Intriguing or naive? Elizabeth Holmes is going to stand trial.

SAN FRANCISCO – After four years, repeated delays and the birth of her baby, Elizabeth Holmes, the founder of the blood testing start-up Theranos, should stand trial on charges of fraud, crowning a saga of pride, ambition and deception in Silicon Valley.

Jury selection begins Tuesday in federal court in San Jose, Calif., Followed by opening statements next week. Ms Holmes, whose trial is expected to last three to four months, is battling 12 counts of fraud and conspiracy to commit wire fraud over false allegations she made about blood tests and of Theranos activities.

In 2018, the Justice Department indicted her and her business partner and former boyfriend, Ramesh Balwani, known as Sunny, with charges against him. Mr. Balwani’s trial will begin early next year. Both have pleaded not guilty.

Ms. Holmes’ case has been touted as a parable of Silicon Valley’s swashbuckling culture, which has helped propel the region’s start-ups to unfathomable wealth and economic might. This same spirit has also allowed con artists and unethical con artists to flourish, often with little consequence, raising questions about Silicon Valley’s hold on society.

But the trial will ultimately focus on an individual. And the central question will be whether Ms Holmes was a deceptive schemer driven by greed and power, or a naïve who believed her own lies and was manipulated by Mr Balwani.

The case rests on Ms Holmes ‘knowledge of problems with Theranos’ blood testing machines. Her lawyers could argue that she was just the public face of the startup while Mr. Balwani and others managed the tech, legal experts said. They could argue that the sophisticated investors who backed Ms. Holmes should have done better research on Theranos. And they could say Ms. Holmes was simply following Silicon Valley standards of exaggeration in the service of an ambitious mission.

Last year, Judge Edward Davila of the United States District Court for the Northern District of California agreed to separate the cases of Ms. Holmes and Mr. Balwani. The move was unusual for such cases, legal experts have said, and allows the couple to blame each other without any ability to respond.

In sealed 2020 court documents that were made public over the weekend, Ms Holmes said her relationship with Mr Balwani had a “pattern of abuse and coercive control.” The documents indicated that Ms Holmes’ attorneys could present expert testimony on her mental state and the effects of the alleged abuse. Lawyers for Mr. Balwani have denied the charges in a filing.

If convicted, Ms Holmes, 37, faces up to 20 years in prison. As high-profile start-up founders, from Travis Kalanick of Uber to Adam Neumann of WeWork, have quickly fallen from grace due to ethical scandals, Ms Holmes could become one of the few to go to jail for it. .

“Too often this kind of fraud goes unchallenged,” said Alex Gibney, director of “The Inventor,” a documentary about Theranos. “So many other people pretend until they are successful, but that is never a reason not to lay charges when someone has committed fraud.”

Lawyers for Ms Holmes did not respond to a request for comment. An attorney for Mr. Balwani, 56, declined to comment, as did a representative from the U.S. District Attorney’s Office for the Northern District of California, which is pursuing the case.

During the trial, the public will be mesmerized by the outrageous details of Theranos’ drama.

For years, Ms. Holmes has cultivated her public image with an unusually deep voice, intense gaze, and a black turtleneck uniform meant to evoke Steve Jobs. She installed bulletproof glass in her office and traveled by jet or chauffeured with a security feature. In 2019, she reportedly married William Evans, a hotel heir. She gave birth to their son in July.

Her high profile presents a challenge in finding jurors who have not formed an opinion on her or the case. Jury members filled out a 28-page quiz describing their media consumption, medical experiences, and whether they’ve heard of Ms. Holmes or seen her TED talk. About half of the more than 200 potential jurors had consumed media related to the case, according to a court filing last week.

It is not known if Ms Holmes will speak in defense. As CEO and President of Theranos, she was persuasive and inspiring. She fiercely defended Theranos and dismissed any criticism as a sign the business is changing the world.

But if Ms Holmes takes a stand, prosecutors could use prior statements to damage her credibility. In a 2017 Securities and Exchange Commission filing, she answered questions by saying “I don’t know” at least 600 times.

“It will be hard for her to say, ‘I remember it that way,’ when she said ‘I don’t know’ so many times,” said John C. Coffee Jr., professor at Columbia Law School. who is not involved in the case. “This is the most damaging evidence against her.”

By the time the United States indicted Ms Holmes in 2018, the once high-flying Theranos was nearly dead.

Ms Holmes founded the start-up at the age of 19 in 2003 and left Stanford shortly thereafter. She hired Mr. Balwani in 2009 and has raised over $ 700 million from investors, valuing Theranos at $ 9 billion. The Palo Alto, Calif., Company has made deals with Walgreens and Safeway to offer its blood tests in their stores. It has also drawn dignitaries, senators and generals – including George Shultz, Henry Kissinger, William Frist and James Mattis – to its board of directors.

“We have reinvented the traditional lab infrastructure,” Ms. Holmes told a conference in 2014. “It eliminates the need for people to have needles stuck in their arm.”

Then in 2015, the Wall Street Journal published a series of papers that questioned the effectiveness of the Theranos machines.

“She committed fraud,” said Dr. Phyllis Gardner, professor of medicine at Stanford who was an early skeptic of Theranos. “She has harmed many patients. She bribed people for their money.

Closer scrutiny by regulators and investors revealed other problems and led to accusations of deception, leading to civil fraud charges by the Securities and Exchange Commission and legal action by investors and investors. Walgreens.

In 2016, Forbes lowered his estimate of Ms. Holmes’ net worth from $ 4.5 billion to zero. In 2018, she settled with the SEC and investors. That same year, Theranos closed its doors.

The Justice Department indictment, also released that year, accused Ms Holmes and Mr Balwani of telling investors that Theranos’ blood testing machines could quickly perform a full range of clinical tests at using a blood sample taken from a finger, even though both knew the tests were limited, unreliable and slow. Ms Holmes and Mr Balwani also overestimated Theranos’ trade deals and told investors the company would generate $ 1 billion in revenue in 2015, when it only earned a few hundred thousand dollars, according to the deed. accusation.

Ms Holmes’ lawyers have since repeatedly pressured for the trial to be delayed. They sought to exclude evidence and blocked witnesses. And they argued over other details, such as whether Ms Holmes should wear a mask during the procedure.

Some charges of fraud on behalf of doctors and patients, whose tests were paid for by insurance, were dropped from the case last year. But Theranos patients whose test results were inaccurate are allowed to testify.

The list of potential witnesses of over 200 people includes many big names who have entered Theranos’ orbit. Among them: Rupert Murdoch, the media mogul, who invested in the start-up; David Boies, the star lawyer, who represented Ms. Holmes and sat on the board of directors of Theranos; and M. Kissinger, M. Frist and M. Mattis.

Lawyers involved in the case have also fought against the hype and stretching of the truth during the Silicon Valley fundraiser. To keep the focus on Theranos, prosecutors have tried to block Ms. Holmes’ attorneys from saying it’s common for start-ups to exaggerate their claims to reap investment. But Judge Davila said the court would allow general comments on the matter.

“Pretend until you get it right – you don’t do that in medical devices,” Dr. Gardner said. “They are very regulated. They have to be perfectly precise and not hurt anyone, and that is what has been done.

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