Live Updates: Elizabeth Holmes Begins Testimony Again the Theranos Trial

Her brief testimony on Friday was the first time jurors heard from her directly. The defense will likely try to establish that Ms. Holmes was a hard-working entrepreneur whose failed blood testing start-up did not constitute a crime

Nov. 22, 2021, 1:58 p.m. ETNov. 22, 2021, 1:58 p.m. ET

Erin Woo

San Jose, Calif.

Automating the blood testing process was a major part of Theranos’s argument for why their devices were more accurate. Mr. Downey showed the jurors a paper saying that 93 percent of the errors in the diagnostic process were human errors that Theranos’s system would theoretically have helped automate.

Nov. 22, 2021, 1:55 p.m. ETNov. 22, 2021, 1:55 p.m. ET

White-collar defendants rarely take the stand because it opens them up to a potentially damaging cross-examination. Yet Elizabeth Holmes is testifying in her own defense.

Why take that chance?

Lawyers for Ms. Holmes, 37, may be betting that their client — who charmed investors and partners as she built Theranos to a $9 billion valuation before it collapsed — will be persuasive and charismatic enough to get 12 jurors on her side.

“They think they are behind, and they have a smart, likable, young, attractive witness,” said Neama Rahmani, who is the president of the West Coast Trial Lawyers and a former federal prosecutor. “And she thinks she’s going to talk her way out of it.”

Ms. Holmes’s testimony may also be the only way to show that she did not intend to deceive anyone, Mr. Rahmani said. She can speak about her relationship with Ramesh “Sunny” Balwani, 55, Theranos’s former chief operating officer and her former boyfriend. In court filings, she has said he was emotionally abusive and controlling. He has denied the allegations.

Ms. Holmes, who smiled and appeared relaxed when she took the stand on Friday, may also be hoping to present herself to the jury as a sympathetic figure. She had a baby in July and has showed up to the courtroom carrying a diaper bag and holding hands with her mother.

But by speaking in court, Ms. Holmes is taking a risk. That’s because she has previously made many statements about Theranos — both under oath and in media interviews — which prosecutors can grill her on.

“She’s going to be the best witness for herself, or the worst,” Mr. Rahmani said. “She may just kind of hang herself, so we’ll see.”

Nov. 22, 2021, 1:55 p.m. ETNov. 22, 2021, 1:55 p.m. ET

Erin Woo

San Jose, Calif.

Those benefits included miniaturization and increased automation of the device. “We thought this was a really big idea,” she said.

Nov. 22, 2021, 1:55 p.m. ETNov. 22, 2021, 1:55 p.m. ET

Erin Griffith

San Jose, Calif.

Ms. Holmes testified that by 2007, she believed Theranos’s technology had benefits over traditional blood testing methods.

Nov. 22, 2021, 1:51 p.m. ETNov. 22, 2021, 1:51 p.m. ET

Erin Woo

San Jose, Calif.

As Ms. Holmes testifies, she is speaking slowly and clearly, looking directly at her attorney, Kevin Downey.

Credit…Kimberly White/Getty Images
Nov. 22, 2021, 1:47 p.m. ETNov. 22, 2021, 1:47 p.m. ET

Erin Griffith

San Jose, Calif.

Ms. Holmes has taken the stand and resumed discussing the Novartis demo she discussed on Friday. She explained that the problems in that demo — which have been reported on — were a result of a problem with the glue used to hold the device together, not the technology itself, and the company fixed the problem.

Nov. 22, 2021, 1:44 p.m. ETNov. 22, 2021, 1:44 p.m. ET

Erin Griffith

San Jose, Calif.

The judge and jury have entered.

Nov. 22, 2021, 1:35 p.m. ETNov. 22, 2021, 1:35 p.m. ET

Erin Griffith

San Jose, Calif.

The lead lawyers from both sides of the case emerged from the judge’s chambers and Ms. Holmes has taken her seat at the lawyer’s table in the courtroom. We are still waiting and have no word on what’s happening.

Nov. 22, 2021, 1:03 p.m. ETNov. 22, 2021, 1:03 p.m. ET
Ms. Holmes with her boyfriend, Billy Evans.Credit…Mike Kai Chen for The New York Times

Elizabeth Holmes, the founder of the blood testing start-up Theranos, arrived in court on Monday for her second day of testimony. She came with her mother, Noel Holmes, and another person who has been a consistent presence alongside her at the trial: Billy Evans, her partner.

