What is Elizabeth Holmes on trial for?
Theranos Inc. founder Elizabeth Holmes is facing a criminal trial in federal court in San Jose, Calif., on charges that she defrauded investors and patients by lying about the accuracy of her company's finger-prick blood-testing technology. The Wall Street JournalThe Trial of Elizabeth Holmes: Who’s Who in the Theranos Case
WOODSIDE, Calif. -- On the same day that former Theranos CEO Elizabeth Holmes was granted a delay in her criminal fraud trial due to a pregnancy, her partner was issued a traffic citation.
William "Billy" Evans received a citation on March 17 for "failure to display license plate," according to San Mateo County, California, court records.
The citation revealed a new address for the couple: a home on the ultra-lush grounds of Green Gables, one of America's most expensive estates.
CNBC has independently confirmed that Holmes and Evans are currently staying in one of the homes that dot the 74-acre property. The storied estate, which is currently listed for sale for $135 million, is nestled in Woodside, one of the wealthiest towns in Silicon Valley. Opening statements in her trial begin this week.
The website for Green Gables boasts "an architectural masterpiece in nature's finest setting."
Four pools adorn the grounds, including a stadium-sized Roman pool, a tennis court, a flower and vegetable garden, and a reservoir exclusively for the property. Green Gables, which was built in 1911, evokes the image of an enchanted forest with deer running through the property.
The English country-style main house is a 10,000-square-foot, nine-bedroom "arts and crafts mansion," according to the website. The other six homes on the property are more modest, including the one Holmes and her partner are staying in. A clerk in the courthouse confirmed to CNBC that the address on Evans' citation was one of the homes on the Green Gables estate.
The town of Woodside is 25 miles from the federal courthouse in San Jose where Holmes is fighting a dozen charges of wire fraud and conspiracy to commit wire fraud. It is home to some of the biggest names in Silicon Valley including billionaires Larry Ellison (co-founder and executive chairman of Oracle), Charles Schwab, Gordon Moore (co-founder of Intel) and venture capitalist John Doerr.
On the town's main street, one shop owner told CNBC "if you want to hide out, you hide out here." Another described it as a place "where people go to lay low." The picturesque, quaint town includes a Michelin-starred restaurant where billionaires are frequently spotted, a small bakery and local grocery store. Residents said they had not seen Holmes lately.
Jury selection in the trial began last week after four delays, including the one in March due to Holmes' pregnancy.
Zackary Wright, executive director, western regional manager of Christie's, told CNBC "I really can't comment on the tenants on the property." Asked about Holmes, one of the listing agents at Compass, Helen Miller, said, "not to my knowledge she isn't. I would know that, not to my knowledge," She later added, "I can't talk about anybody that's renting."
Miller said there's been "quite a bit of interest" in purchasing the property, noting four of the homes on the estate can be rented on a yearly basis. The property also hosts about 10 weddings every summer.
According to the estate's website, San Francisco banker and businessman Mortimer Fleishhacker built the property as a summer getaway for his family. It's been passed on to several generations. In a promotional video, one of Fleishhacker's great-grandsons said, "what he created in Green Gables is undisputedly one of the great private real estate jewels of the world."
Attorneys for Holmes did not respond to CNBC's request for comment.
Holmes' life outside court has been the subject of much speculation. In 2019, an employee at Michelin-starred restaurant Spruce in San Francisco told CNBC that he had seen Holmes dining there numerous times. That same year, CNBC learned Holmes and Evans were living in a two-bedroom, $5,000-a-month apartment in San Francisco's Russian Hill neighborhood.
For the time being, outside the media gaggle at the courthouse, Holmes, Evans and their newborn have been keeping a low profile – leading a very different life than when she was CEO of Theranos. During that time, Holmes graced magazine covers, named one of Time's 100 most influential people, hailed as the "next Steve Jobs" by Inc. magazine and "the world's youngest self-made female billionaire" by Forbes.
She hobnobbed with politicians, celebrities and CEOs. But her star power began to implode after the publication of a series of reports by former Wall Street Journal reporter John Carreyrou which exposed that Theranos' blood-testing technology didn't work.
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08 September, 2021 - 08:30am
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The elements of captivation for, of all things, a high-tech blood-testing startup are clear. It is rare for a CEO — let alone a former billionaire female CEO — to face trial and 20 years in jail. The case has already been marked by head-turning, last-minute revelations and allegations. And Holmes’ meteoric rise to black-turtlenecked cover girl and media darling is matched only by her catastrophic fall from grace.
At the heart of the matter are thousands of patients whom Holmes and Theranos are accused of defrauding: a mother misled about her pregnancy, a patient told to stop taking heart medication, and patients who received false HIV-positive results.
