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Theranos trial: Prosecution rests, Elizabeth Holmes takes the stand

In a surprise move, the defense has Holmes testify.

Elizabeth Holmes at the federal building

Theranos founder Elizabeth Holmes arrives in federal court on Sept. 8 for opening arguments in her highly anticipated trial. 

David Odisho/Getty Images

The trial of former Theranos CEO Elizabeth Holmes is reaching a crucial point. The prosecution rested its case on Friday after calling nearly 30 witnesses over the past two months. Now it's the defense's turn to build its case, and in a surprise move, Holmes took the stand Friday to talk about her early days at Stanford University and the blood-testing startup at the center of the closely watched trial. She's expected to testify further Monday. 

Holmes is charged with multiple counts of conspiracy and fraud over claims she made about the company's compact blood-testing machine. Investigations revealed the technology had serious problems. In a few short years, Theranos went from being valued at $9 billion to being one of the decade's more notorious Silicon Valley stories.

Since September, federal prosecutors have attempted to make the case that Holmes misled patients and investors. This week they presented testimony alleging that Theranos doctored documents intended to show validation of the company's purportedly revolutionary blood-testing technology. Among numerous other witnesses, jurors also heard from a patient who received a false-positive HIV test from Theranos and a former lab director who shut down one of the company's labs after becoming concerned about data from another HIV test.

Holmes' attorneys have pushed back in cross-examination, but on Friday they began to call witnesses of their own. First up was Trent Middleton, a paralegal at the law firm representing Holmes, who explained documents illustrating Theranos' financial and operational history. Then the defense called Theranos board member Fabrizio Bonanni to the stand. The lawyers said Bonanni's testimony will show Holmes made genuine attempts to fix problems at Theranos and that the prosecution failed to mention progress made by the company. 

Next it was Holmes' turn, though her attorneys hadn't made prior indications she'd testify. Holmes pulled down her COVID mask, appeared composed on the stand and at times smiled while answering questions about herself and Theranos. "We worked for years with teams of scientists and engineers to miniaturize all the technologies in the laboratory," Holmes testified, according to The Wall Street Journal.  

Here's what else to know about one of the biggest trials of the decade so far.

What happened to Holmes and Theranos?

In 2003, Holmes dropped out of Stanford University at 19 to found Theranos with the goal of disrupting the blood-testing industry. The company said it was developing proprietary technology that required gathering a smaller amount of blood than a conventional intravenous draw and was more portable than traditional tests sent off to a lab.

Theranos began to see more mainstream attention in 2013 when it signed up Walgreens and Safeway as potential customers. At one point, the startup was valued at more than $9 billion.

Holmes began to appear on the cover of various publications, including Fortune, sometimes drawing comparisons to Steve Jobs for her seeming powers of disruption and a penchant for high-necked black tops.

But the fortunes of both Holmes and Theranos began to change in 2015 when The Wall Street Journal took a deeper look into the company. The Journal reported that only a small portion of tests were being done with the company's testing machine, named Edison, and that many tests were being run on other companies' machines, using diluted blood samples. The accuracy of test results that patients received from Theranos was also called into question.

All this led to the charges filed against Holmes in 2018, a settlement with the Securities and Exchange Commission and the permanent shuttering of Theranos shortly thereafter.

A 2019 documentary, a book called Bad Blood: Secrets and Lies in a Silicon Valley Startup by Wall Street Journal reporter John Carreyrou, and multiple podcasts about the company's precipitous fall helped bring mainstream attention to the story.

Former Theranos employee and whistleblower Tyler Shultz spoke with CNET in 2020 about the whole saga.

What is Holmes charged with?

Holmes is formally charged with two counts of conspiracy to commit wire fraud and 10 counts of wire fraud.

"The charges stem from [Holmes'] allegedly deceptive representations about [Theranos] and its medical testing technology," reads a statement from the US District Court in Northern California

Essentially, Holmes is accused of lying to patients about how the company's blood testing worked and how effective the tests were. Some of the charges also relate to Holmes allegedly misleading investors about the internal workings at Theranos and how much revenue the company was expected to generate.

If convicted, Holmes could be sentenced to up to 20 years in prison.

What is Holmes' side of the story?

Though Holmes denied that the allegations made by the Journal's original reporting were true, she's never told her side of the story from that point on in depth.

"This is what happens when you work to change things," Holmes said on CNBC's Mad Money in 2015. "First they think you're crazy, then they fight you, and then all of the sudden you change the world."

The 37-year-old reportedly pursued a book deal to get her story out. The book never materialized, but a widely acclaimed HBO documentary about the Theranos collapse, The Inventor: Out for Blood in Silicon Valley by director Alex Gibney, came out in 2019. It didn't portray Holmes in a flattering light and she didn't cooperate with the filmmakers, so her take on the events of the past half-decade largely remains a mystery.

Holmes' lawyers come from the high-powered Washington firm that defended President Bill Clinton at his impeachment trial. One possibility is they'll argue she was following something like the Silicon Valley "fake it till you make it" ethos and that she always believed in the long-term potential of the company and its technology to eventually deliver on its promises.

According to The Wall Street Journal, Holmes' lawyers have said she may argue that "she believed any alleged misrepresentations were true and accordingly that Theranos was a legitimate business generating value for investors."

There were hints of this defense in opening statements, when Wade referred to the company's technology as "real" and "innovative."

On Aug. 28, newly unsealed court filings suggested Holmes could seek to defend herself by alleging she suffered psychological, sexual and emotional abuse at the hands of former Theranos president and onetime boyfriend Ramesh "Sunny" Balwani, and that because of submissiveness to him, she believed allegedly fraudulent statements she made were true. 

This strategy was also foreshadowed in opening arguments in which Wade referred to Balwani's temper and promised more related evidence would be presented during the trial. 

Lawyers for Balwani called abuse allegations "outrageous."

Holmes took the stand and began testifying on Friday, Nov. 19, briefly discussing her vision, during her first year of college, for altering health care, The Wall Street Journal reported. She's expected to return to the stand Monday, so we'll see what else she has to say.

How can I watch the trial?

The trial officially began Sept. 7, with opening arguments the following day. There isn't an online feed of the trial, and television cameras aren't allowed in the courtroom, so the best way to follow the case will be via reporters in the room taking notes the old-fashioned way.

In total, over 200 potential witnesses have been identified between the prosecution and the defense, so it's possible testimony will go on for months. 

Balwani faces similar charges in a separate trial scheduled for next year.

Both Holmes and Balwani have pleaded not guilty.