Mr. Evans’s family founded the Evans Hotel Group, a hotel chain in Southern California. He graduated from the Massachusetts Institute of Technology in 2015 and worked at a tech start-up until early 2019, according to his public LinkedIn page.

Not much is publicly known about Ms. Holmes’s relationship with Mr. Evans. The two were first seen together at the Burning Man festival in 2018, the year that Theranos shut down. Mr. Evans and Ms. Holmes, 37, had a child together in July; she often totes a diaper bag in court.

Mr. Evans often sits with the rest of Ms. Holmes’s family in their reserved row in the courtroom in San Jose, Calif., occasionally leaning over to confer with Noel Holmes during testimony. He and the other members of Ms. Holmes’s entourage keep to themselves and do not interact with the press or the public. He has declined to comment on the trial.

Nov. 22, 2021, 12:51 p.m. ETNov. 22, 2021, 12:51 p.m. ET

Erin Griffith

San Jose, Calif.

After being ushered into the courtroom expecting a 9 a.m. start, we’ve now been waiting for nearly an hour. Kevin Downey and Jeffrey Schenk, the lead lawyers for Ms. Holmes and the prosecution, respectively, are not here. Nor are Ms. Holmes, Judge Edward Davila and the jury.

Nov. 22, 2021, 12:09 p.m. ETNov. 22, 2021, 12:09 p.m. ET
Ms. Holmes heading into court on Monday.Credit…Jim Wilson/The New York Times

Since the trial’s opening statements, the legal team for Elizabeth Holmes, the founder of the failed blood testing start-up Theranos, has made it clear how they plan to defend their client from charges of fraud.

First, they have said: Ms. Holmes was a hardworking entrepreneur who believed her claims that Theranos’s technology was revolutionary and whose failure was not a crime. Second: Other Theranos employees, executives and investors should have known better. And third: Ms. Holmes was manipulated by Ramesh Balwani, who is known as Sunny and who was formerly Theranos’s chief operating officer and Ms. Holmes’s boyfriend.

“She did her level best, day in, day out, to make Theranos successful, and she genuinely, deeply believed it would be successful,” Lance Wade, one of Ms. Holmes’s lawyers, said during opening statements.

Theranos, which had been hailed as a successful Silicon Valley start-up, collapsed in scandal and shut down in 2018 after the company’s technology was shown to not work.

Over the first 11 weeks of the trial, Ms. Holmes’s lawyers have repeatedly pushed the first two points of their defense. They have sought to undercut testimony from lab employees by pointing to their advanced degrees and comparing that to Ms. Holmes, who dropped out of Stanford University. They have also attacked investors’ credibility by detailing their lack of due diligence.

As Ms. Holmes, 37, takes the stand for a second day, she may point the finger at Mr. Balwani. In court filings, she has said that Mr. Balwani, 55, was emotionally abusive and controlling during their relationship. Mr. Balwani, who will stand trial next year, has denied the allegations. Both have pleaded not guilty.

Because Ms. Holmes and Mr. Balwani kept their relationship secret while they worked at Theranos, jurors have heard very little about their interactions. Ms. Holmes’s testimony will likely be jurors’ first real insight into the inner workings of the relationship.

Nov. 22, 2021, 12:05 p.m. ETNov. 22, 2021, 12:05 p.m. ET

Erin Woo

San Jose, Calif.

Ms. Holmes arrived hand-in-hand with her mother, Noel Holmes. She was also accompanied by her partner, Billy Evans, and various other members of her entourage, including two who arrived before 4 a.m. to wait in line with the rest of the public.

Nov. 22, 2021, 12:01 p.m. ETNov. 22, 2021, 12:01 p.m. ET

Erin Woo

San Jose, Calif.

Both the courtroom and an overflow room are packed with spectators who arrived well before dawn. The courtroom is quiet as reporters pull out their laptops and everyone waits for testimony to start.

Credit…Jim Wilson/The New York Times
Nov. 22, 2021, 11:59 a.m. ETNov. 22, 2021, 11:59 a.m. ET

Erin Woo

San Jose, Calif.

After waiting outside for hours, spectators have now filed into the courtroom for the second day of Elizabeth Holmes testifying in self-defense. (Because the proceedings are not live-streamed, standing in line is the only way to secure a spot inside.) Ms. Holmes, wearing a royal blue dress, has arrived at the courthouse, but is not yet in the courtroom. Neither are the judge nor jury.

