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Prosecution persuades Elizabeth Holmes to admit she was in charge of Theranos

Image: NickCorey/AP

Theranos founder Elizabeth Holmes’ best hope for acquittal at this time in her criminal trial is for the jury to conclude that she was a puppet controlled by her lover, company president Ramesh “Sunny” Balwani. The prosecution attempted to dismantle that defence yesterday.

Jurors heard about Balwani’s abusive behaviour during Holmes’ first few days on the stand. Holmes stated that he pushed her to have sex with him, prescribed her meals and routine, and told her she needed to “kill” herself in order to be reborn as an entrepreneur.

Balwani has refuted the allegations of sexual harassment. Several times during his recounting of various occurrences, Holmes sobbed. It clearly sounds like it was a toxic relationship based on her testimony and contemporaneous notes given as evidence.

The jury will have to decide whether or not this influenced Holmes’ behaviour. Was she the one in charge of Theranos? Was she naive to a fraudulent scheme because of her relationship with Balwani? A person’s participation in wire fraud, which Holmes has been charged with, must be both willful and knowing. The prosecution set out yesterday to demonstrate that Holmes was in command and aware that what she was doing was illegal.

Logos return

The prosecution brought up the Theranos reports, which Holmes had doctored with pharmaceutical firm logos, in one particularly devastating conversation. Holmes admitted to placing the logos herself in previous evidence, though she maintained her motives were good. “I was trying to convey that this work was done in partnership with these companies,” she told the court.

However, the prosecution probed her on the subject yesterday. Jurors witnessed contracts between Theranos and pharmaceutical companies that stated that using their logo without prior written permission was clearly prohibited. Is it true that she got that permission?

“I don’t know,” Holmes replied.

Although the initial version didn’t have the firm’s logo, and the intended audience was clearly GSK and Theranos personnel, one report was apparently written by a drug company, GlaxoSmithKlein. Despite this, Holmes put a GSK logo to the document and forwarded it to investors.

But that’s not all: before she emailed it to investors, someone at Theranos crossed out a paragraph that said the “finger prick/blood draw procedure was difficult.” Was it Holmes?

“I don’t know,” she said.

A legal assessment of Theranos’ marketing materials, including its website, in preparation of the Walgreens rollout was the second damning exchange. According to emails, Holmes was personally involved in the process.

“I haven’t quite worked my way through the whole website, but I’m worried,” an attorney emailed Holmes. “For example, every time you say ‘better’ without specifying what it is better than, you are making a comparative claim, at least to all market leaders. You must be able to substantiate these claims.”

A number of adjustments were proposed by lawyers working on the study, including substituting “highest levels of accuracy” with “high levels of accuracy.” They also advised Holmes to have her firm give proof for some assertions. Many of the changes were incorporated into the website, but the original claims—such as “highest levels of accuracy”—were not altered in the documents she provided to investors.

Despite being informed that her exaggerated statements were not lawful, Holmes continued to make them to investors.

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