Trial of Theranos founder Elizabeth Holmes begins in California
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Elizabeth Holmes, founder of the blood testing start-up Theranos, appeared in court on Tuesday as jury selection began in one of the largest trials involving alleged fraud in Silicon Valley.
Holmes faces charges that she defrauded investors and patients by making false claims about Theranos’s blood tests and the company’s financial position. Her trial is being held in federal court in San Jose, California, with opening arguments expected to be heard next week.
Ramesh Balwani, the one-time president of Theranos and Holmes’s former boyfriend, will go on trial separately next year. Both have pleaded not guilty.
Holmes’s trial marks a long-awaited coda to the saga of Theranos, which had been valued at $9bn by investors and hailed as revolutionary before crumbling as evidence accumulated against the accuracy of its blood-testing technology.
The proceedings could also become a crucial test of the blurry lines between upbeat projections and outright fraud at tech start-ups, as venture capitalists pump record amounts of money into young but promising companies.
Theranos claimed to be developing technology that would conduct a range of medical tests using just a few drops of blood. It struck a deal to offer testing services to Walgreens patients and raised a total of more than $700m from investors including the venture firm DFJ, the Walton family of Walmart and the media tycoon Rupert Murdoch.
However, the company began unravelling after the Wall Street Journal reported in 2015 it had used generic diagnostic equipment, rather than proprietary technology, to perform many tests.
The US Justice Department indicted Holmes and Balwani three years later, alleging they had purposely misled doctors and patients when promoting Theranos technology, and misrepresented the company’s financial position and prospects to investors.
Balwani, Holmes and Theranos previously settled charges of fraud with the Securities and Exchange Commission, with Holmes agreeing to pay a $500,000 penalty and relinquish her shares in the company. The company dissolved and transferred its patents to Fortress Investment Group, one of its lenders.
It is unclear whether Holmes, who is represented by litigation firm Williams & Connolly, will take the stand to testify in her own trial. Her lawyers did not immediately respond to a request for comment.
The proceedings have been repeatedly delayed by the coronavirus pandemic, and Holmes gave birth to a baby in July.
Over the weekend, unsealed court documents showed that lawyers for Holmes had argued that Balwani abused her, causing post-traumatic stress disorder. Balwani’s lawyers have denied those claims.