Nov. 22, 2021, 11:43 a.m. ETNov. 22, 2021, 11:43 a.m. ET

The government’s case against Elizabeth Holmes, the founder of Theranos, featured several key pieces of evidence that showed she intentionally deceived doctors, patients and investors in the blood testing start-up.

They included:

A fraudulent report

In 2010, Theranos created a 55-page report that prominently displayed the logos of the pharmaceutical companies Pfizer, Schering-Plough and GlaxoSmithKline. Investors such as Lisa Peterson, who manages investments for the wealthy DeVos family, and Walter Mosley, whose clients include the Walton family, testified that the report had helped persuade them to invest in Theranos.

The problem? Pfizer, Schering-Plough and GlaxoSmithKline had not prepared or signed off on the report. While prosecutors did not establish that Ms. Holmes created the report, witnesses like Daniel Edlin, a former Theranos senior product manager, testified that she had signed off on all investor material.

A Theranos report implied endorsements from pharmaceutical companies including Schering-Plough and Pfizer.

An investor letter

Theranos spent years discussing with the Department of Defense the possible deployment of its technology in the battlefield, but no partnership materialized.

Yet Ms. Holmes told potential investors in a letter that Theranos had signed contracts with the U.S. military — claims that helped persuade them to invest, the investors testified.

“We really relied on the fact that they had been doing work for pharma companies and the government for years,” Ms. Peterson said.

A Theranos letter about the start-up’s work with pharmaceutical companies and the military.

Internal emails

Emails between Theranos employees made up the bulk of the prosecution’s exhibits. Some of the emails showed when Theranos hid device failures, removed abnormal results from test reports and fudged demonstrations of its blood testing.

In one case, Mr. Edlin asked a colleague for advice on how to demonstrate Theranos’s technology for potential investors.

Michael Craig, a Theranos software engineer, recommended that Mr. Edlin use the demo app, a special setting on Theranos’s devices that said “running” or “processing” if an error had taken place, rather than display the mistake.

The app would hide failures from the client, Mr. Craig wrote in an email.

“Never a bad thing,” Mr. Edlin replied. “Let’s go with demo, thanks.”

Emails between Theranos employees as they prepared to show the company’s technology.

Nov. 22, 2021, 11:31 a.m. ETNov. 22, 2021, 11:31 a.m. ET
Adam Rosendorff, former lab director at Theranos, left, arriving at court last month.Credit…David Paul Morris/Bloomberg, via Getty Images

From the start, prosecutors have argued that Elizabeth Holmes intentionally deceived investors, doctors and patients as she sought investments and partnerships for Theranos, her once highflying blood testing start-up.

In opening statements on Sept. 8, Robert Leach, the assistant U.S. attorney who is the lead prosecutor in the case, laid out the government’s central thesis: that Ms. Holmes courted investors and commercial partners with false claims about her company’s technology and its relationships with pharmaceutical companies and the military.

“Out of time and out of money, Elizabeth Holmes decided to lie,” he repeatedly declared.

To make that case, prosecutors called 29 witnesses to the stand. They included eight former Theranos employees, six investors, three commercial partners, two doctors and three patients. From a star-studded list of nearly 200 people the government had listed as potential witnesses, the highest-profile person to appear was former Defense Secretary James Mattis, who had served on Theranos’s board.

Prosecutors presented evidence to show that Ms. Holmes perpetrated deceit, including that she knew of technology demonstrations that hid Theranos’s failures and was aware the company made false claims of working with the military. They also showed that Theranos had used a report with a pharmaceutical company’s logo to imply it had that company’s backing, even though the firm had not signed off on the report. Investors and partners testified that those claims had helped persuade them to give Theranos their business and money.

The prosecution also detailed the dysfunction within Theranos’s lab, which handled the blood tests. Theranos had trumpeted its claim that its tests could discern various illnesses in patients with just a drop of blood.

But Adam Rosendorff, one of Theranos’s former lab directors, spent six days on the stand explaining that the tests repeatedly produced inaccurate and irregular results. Other lab directors testified that they had essentially been figureheads; one spent just five to 10 hours at Theranos over his tenure.

Daniel Edlin, a former senior product manager and Holmes family friend, testified that Ms. Holmes had signed off on Theranos’s marketing and investor materials. He also said Ramesh Balwani, the chief operating officer and Ms. Holmes’s onetime boyfriend, who is known as Sunny, had deferred to her when the two of them disagreed.

“Generally, she was the C.E.O., so she had the final decision-making authority,” Mr. Edlin said.

