EXPLAINER - Why Elizabeth Holmes' trial hinges upon intent

SAN JOSE (Calif.) -- The highly publicized trial of Elizabeth Holmes, former CEO of Theranos, boils down to one question: Did Holmes cover up flaws in the startup's blood-testing technology in order to rip investors and potentially put lives at risk for unwitting patients?

EXPLAINER - Why Elizabeth Holmes' trial hinges upon intent

After Theranos fell under her false boasts about its technological capabilities, federal prosecutors indicted Holmes, 37, on 11 counts of fraud and conspiracy. Holmes claimed repeatedly that Theranos could scan for hundreds of health conditions and diseases using just a few drops blood.

This would have been a significant change from the traditional method of drawing vials via needles inserted in patients' veins and then shipping them off for testing by Quest Diagnostics/Labcorp. This could have taken days.


It turned out to be a complete mirage.

From 2010 to 2015, Holmes allegedly used deceitful tactics and lies to con investors in her startup. Holmes also misled patients about the accuracy or reliability of blood tests.

Holmes admitted that she made mistakes and made bad decisions during her seven-day defense. She maintained, however, that she believed Theranos was close to a breakthrough that would revolutionize health care.

Holmes implied that Sunny Balwani, her ex-love, had manipulated and deceived her. Holmes claimed that Balwani, with whom she had a secret relationship from 2009 to 2016, let her down. He failed to fix laboratory problems he promised to fix. In the most dramatic testimony of trial, Holmes said that he had made her his pawn by a long-running pattern involving abuse and control over her sleeping habits, diet, and friendships.

Balwani, whose lawyer strongly denied Holmes' allegations, faces similar fraud charges in a separate case that is scheduled to start in February.

The jury, consisting of eight men as well as four women, is considering whether Holmes should be found guilty or acquitted of the charges that hang over her future. Monday was the end of their first day of full deliberations. They did not send any notes to U.S. district Judge Edward Davila who has presided over the trial since its inception in September. They will be returning to San Jose's courthouse on Tuesday morning.


Holmes claimed that Theranos' technology could have saved many lives and reduced health care costs. It made it easier and more affordable for people to obtain blood tests and allowed doctors to better understand their physiology.

This was an amazing idea that Holmes was able create a high-powered board with former Cabinet members from administrations that ranged from Richard Nixon to Donald Trump. This made Holmes a media phenomenon that set Silicon Valley ablaze.

Privately held Theranos was worth $9 billion at its peak. Half of that paper wealth belonged to Holmes, who left Stanford University in 2003 to create the company. Holmes was only 19.


Theranos' highly-hyped technology proved to be a huge failure. It gave such inconsistent results that Theranos' lab began to use conventional blood-testing methods. Holmes continued to praise it as a breakthrough, while boasting of lucrative deals with the U.S military and major drug companies like Prizer.

All of it came to an abrupt halt in 2015 and 2016, when Theranos' testing flaws were exposed in a series articles in The Wall Street Journal as well as the results of an audit conducted by the Centers for Medicare & Medicaid Services.

Holmes was charged by the U.S. Justice Department almost three and a quarter years ago. However, the trial was delayed due to the pandemic and Holmes' pregnancy.


This case can also serve as a warning shot to Silicon Valley's zeitgeist, where young entrepreneurs are often lost in their own hyperbole and hubris as they chase fame and fortune.

Although Theranos raised over $900 million before it failed, fraud charges are focused on $155 million that five investors raised between December 2013 - December 2014. The DeVos family, which includes former U.S. Education Secretary Betsy DeVoss, invested $100 million in the company.

Holmes was accused of fraud against patients by Theranos, who transmitted inaccurate blood results to Holmes in May 2015. They also paid $1.1 million in August 2015 for advertising its blood tests at Walgreens pharmacies. This partnership was one of Theranos' biggest selling points. However, the startup began to have problems.

Two conspiracy charges were filed against Holmes alleging that he had concocted all of it as part of an elaborate scheme to bamboozle business partners like Walgreens, media outlets like Fortune magazine, and investors as well as patients.

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