Consider This from NPR - What We Learned When Elizabeth Holmes Took The Stand In Her Fraud Trial

Episode Date: December 10, 2021

After seven days of testimony directly from Elizabeth Holmes, her defense announced it had rested its case this week in a federal fraud trail that began in September. Holmes, a former Silicon Valley luminary, was CEO of the blood-testing startup Theranos. She told jurors she was not responsible, as prosecutors allege, for fleecing investors of millions of dollars and delivering flawed results to patients.And as NPR tech reporter Bobby Allyn explains, Holmes detailed a story of abuse that could sway the outcome of the trial. In participating regions, you'll also hear a local news segment that will help you make sense of what's going on in your community.Email us at [e-mail] more about sponsor message choices: podcastchoices.com/adchoicesNPR Privacy Policy

It all started with a fear of needles. So Elizabeth Holmes and her mother hate syringes. That's NPR tech reporter Bobby Allen. This has been well documented in books and documentaries. They hate needles. They hate getting jabbed. People don't like big needles being stuck into their arm. You're one of those people, right? Deeply so, yes.

And this is Elizabeth Holmes in an interview with Fortune magazine back in 2014. We've reinvented the traditional laboratory infrastructure. When she was 19 years old, she came up with this idea that would like revolutionize the way that you and I get blood tests. That instead of getting a jab in the arm, you know, we'd get this like tiny pinprick of blood from the tip of our finger, and it would be put into this machine that she called an Edison, and it would be able to scan for hundreds and hundreds of diseases. What resulted is this black box, a mini lab. In 2016, Holmes granted CNN an interview and a rare tour of her company Theranos.

The company says it can run up to 40 different tests on a tiny sample of blood. We've designed it to allow for the same operations that a technologist could do in a laboratory. At its height, Theranos was worth more than $9 billion. The problem was that its product, that mini lab, it didn't work as Holmes had promised. And this was discovered after approval had already been given to use the product on real patients. Then the government came in, did a bunch of investigations. The company collapsed. Holmes and her number two, this guy named Sonny Balwani, were charged with fraud. And here we are today in a federal courthouse in Silicon Valley.

The 37-year-old arriving in court, her appearance a far cry from the Steve Jobs-inspired black turtleneck she frequently wore as the founder of Theranos. Another stunning development in a case we've been closely following. And then, late last month, Elizabeth Holmes took the stand. It was one of the most surprising and dramatic moments of an already spectacular trial. Consider this. The saga of Elizabeth Holmes and Theranos has been widely covered through countless news articles, books, documentaries, and podcasts. But coming up, we'll look at what happens now that a jury has heard the story from Holmes herself.

From NPR, I'm Elsa Chang. It's Friday, December 10th. This message comes from WISE. From NPR, I'm Elsa Chang. It's Consider This from NPR. Tech reporter Bobby Allen has been covering this trial since it began back in September. A typical day covering the Theranos trial is showing up at the courthouse around 3 or 4 in the morning, waiting for the Starbucks to open right around the corner. You beat the Starbucks, yeah. There's usually a procession of reporters waiting for the Starbucks employee to open right around the corner. You beat the Starbucks. Yeah. There's usually a procession

of reporters waiting for the Starbucks employee to open the door and we're rushing in to try to get our caffeine fix. And the reason they're lined up so early is because there's limited court seating. It's first come, first served. And these reporters are not just competing for seats with each other. They're also competing with enthusiasts who are trying to follow the trial as well. It's not being streamed. So you have to be inside the courthouse to watch what's going on. Sometimes, you know, Theranos book club people will show up to try to catch a glimpse of Holmes. There was this lady selling black turtlenecks and blonde wigs who came one day because,

for those who don't know, Holmes famously used to wear black turtlenecks like her idol Steve Jobs. Because the story has been so well documented in the years following the collapse of Theranos, I started my conversation with Bobby by asking him whether all this time in the face of all these allegations and government investigations and controversy swirling around the company that eventually made it collapse. And she has offered a defense. It's, you know, included being contrite, saying, oh, I've made some mistakes. It included pointing the finger at others at the company. It included a really harrowing story of being the alleged victim of intimate partner abuse. So I think a dimension that was really missing before this trial was Elizabeth Holmes' side of the story. And we really got to learn about that with real vivid detail during the months and months of this trial. Well, what about the other side of this story? Like, what's the central argument from prosecutors?

What are the main points that they're trying to prove? Yeah. So over the course of this trial, prosecutors have called something like 29 witnesses. And we're talking former Theranos employees, whistleblowers, patients, investors. And they're trying to make the point that Theranos basically was built on a series of lies and that she deceived investors, doctors, and patients about what this company could really do. And in the process, she became a billionaire. You know, she's been described as, you know,

the youngest female self-made billionaire at the time. Here, a great pleasure to talk with somebody that I call an architect of change, Elizabeth Holmes. Most of you... She got very rich and famous, and she, you know, prosecutors said this was always her goal, to be the sort of next Steve Jobs. And she's wearing my uniform. I'm kind of like beside myself here.

I said to my daughter, I'm going to, Elizabeth is very famous for wearing the same thing. So I thought, oh, I'll wear her uniform. So at five, the school was left holding the bag, but investors who lost hundreds of millions of dollars and patients who got false or completely error riddled results, and that really changed their lives. So yeah,

prosecutors are saying that she did this intentionally, which is really key here, Elsa, the government has to show that not only did she lead this company into the ground and make people lose money, but that she intentionally deceived them. And that is going to be a really pivotal thing for the government to prove. And it's a very high legal bar. Meanwhile, where is Elizabeth Holmes throwing the blame for what happened? Right. Before we get to like where she's throwing the blame, what's been sort of interesting to me is her defense strategy has included being apologetic in a sense.