Nov. 22, 2021, 11:00 a.m. ETNov. 22, 2021, 11:00 a.m. ET
Theranos’s blood testing machine at the company’s headquarters in 2015.Credit…Jim Wilson/The New York Times

[Follow live news updates on the fraud trial of Elizabeth Holmes.]

In 2018, the United States charged Elizabeth Holmes and her business partner, Ramesh “Sunny” Balwani, with nine counts of wire fraud and two counts of conspiracy to commit wire fraud.

The indictment accuses the pair of engaging in a “scheme, plan and artifice to defraud investors as to a material matter.”

In other words, they are accused of lying about Theranos’s business and technology to get money. The lies outlined in the indictment include claims Theranos made about its relationship with the military and the status of its partnership with Walgreens. Prosecutors also say that Theranos faked demonstrations of its technology and falsified validation reports from pharmaceutical companies and the financial health of its business.

Wire fraud is a felony that carries a maximum penalty of 20 years and potential fines. Theranos also paid a $500,000 fine to settle civil securities fraud charges with the Securities and Exchange Commission in 2018. It also settled multiple lawsuits with investors and partners before dissolving that year.

Since the criminal indictment, the cases of Ms. Holmes and Mr. Balwani have been separated. Mr. Balwani faces trial next year. Further, some of the charges against Ms. Holmes have been dropped and others added. As of today, Ms. Holmes faces 11 counts of fraud and conspiracy to commit fraud.

She has pleaded not guilty.

Nov. 19, 2021, 9:02 p.m. ETNov. 19, 2021, 9:02 p.m. ET

At the end of a grueling five days of testimony this week, the defense in the case of United States v. Elizabeth Holmes on Friday called Ms. Holmes, the founder of the failed blood testing start-up Theranos, to the stand.

A flutter of typing and murmuring washed over the gallery, which had been packed with spectators early in the day, before the audience dwindled as the weekend crept closer. Ms. Holmes has been charged with 11 counts of defrauding investors about what Theranos’s technology could do and about its business.

Ms. Holmes, 37, spent only an hour on the stand before the court closed for the day, so her testimony was truncated. What she discussed were the early days of Theranos and why she had set the company up — and she used the opportunity to present herself in her own terms after her emails, texts and other communications were dissected over the trial’s nearly three months of testimony.

Ms. Holmes’s lawyers have argued that she was merely a young, naive, ambitious founder who relied too much on others who gave her bad advice. Her lawyers have also hammered on her lack of experience and expertise. But on Friday, she presented herself as an expert on her company’s technology.

She testified about the early days of Theranos, which started out as Realtime Cures in 2003. She testified about a patent she had created while a student at Stanford, which led her to drop out and work on the company full time. She also briefly discussed demonstrations of Theranos’s early technology and the early rounds of investment she raised to develop it.

Ms. Holmes’s lawyers indicated that her initial testimony is likely to take up Monday and Tuesday next week. That means that the prosecution’s cross-examination, which is expected to be lengthy, won’t begin until after Thanksgiving.

Ms. Holmes was the third witness to be called by her defense team.

Nov. 19, 2021, 6:31 p.m. ETNov. 19, 2021, 6:31 p.m. ET

Elizabeth Holmes, the founder of the failed blood testing start-up Theranos, surrounded herself with a constellation of moguls, four-star generals, venture capitalists and others during her time running the company. Ultimately, Theranos was undone after whistle-blowers who were concerned that the company was lying about its technology spoke to the media and to regulators.

Here are some of the central figures in the rise and fall of Theranos and Ms. Holmes’s fraud trial.

Who’s Who in the Elizabeth Holmes Trial

Erin Woo?Reporting from San Jose, Calif.

Who’s Who in the Elizabeth Holmes Trial

Erin Woo?Reporting from San Jose, Calif.

Carlos Chavarria for The New York Times

Elizabeth Holmes, the disgraced founder of the blood testing start-up Theranos, stands trial for two counts of conspiracy to commit wire fraud and nine counts of wire fraud.

Here are some of the key figures in the case ->

Who’s Who in the Elizabeth Holmes Trial

Erin Woo?Reporting from San Jose, Calif.

Stephen Lam/Reuters

Holmes founded Theranos in 2003 as a 19-year-old Stanford dropout. She raised $945 million from investors and was crowned the world’s youngest billionaire, but has been accused of lying about how well Theranos’s technology worked. She has pleaded not guilty.

