach had Holmes read aloud text messages full of loving sentiments between Holmes and Balwani. Not only did Holmes get weepy, humanizing her as a vulnerable person, he said, but she was handed an opportunity to tell the jury that one message showed her delicately asking Balwani for permission to see her friends.

The messages were “fool’s gold for the government,” Clark said. “They do not in any way suggest that she was not abused. The way she’s handled herself so far in this trial is with total decorum, total politeness. The last thing you want to do with someone who’s alleging a claim of domestic abuse is bully them further.”

*But the prosecution also highlighted messages Balwani sent to Holmes clearly informing her about deficiencies in Theranos’ technology. Crucially for prosecutors, Holmes also admitted that as CEO, she was responsible for everything that happened at the company.

“That shows the conspiracy,” Hagan said, speaking of the government’s allegations. “They actually planned this out. They knew about problems and they were working together on how to address or not address them, furthering the scheme to defraud investors and patients, to keep the alleged sham going.”

Holmes’ abuse claims also could backfire if the jury does not find them credible, Clark said. “That’s a societal issue that’s very sensitive,” he said. “You better be genuine regarding those claims.” And Holmes acknowledged that Balwani neither forced her to make statements to investors or journalists nor controlled her interactions with Theranos board members or executives from companies she sought to partner with.

Holmes admitted that in 2016 she fired Balwani, which Hagan said may have shown her power over him and “could be a counter-indicator of abuse.” But, Hagan added, Holmes may have undercut that notion by testifying that she pushed Balwani out of her life and the company, and brought on an array of business and laboratory experts to “fix the issues” at Theranos.

“She is pointing the finger at him and showing that she got rid of the problem and she brought in the cleanup team,” Hagan said.

What happens next?

Whether Holmes’ lawyers will call as a witness a psychologist specializing in relationship violence who has analyzed Holmes remains to be seen. Though the psychologist’s testimony could help Holmes’ team make the connection between the purported abuse and her actions at Theranos, it would allow the prosecution to call their own expert witness, a psychiatrist who has also examined Holmes

Holmes’ cross-examination is expected to end Tuesday, and the defense has said it will likely conclude its case by the end of next week. Both sides can then call rebuttal witnesses.

“They both could be holding back on witnesses that are going to drop bombs,” Hagan said. “Or not.”