Elizabeth Holmes, the Theranos founder accused by US prosecutors of defrauding hundreds of millions of dollars from investors, has taken the stand in her own criminal trial, telling jurors: “We thought this was a really big idea.”
The defence made the surprise move to call the 37 year old to the stand last week, giving her the chance to defend herself against claims she lied about the capabilities of the supposedly breakthrough Theranos blood-testing machine.
After an unexplained delay of more than an hour at the outset of Monday’s proceedings, Holmes’s testimony focused on the formative days of Theranos, part of a defence strategy to convince the jury the young entrepreneur had wholeheartedly believed the technology was ambitious but possible.
Defence lawyer Kevin Downey had Holmes talk the jury through several pictures and technical slides, at one point having her use a computer mouse to point out individual components of an early Theranos machine.
One exhibit, a presentation slide apparently prepared by Ian Gibbons, then-chief scientist at Theranos, detailed several milestones the team felt had been met. Gibbons took his own life in 2013, days before a deposition in a patent lawsuit about the company’s technology.
“I took away that we were hitting the design goals for this system,” Holmes said of the presentation, speaking slowly in her trademark low voice. “The system was performing in a way that was excellent.”
In an apparent effort to counter claims Theranos was developing its technology in deep secrecy, the defence showed slides and documentation detailing research partnerships and peer-reviewed studies.
Several were under the heading “Completed Successes”, with examples including work that took place at London’s Royal Marsden Hospital in conjunction with the pharmaceutical company AstraZeneca.
Holmes’s appearance on the stand in the federal courthouse in San Jose, California, will give the prosecution, intent on painting a picture of her as a calculated liar, a chance to cross-examine Holmes — although that grilling is not likely to take place until after the Thanksgiving break.
“She doesn’t have to prove that she’s innocent,” said Amanda Kramer, a former federal prosecutor who is a partner at Covington & Burling. “She just has to create reasonable doubt in the minds of the jurors.”
“The defendant’s answers on cross-examination, no matter the degree of preparation, by their nature are going to be more spontaneous, less prepared, less practised,” Kramer said. Defendants testifying in their own trials is rare, she said, “because it is so risky”.
Journalists and onlookers gathered outside the courtroom since around 3am on Monday. Holmes entered court moments before 8am.
In a brief appearance on Friday, Holmes told the jury about the early days of creating Theranos when she was just 19. At its peak the company was valued at $9bn, with Holmes owning about half.
Holmes has been charged with wire fraud and conspiracy to commit wire fraud. She has pleaded not guilty. If convicted, she faces a maximum sentence of 20 years in prison.
Beyond Holmes’s fate, observers have suggested the spirit of Silicon Valley itself is on trial, with questions over how accountable bold entrepreneurs should be if their ideas do not pan out as intended.
“Trying your hardest and coming up short is not a crime,” Lance Wade, an attorney for Holmes, said in opening arguments.
The trial began in the US federal in San Jose, California, on August 31, having been delayed by Covid-19 restrictions and Holmes’s pregnancy. She gave birth to a boy in July.
Over 11 weeks, until it rested its case on Friday, the prosecution called on 29 witnesses, including the former US defence secretary Jim Mattis, who was a board member of Theranos and invested some of his money in the company.
With Holmes on the stand, the defence is expected to argue, as it has done already in court filings, that she was emotionally abused by Ramesh “Sunny” Balwani, Theranos’s chief operating officer and Holmes’s former boyfriend. Balwani’s lawyers have denied those claims.
Holmes had promised that Theranos could greatly reduce the costs and discomfort of having blood drawn and analysed.
The Theranos Edison machine was billed as a unit about the size of a personal computer that could take a small amount of blood through a “nanotainer” and conduct more than 200 tests. The tiny, half-inch vial became a central prop for Holmes as she graced magazine covers and conference stages the world over.
Behind the scenes, however, the technology was failing and, according to the prosecution, Holmes and her staff set about covering up the company’s shortcomings by doctoring documents and inventing non-existent deals and endorsements with major groups, such as the US military.
Balwani will separately face his own trial on similar charges, likely to be next year. Ahead of it his legal team is seeking to block the inclusion of a vanity number plate on Balwani’s car that read “DASKPTL”, a reference to Karl Marx’s Das Kapital.
“Whether intended as a heartfelt homage, a casual reference or an ironic joke, Mr Balwani’s licence plate does not support any element of the charges that he engaged in a scheme to defraud people of money or other property,” his lawyers wrote in a court filing.