What to watch for as the Elizabeth Holmes fraud trial unfolds

What to watch for as the Elizabeth Holmes fraud trial unfolds

After two delays, two documentaries, and enough podcast hours to fill even the longest of road trips, the Theranos saga is finally headed for the courtroom. Elizabeth Holmes, founder and former CEO of the disgraced testing company, will stand trial starting this week on charges of conspiracy and fraud. She is accused of lying to investors, patients, and the public as Theranos became a multibillion-dollar darling of Silicon Valley.

The trial is the summation of the decade-long cautionary tale that is Theranos, a company that raised hundreds of millions of dollars on a revolutionary premise that proved to be false, buoyed by its charismatic founder, credulous investors, and an adulatory public. Holmes’s fate is sure to resonate in the startup world, where self-appointed visionaries court massive investments with ambitions that don’t always comport with reality.

It could also be quite the spectacle. Among the potential witnesses are big-name supporters of Theranos, including media magnate Rupert Murdoch, former Secretary of Defense James Mattis, and ex-Secretary of State Henry Kissinger. Holmes might even take the stand herself, depending on how her attorneys approach her defense.


Jury selection starts Tuesday, and opening arguments are slated for Sept. 7 in a trial expected to last about three months. Holmes faces two counts of conspiracy to defraud investors and patients and 10 counts of wire fraud. Each count carries a maximum sentence of 20 years.

Here’s STAT’s guide to what to watch for as the trial unfolds.


Was there even such a thing as Theranos technology?

It’s hard to pick a weirdest moment from the Theranos saga. But one most people don’t remember came in Philadelphia on Aug. 1, 2016, after Theranos had been exposed and its valuation had plummeted and investors had headed for the gates but two years before the company declared bankruptcy. Holmes presented a new, next-generation blood test device that was meant to allow diagnostics labs or doctors’ offices to run blood tests on a table top, just as the company’s vaunted Mini-Analyzer did. But the new device didn’t run many of the tests Theranos had claimed its older technology could handle. What’s more, it was used with needles, not the finger-prick devices that were a big part of Theranos’ marketing.

This all leads to the question: Was there ever the claimed Theranos technology, and did it ever work? Or was Theranos simply diluting blood samples so they could be run on existing diagnostics machines like those made by Siemens? Sure, listen for gossip, but we’ll be listening to hear if there was any there there at all, and, if not, for specifics on how it is that Theranos pulled the wool over many people’s eyes — and even delivered blood tests results that, while sometimes terribly unreliable, were not always wrong.

How will Holmes defend herself?

Holmes’s attorneys, from the white-shoe law firm Williams & Connolly, face an uphill struggle. The government will have no trouble showing her dishonesty — she said Theranos’s machines worked when they very clearly did not — so the task for the defense will be to argue that Holmes did not intend to defraud anyone when she said things that were demonstrably untrue. In pretrial motions, her attorneys have hinted at defenses arguing that she truly believed in the power of the company’s machines, that she was simply engaging in Silicon Valley-standard exaggeration, and that her mental state made it impossible for her to deliberately deceive anyone.

The latter defense, revealed in documents unsealed over the weekend, hinges on an allegation that Ramesh “Sunny” Balwani, Holmes’ former deputy and alleged co-conspirator, was psychologically, emotionally, and sexually abusive during the pair’s romantic relationship. Balwani is facing identical charges to Holmes, but he won’t go on trial until next year and won’t be present to defend himself. Even if Holmes’s attorneys decide against the mental-state defense, they could try to pin the blame for fraud on Balwani, who is about 20 years her senior.

Is she going to testify?

For months, legal experts have considered it deeply unlikely that Holmes might take the stand in her own defense, as the risks would almost certainly outweigh the benefits. But if her attorneys choose to argue that she was incapable of intentional fraud because of her mental state, it’s “highly likely” she would testify about Balwani’s alleged abuse, according to recently unsealed documents. Those documents date back to 2019 and early 2020, however, and might not reflect her attorneys’ current plans.

If Holmes takes the stand, she could clear up confusion on a minor facet of the Theranos scandal: her voice. According to former colleagues, Holmes’s signature baritone is an affectation, fitting alongside the black turtlenecks and other aspects of her Silicon Valley visionary persona. (Members of her family, speaking to TMZ, disputed that.) If she testifies in court, the public might hear for the first time her natural speaking voice.

How did she get buy-in from so many big names?

A question underlying the trial is how Holmes convinced so many high-profile investors and advisers to back her company. Former Theranos board members include several former high-ranking members of the U.S. military as well as former U.S. senators (Majority Leader Bill Frist of Tennessee and Sam Nunn of Georgia) and top legal minds, such as the famed litigator David Boies. She also attracted investments from the likes of News Corp. executive chairman Rupert Murdoch, Oracle founder Larry Ellison, Mexican billionaire Carlos Slim, and the family of former U.S. Education Secretary Betsy DeVos, which reportedly invested $100 million.

While she clearly employed the usual friend-of-a-friend approach — her parents, former public servants, had deep Washington connections — testimony may reveal the common elements of her pitch, what made her so convincing, and how her backers reacted to revelations of potential fraud.

How often will Balwani be mentioned?

In the original indictment, Holmes was named as a defendant alongside Balwani, the former Theranos president and COO, but in 2020, they both got a bit of a reprieve when the court granted a motion for the defendants to be tried separately. That could make it easier for Holmes to build a defense by shifting blame onto Balwani, whose trial is scheduled to begin in January 2022. Balwani is just as likely to play the blame game. But if he gets skewered by Holmes’ defense, it could complicate the second trial by increasing the public’s awareness of the notoriously quiet figure.

Did Elizabeth Holmes actually lie?

Hype is a part of the startup business. But there is a line founders are not supposed to cross. Certainly, savvy investors should expect that they are being spun. But it’s not legal to lie to them outright.

A big part of the successful prosecution of “pharma bro” Martin Shkreli, who, remember, made headlines at the same time as Holmes, was that it was possible to catch him in clear lies. He told investors that their investments had gone up when, in fact, the value of his fund had gone down. (Eventually, he was able to make returns that could pay everyone back.) A key question will be how many times prosecutors can prove that Holmes knowingly presented information that she knew was wrong. So watch for those examples — and keep count.

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