SAN JOSE, Calif., — During closing arguments in the 15-week fraud trial of former Theranos CEO Elizabeth Holmes, defense lawyers got one last chance to portray their client as a true believer in her unproven technology and had simply tried her best and failed.
“She gave up her education, she gave up her youth, she gave up her close friends, a relationship with her friends, why? Because she believed that she built a technology that could change the world,” said one of her attorneys, Kevin Downey.
“What is the government’s story? Every day from 2010 until 2016: she knew she was committing a crime, she was robbing investors and then in 2016 she was robbing patients,” Downey added.
The case was sent to the jury Friday evening, and deliberations were expected to continue into next week, although a verdict could be reached as soon as Monday.
During several hours of closing arguments, Downey again questioned the credibility of former Theranos lab director Dr. Adam Rosendorf, one of the government’s star witnesses. Downey pointed out there were problems at another lab he later worked at and had been inconsistent in his testimony about the rate of errors in the Theranos lab.
Downey reiterated that Holmes had relied on the advice of others and never misrepresented her work with the military. He said prosecutors failed to prove intent to deceive or defraud because she never sold a share in the company.
During their closing arguments, prosecutors said that if Holmes had sold her class of super voting shares, which gave her disproportionate power within the company, she would have lost control of the board and the company, a structure common among Silicon Valley tech firms, Downey noted.
“We heard for the first time yesterday but not in the evidence in the case that Ms. Holmes held a form of stock that she would lose control over the company if she sold stock,” Downey said.
“No witness testified like that. There’s no evidence.”
Investors in the company were also partly to blame for their losses, Downey argued, and failed to take advantage of public information, including material that would have indicated Theranos was relying on third-party equipment.
When the company dramatically failed surprise government lab inspections, she instituted sweeping internal reforms, agreeing to void two years of test results and installing new lab leadership, Downey said.
“You know that at the first sign of trouble, the crooks cash out, criminals cover up, and rats flee a sinking ship,” Downey said.
Instead, Holmes stayed and tried to right the ship, until her company finally shut down two years later.
“She believed in this technology,” Downey said. “She stayed the whole time… That is who this woman is.”
Federal prosecutors got the final word in their rebuttal to the defense’s closing remarks.
During the trial, Holmes testified the company’s use of third-party machines instead of its own faulty devices was a “trade secret,” which is why it kept the information from investors, the media and its own board of directors.
“Theranos, though, was no Coca-Cola,” Assistant U.S. Attorney John Bostic said.
If it were a soda company, it would repackage sodas sold by its competitors and sell them as their own, or only sell a few sodas, he said.
Bostic also addressed some of the bombshell abuse allegations raised by Holmes during the trial, though the defense did not touch upon them in its closing remarks.
In earlier, emotional testimony, Theranos had disclosed for the first time that she had been raped while a student at Stanford. She also alleged mental, physical and sexual abuse by Ramesh Balwani, her former partner and COO, saying he had exerted control over her transformation from a naive college dropout into the image of a successful Silicon Valley entrepreneur.
“It’s natural to have a strong reaction,” Bostic said. “You need to make up your own minds.”
After considering all the facts, he said, “That will leave you wondering why Ms. Holmes testified about those allegations when she was on the stand, in the absence of any evidence linking that experience to the charged conduct, you should put it out of your mind.”
In his final remarks, Bostic said that when faced with obstacles, Holmes had consistently taken the low road. She could have told investors and Walgreens that the company’s machines weren’t actually going to be used, and not lied to journalists.
“On each of these issues Ms. Holmes had a choice and she consistently put the reputation of the company over what the law requires,” Bostic said.
Holmes and co-defendant Balwani were indicted in 2018 on 11 counts of fraud and conspiracy for allegedly defrauding investors in their blood diagnostics startup, Theranos.
In keeping with the archetypical Silicon Valley origin story, Holmes dropped out of Stanford at 19 to build the company with a single-minded vision of compressing an entire commercial lab into a PC-sized device that used fingerprick tests instead of drawing blood from a vein.
Along the way, she adopted some of the affectations of the tech world’s stars, receiving laudatory media coverage and at one time being called the world’s youngest self-made female billionaire, at least on paper.
But critical articles in the Wall Street Journal in 2015 and 2016 revealed that Theranos was using other companies’ machines to run its tests and delivering faulty results. Theranos attempted a flurry of reforms but was shut down in 2018 following lawsuits by investors and the Securities and Exchange Commission.
Falling from business magazine cover model to indicted and accused fraudster, Holmes has since become a kind of anti-hero, heralded as “Girl Boss” by her online followers and providing material for multiple books, movies, podcasts and streaming television miniseries.
If convicted, she could be sentenced to up to 20 years in prison, the statutory maximum, but as a first-time offender she would likely face less time.
Cyrus Farivar reported from San Jose, Calif., and Ben Popken from the East Coast.