Who’s Who in the Elizabeth Holmes Trial

Erin Woo?Reporting from San Jose, Calif.

Justin Sullivan/Getty Images

Ramesh Balwani, known as Sunny, was Theranos’s president and chief operating officer from 2009 through 2016 and was in a romantic relationship with Holmes. He has also been accused of fraud and may stand trial next year. He has pleaded not guilty.

Who’s Who in the Elizabeth Holmes Trial

Erin Woo?Reporting from San Jose, Calif.

Jefferson Siegel for The New York Times

David Boies, a prominent litigator, represented Theranos as its lawyer and served on its board.

He tried to shut down whistle-blowers and reporters who questioned the company’s business practices.

Who’s Who in the Elizabeth Holmes Trial

Erin Woo?Reporting from San Jose, Calif.

Getty Images

The journalist John Carreyrou wrote stories exposing fraudulent practices at Theranos.

His coverage for The Wall Street Journal helped lead to the implosion of Theranos.

Who’s Who in the Elizabeth Holmes Trial

Erin Woo?Reporting from San Jose, Calif.

Jeff Kravitz/FilmMagic, via Getty Images

Tyler Shultz and Erika Cheung are former Theranos employees and were whistle-blowers. They worked at the start-up in 2013 and 2014.

Shultz is a grandson of George Shultz, a former secretary of state who was on the Theranos board.

Who’s Who in the Elizabeth Holmes Trial

Erin Woo?Reporting from San Jose, Calif.

Eric Thayer for The New York Times

James Mattis, a retired four-star general, was a member of Theranos’s board.

He went on to serve as President Donald J. Trump’s secretary of defense.

Who’s Who in the Elizabeth Holmes Trial

Erin Woo?Reporting from San Jose, Calif.

Edward Davila, a federal judge for the Northern District of California, will oversee the case.

Kevin Downey, a partner at the Washington law firm Williams & Connolly, is the lead lawyer for Holmes.

Robert Leach, an assistant United States attorney for the Northern District of California, will lead the prosecution for the government, along with other prosecutors from the U.S. attorney’s office.

Read more about Elizabeth Holmes:

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Nov. 19, 2021, 6:13 p.m. ETNov. 19, 2021, 6:13 p.m. ET
Elizabeth Holmes at the Theranos Lab in 2015.Credit…Carlos Chavarria for The New York Times

It’s Silicon Valley’s trial of the decade.

Since opening statements began on Sept. 8, Elizabeth Holmes, the founder of the failed blood testing start-up Theranos, has been standing trial in federal court in San Jose, Calif., for 11 counts of fraud (a 12th count was removed). If convicted, she faces up to 20 years in prison. She has pleaded not guilty.

Her case has captivated the public — and spawned books, documentaries and even a fan club for Ms. Holmes, 37 — because she was a young female entrepreneur in heavily male Silicon Valley and because she appeared to push the boundaries of start-up culture and hubris to the limit.

Her story initially seemed like the stuff dreams are made of. Ms. Holmes dropped out of Stanford University at 19 and founded Theranos, which promised to decipher people’s health problems with just a drop of their blood. The company raised $945 million from famous venture capitalists and from powerful tech and media moguls such as Larry Ellison and Rupert Murdoch. At its peak, Theranos was valued at $9 billion. Ms. Holmes was lauded as one of the youngest self-made female billionaires.

But it all came crashing down after a 2015 investigation from The Wall Street Journal found that Theranos’s blood-testing technology didn’t work. Theranos shut down in 2018.

Now Ms. Holmes is on trial over a central issue: Did she intentionally mislead doctors, patients and investors as she sought investments and partnerships?

The prosecution spent weeks arguing that Ms. Holmes purposely deceived investors and others while knowing that Theranos’s blood tests were often inaccurate and that the company relied on third-party commercial machines. In opening statements, Ms. Holmes’s lawyers asserted that she was simply a hardworking entrepreneur whose failure to achieve lofty aims did not constitute a crime.

Ms. Holmes vocally defended herself in the media after The Wall Street Journal’s revelations about Theranos. The jury — and public — will be eager to hear directly from her and to see whether she continues that stance or instead points fingers at others, such as her former business and romantic partner, Ramesh Balwani, who is known as Sunny.

The trial has played out inside a courtroom presided over by Judge Edward J. Davila of the U.S. District Court for the Northern District of California, with no live broadcast of the proceedings. Jury selection began on Aug. 31 and the case is scheduled to finish on Dec. 10.

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