I mean, she has got up on the witness stand and said, yeah, you know, I could have done some things differently. I made some mistakes. In retrospect, I would have done some things very, very differently. In stark contrast to her poised nature seen in the media, Holmes unveiling a more vulnerable side. But she quickly will then pivot to, well, you know, making a mistake isn't necessarily committing a crime, right? So there's that. And then she's also throwing the blame on her number two, her ex-boyfriend and former deputy at Theranos, Sonny Balwani.

The defense submitting Holmes's personal notes, arguing she was under the influence of her second in command and former boyfriend, Sonny Balwani. Saying that he actually had incredible control over Theranos's finances and financial projections. And she may have had the power to fire him at any time, which the prosecution has pointed out several times, but she said that she was being manipulated by him, and that was clouding her judgment, and that is a big piece of her defense. Lastly, she's throwing the blame on lab directors, who she said she trusted. They were the ones who were closest to the technology. If there was any problems with their nose technology, the lab directors were the ones who were accountable, not her. But of course, as the CEO of the company, you know, all roads

point to, right, the CEO. Right. Okay, well, I want to talk more about Sonny Balwani, because his name, it comes up again and again throughout this trial. He was COO and president of Theranos. And he was also in a romantic relationship with Holmes, as we mentioned. And during the trial, Holmes said that Balwani was abusive to her. And we should make it clear that this is a claim that Balwani and his lawyers deny. But tell us, Bobby, how does Holmes describe how Balwani treated her? Yeah, this was probably the emotional climax of the trial when she went up to the witness stand and described this alleged abuse. So Sonny Balwani is someone who got pretty wealthy

during the dot-com era in Silicon Valley. He was 20 years older than Elizabeth Holmes. They struck up what started as a quasi-professional relationship that morphed into a romantic connection. They were living together during the rise of Theranos, but it was sort of a surreptitious situation. They hid the fact from investors that the two of them were dating or had any kind of romantic connection. But from the witness stand, yeah, Holmes said that, you know, Balwani manipulated her, forced

her to have sex, you know, a very harrowing story of suffering intimate partner abuse. I mean, this really emerged as, you know, a central tenet of Holmes' defense here. And, you know, she suggested that at times her judgment was even so clouded by this alleged abuse that it got in the way of being able to think rationally. I don't know what the jury was feeling and what the jury was thinking, but as an audience member in this courtroom, it was hard not to have some compassion for these allegations. Well, I was just going to ask, how much do you think those abuse allegations against Balwani could sway the jury? Did they feel, like, effective? That's a really tough call. I talked to former federal prosecutors about how it might be landing with jurors to get a sense of what, you know, trial lawyers, you know, who have a lot of experience might be thinking about this.

And, you know, they said it's possible to have compassion for her suffering while also thinking she's guilty of fraud. You can hold those two things at once, many told me, right? But others said no. We live in the Me Too era where jurors tend to be much more open and receptive to allegations of abuse in relationships. I talked to Tom Mesereau. He's a longtime criminal defense lawyer and he's represented Michael Jackson and Bill Cosby. So from where I sit, I think the defense is smart to present it. And it's important to underscore that if just one of the 12 jurors believes her, right, it is possible that this jury will not reach a verdict at all. It could be a hung jury and there could be a mistrial declared. Now, I don't know what's going to happen and I'm not going to hazard to guess what may

happen, but that's always a possibility and it's likely part of the defense strategy here to try to appeal to the jurors' emotions. That said, there was a moment in which the jurors did seem to be a little uncomfortable. One of the lead prosecutors on the case, Robert Leach, brought some text messages, romantic sort of lovey-dovey text messages between Holmes and Balwani, in which they used all sorts of terms of endearment for each other, like tiger and tigress.

You know, one of them said, I worship you. The other one said, you're my nirvana. You know, they're expressing love and admiration for one another. They're building each other up. This is how another reporter covering the trial, Emily Saul, described the moment on the Bad Blood, the Final Chapter podcast. And she almost immediately began crying. And, you know, this is just a day after she'd accused Sunny of, you know, forcing sex on her and other things. And so to have her read these messages where she appeared to have a very visceral, authentic response, you know, her face turned red, her mascara was running, just seemed to really authenticate her testimony. I must say that I have no idea how that is going to play into their deliberations,

but it definitely was something that, you know, if you left this trial, you remember that moment because it was so awkward. The feeling of discomfort was palpable in the courtroom. Well, if we can just look ahead now, like after all of this is over, do you think the outcome of this trial could lead to any larger cultural shifts in Silicon Valley? The trial has prompted a lot of conversations out here in Silicon Valley about startup culture, right? There's so many people out here who come up with an innovative idea trying to disrupt an industry just like Elizabeth Holmes was. But there's also this like fake it till you make it ethos, this idea that we might not be able to do what we promise on this very day, but maybe five, ten years down the road, we will. So where does the line between exaggerations

and fraud, where is that line? It's sort of a blurry line. So I think that has caused real conversations out in Silicon Valley, and also this idea of due diligence. I mean, before you write a check for, you know, millions and millions of dollars, shouldn't you be, you know, looking under the hood a little bit. So I think with the, you know, spectacular implosion of Theranos, there has been some soul searching in Silicon Valley and Sand Hill Road, which is where most of the VC firms are based out here, about this idea of let's really do due diligence before we fund the next Theranos and see it embarrassingly all fall apart. So I do think that in a sense, this is a referendum on Silicon Valley

culture. But in another way, this is a very specific case about Elizabeth Holmes and a very specific case about Theranos. It's not great to sort of use this as a way of indicting the entire industry, but there's larger lessons to be learned here for sure. That's NPR tech reporter Bobbi Allen. You're listening to Consider This from NPR. I'm Elsa Chang.