Elizabeth Holmes is guilty of defrauding investors who believed her promises to revolutionize the future with Theranos. It is the most important conclusion of the jury after seven days of intense deliberations that even left without verdict three of the eleven indictments faced by the businesswoman, who was considered for years one of the promises of Silicon Valley with her blood analysis company. The jury also found Holmes, 37, not guilty of four other charges, including defrauding dozens of patients who went to court after the company’s fiasco, which promised a catalog of diagnoses with a single drop of blood. analyzed by a high-tech machine. Ramesh Balwani, Sunny, who was the president of the company and Holmes’ partner for a decade, will also be tried for the same crimes in a trial that begins in the next few weeks.
Eight men and nine women made up the jury, which deliberated for eight hours over seven days during the Christmas and New Year season. Legal process specialists had claimed a few days ago that each day that was reached without unanimous agreement was actually a benefit to the accused, as it increased the chances of finding Holmes not guilty. This has happened in the fraud charges against investors Alan Jay Eisenman and the investment funds Black Diamond and Hall Phoenix Inwood. On Monday morning, the jury communicated to Judge Edgar Davila that they had failed to reach unanimity.
On Thursday the 23rd, the last business day before the Christmas break, the jurors asked Judge Davila to review again a telephone conversation from 2013 that was reproduced at the trial in October. Holmes, who did not know that it was being recorded, explained to a group of investors that the company was pursuing “a number” of contracts with the military and pharmaceutical companies, but that this effort would be interrupted to instead focus on expanding the number of machines in pharmacies for testing.
“The question is how fast can we scale up … It is a fact that we are going to scale,” said Holmes in the communication with his characteristic low-pitched voice. Theranos was valued at $ 7 billion at the time, but the stock was down. “We are creating significant value for them. We are just beginning, ”said the businesswoman, who never sold a single share of her company despite owning half of the total.
The jury took notes while listening to the conversation again. At the heart of the call was one of the questions posed by the prosecution: did Holmes purposely mislead his investors? This doubt underpinned the prosecution led by John Bostic, which had one of its star moments in September when Jim Mattis, Donald Trump’s defense secretary, sat on the stand to testify against Holmes.
The four-star military man told the San José court how he lost $ 85,000 of his money after believing in the sayings of Holmes, who assured him that the technology developed by his company could help the health of military detachments abroad. . So much faith was Mattis in the company that he joined the board in 2013 with a salary of $ 150,000 a year. He left the post in 2016, when he joined the Republican Administration and the company was sinking into controversy after it was revealed that the machines performed only a dozen tests, forcing hundreds of tests to be taken to conventional labs. The company finally collapsed in 2018. The government presented almost 30 witnesses. One of the victims, a Texas investment manager named Alan Eisenman injected $ 1.2 million. The jury has not found Holmes guilty on Monday in this case.
Holmes’ defense pointed out to the jury that the businesswoman at no time during the call, where she answered questions from investors, gave details about the alleged military or large pharmaceutical contracts. He spoke of these as potential activities, not something that was happening. “We are focusing our investment on retail,” Holmes responded to the question. The legal team stated that their client acted in good faith. “She believed she was building technology that was going to change the world. That’s our story, ”attorney Kevin Downey said during closing arguments last week. More than three months earlier, he had initially raised a similar idea to the jury: “Failure is not a crime.”
Downey and his team used expert testimony during the process to prove that the financial projections Holmes presented to the board were feasible but uncertain. These were gains of 140 million in 2014 and 990 million for 2015. In his conclusions, he even blamed investors for his losses in a speculative activity by nature, but Judge Davila prevented him from continuing down that path. Prosecutor Bostic assured the jury that “a fraud scheme is still a fraud scheme even if it only manages to ensnare someone who has been not very cautious.”
The jury deliberated with a 55-page instructional provided by the judge. In one of these sheets, men and women are asked “not to speculate” why Sunny Balwani has not been tried in the same case. “This fact should not influence your verdict,” the document says. This in reference to one of the moments that marked the process, where Holmes took the stand to argue his innocence. It was a risky strategy that was intended to change the narrative about the accused.
Holmes told the jury how a rape cut short his career as a Stanford University student at age 19. After the attack, he vowed to rebuild his life through his business. Shortly after that, he began his relationship with Sunny, one of the first who believed in the idea. The court, however, heard from her how Balwani abused her sexually and psychologically for several years. The Prosecutor’s Office countered these sayings by showing hundreds of messages full of affection and love between them. In one of them, Balwani insisted to Holmes on the need for the company to obtain approval from the Office of Food and Drug Administration (FDA, for its acronym in English), something that the Theranos machines never achieved and that was an element key so that the military did not advance in the negotiations of the contracts.
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