Holmes, along with Ramesh “Sunny” Balwani, a former boyfriend who became president of Theranos, face charges of 10 counts of wire fraud and two counts of conspiracy to commit wire fraud. Both have pleaded not guilty.
Holmes told investors the company was on track to make $100 million in revenue in 2014. In reality, the total was closer to $100,000.
But ultimately, the case is about stories. Which one the jury believes will decide its outcome.
In 2003, Holmes, then 19, followed the contours of a well-worn path to Silicon Valley startup stardom, dropping out of Stanford to devote herself to a singular idea: to revolutionize blood testing by running a rapid battery of tests from a single finger prick.
Modeling herself after her hero, Apple co-founder Steve Jobs, she adopted a black turtleneck as her trademark attire, adopted a strict vegan diet and used a laserlike stare to mesmerize investors and burn through doubters of her quest to disrupt the gatekeepers, make the world better and make a lot of money while doing it.
“I would say Winston Churchill really knew what he was talking about when he said, ‘Never give in. Never give in. Never, never, never,’” Holmes told Glamour in 2015 in a typical example of the laudatory coverage she and her company got at the time. “And I would say that I am living proof that it’s true that if you can imagine it, you can achieve it.”
Along the way, Holmes tried to achieve her dreams by shortcutting the checks and balances designed to protect investors and patients. Theranos did not initially publish its “breakthrough” technology in peer-reviewed journals, nor did it share data with the scientific community. It also did not get approval from the Food and Drug Administration for its devices.
Instead, Holmes took her company’s story straight to the covers of glossy magazines, gave hype-building TED Talks, claimed that its devices were being deployed by the U.S. military on the battlefield and lobbied to change state laws to allow patients to get their blood tests directly, rather than through their doctors.
Rather than raise funds from the usual West Coast venture capital outfits — which demanded to see published peer-reviewed studies showing that her biotechnology worked — Holmes raked in more than $700 million from private investors and East Coast hedge funds, netting the company a valuation of $9 billion — and herself a fortune of around $4.5 billion, making her the world's youngest self-made female billionaire.
Holmes told investors that the company was on track to make $100 million in revenue in 2014, but it was really generating only about $100,000. The company built up an impressive roster of dignitaries and military advisers on its board of directors, including former Defense Secretary James Mattis and former Secretary of State Henry Kissinger. Publishing magnate Rupert Murdoch, Mexican billionaire Carlos Slim and former Education Secretary Betsy DeVos were among its investor pool.
But the technology had issues, which medical professionals and a series of investigative articles in The Wall Street Journal raised in 2015 and 2016. Reporter John Carreyrou broke the story that, although the company claimed that its blood-testing machines could do over 1,000 separate diagnostic tests, its key technology could actually perform only one finger-prick test. Skepticism also mounted in the medical community.
It all came to an end in June 2018, when the company was charged with fraud by the Securities and Exchange Commission and with wire fraud and conspiracy by the U.S. attorney for Northern California.
Prosecutors allege that “despite their knowledge of Theranos’s accuracy and reliability, Holmes and Balwani used interstate electronic wires to purchase advertisements intended to induce individuals to purchase Theranos blood tests,” according to the indictment, even though they knew the tests could yield “inaccurate and unreliable results” that had been improperly adjusted and generated from “improperly validated assays.”
Holmes' trial was originally scheduled to have started in August 2020, but it was delayed repeatedly by the coronavirus pandemic, the birth of her child in July and Holmes’ attorneys, who have sought to exclude evidence and argued successfully for her trial to be separated from Balwani’s.
According to recently unsealed court papers, Holmes will pin the blame on Balwani, arguing that he was an abusive partner who controlled her actions.
Holmes is prepared to describe how Balwani controlled how she ate and dressed and with whom she spoke, monitoring her calls, texts and emails, and to say he threw “hard, sharp objects” at her.
Balwani’s actions were the equivalent of “dominating her and erasing her capacity to make decisions,” including hampering her ability to “deceive her victims,” according to court papers.
Balwani’s attorneys wrote that the allegations are “salacious and inflammatory” and “deeply offensive to Mr. Balwani, devastating personally to him.”
As part of jury selection last week, a pool of 240 potential jurors had to answer a 28-page questionnaire that scrutinized their media consumption and how much they knew about the case. It also asked about their own medical histories. It did not include questions about sexual abuse or domestic violence, but some jurors were dismissed after they recalled experiences with domestic abuse. After three days, the jury pool was narrowed to seven men and five women.
The court has set aside time until December for the trial, which is expected to last the full four months, an indication that there will be many chapters and unfolding narrative threads to follow.