Elizabeth Holmes's defense rests on her force of personality
Elizabeth Holmes built a startup into a $9 billion company based on promises and the force of her personality. Now, her defense team is relying on that same charisma to win her acquittal.
Over the course of seven days of testimony at her fraud trial, Holmes spoke -- sometimes tearfully -- about her swift ascent as a tech wunderkind before her company collapsed in 2018. The 37-year-old also did something out of character for the founder of Theranos Inc.: she appeared vulnerable. She told the jury that she aimed to do good in the world, and spoke of a controlling boyfriend whom she made president of her blood-testing startup.
This past Wednesday, she finished testifying in a California courtroom and her defense lawyers rested their case. Closing arguments are scheduled for this week. After three months of testimony, 12 jurors will shortly begin the process of deciding her fate. Holmes faces as much as 20 years in prison if convicted on charges that she deceived investors and patients about her company's capabilities.
"If the defense team wanted the case to turn on Holmes's testimony, then mission accomplished," said Andrey Spektor, a former federal prosecutor and criminal defense lawyer at Bryan Cave Leighton Paisner in New York. "I'd expect at least some jurors to sympathize with Holmes, even if they believe she is guilty of the charged crimes."
Holmes was the face of Theranos -- a compelling figure who drew high-profile men onto her company's board and attracted investment from bold-faced names like Rupert Murdoch. In television interviews or on the cover of business magazines, she often wore black turtlenecks like those favored by her icon, Apple co-founder Steve Jobs.
But the lifestyle Holmes testified about was less glamorous. It featured a strict diet and minimal sleep that she said was prescribed by her boyfriend as necessary sacrifices to be a successful entrepreneur. The jury learned that Holmes was consumed for a decade with a juggling act of schmoozing, fund raising, deal-making and trouble-shooting blood-testing machines that ultimately proved unfixable.
The list of lies Holmes is accused of telling to raise hundreds of millions of dollars for the company have made for a long trial. Her widely repeated, brazen claims that the U.S. military adopted and deployed Theranos blood analyzers were easily proven false. She confessed to meddling with reports that misrepresented Pfizer's and Schering-Plough's endorsement of Theranos results.
She acknowledged errors in trying to impede whistle-blowers who helped the Wall Street Journal with stories that exposed the inaccuracies of Theranos's blood tests, putting critical cracks in the company's facade.
Holmes "owned her conduct when there was no alternative explanation," said Mark MacDougall, a former federal prosecutor turned white-collar criminal defense lawyer. "There was also no obvious instance where she could be fairly accused of lying on the stand, which is critical when the jury is asked to weigh her version of events."
Holmes heaped significant blame for what went wrong at Theranos on Ramesh "Sunny" Balwani, with whom she entered into a romantic relationship when she was 18 and he was 38.
Her efforts to pin mismanagement of the startup's finances and lab operations on Balwani were countered by the government pointing to text messages showing that he communicated openly with her about the company's many problems.
But Holmes's allegations of mistreatment by Balwani, including forced sex, were the most emotionally charged and disturbing moments of her testimony. While Balwani has denied the abuse claims, he wasn't in the courtroom to defend himself because he faces a separate trial next year over the same fraud charges.
"He impacted everything about who I was, and I don't fully understand that," Holmes testified.
Up until the last possible moment Wednesday, Holmes's lawyers kept the government guessing about whether they would call a psychological expert to explain to the jury how Balwani's alleged abuse affected her decision-making and undermined criminal intent. In the end, the decision was made to finish the defense with Holmes as the last witness.