- After more than three months
of hearing testimony and seeing evidence,
a jury has begun deliberations for the criminal fraud trial
of Theranos founder Elizabeth Holmes.
Over the course of the high-profile trial,
the prosecution set out to prove
that Holmes intentionally misled investors and patients
about the efficacy of Theranos's blood-testing technology.
Jurors heard from 29 government witnesses
and reviewed reams of documents, text messages,
emails, and reports.
They also heard directly from Holmes herself,
who spent seven days on the stand.
She acknowledged regrets,
but maintained that she never defrauded anyone.
With cameras banned in the courtroom,
WSJ's Sara Randazzo brings us all the highlights
from Holmes's testimony.
Elizabeth Holmes shocked a lot of people
when she took the stand.
What was the defense's strategy in having her talk?
- She's good at working a room.
She's good at convincing people.
It's what she had done her whole career!
She had convinced tons of high-profile investors
and Washington luminaries and the like,
to buy into her vision, and really,
this was just the ultimate sales pitch,
her taking the stand to tell her side of the story.
- [Shelby] In the first part of her testimony,
the defense walked the jury
through the early days of Theranos.
- They painted her as an entrepreneur
who had great intentions
and was really trying to improve healthcare.
She said, she "thought things were going well,"
and she'd get reports from a study saying that,
"Oh, these results were excellent,"
and she wanted to share that with investors.
And so she gave a lot of examples of times
when scientists and others were telling her
things were on track.
- [Shelby] Another big topic throughout the trial,
Holmes's comments about her company's relationship
with the military.
Here's a clip prosecutors played of Holmes
talking to investors in 2013.
- We built the business around partnerships
with pharmaceutical companies,
and our contracts with the military,
wherein we could deploy our framework."
- A lot of investors said that they backed Theranos
because of its relationship with the military,
which didn't exist.
How did Holmes answer to that?
- She basically insisted up, down, and sideways
that she did not recall ever telling an investor
that the Theranos device was being actively
used by the military.
And so it was this very odd disconnect,
where we had heard from several investors who said,
"She said this in pitches,
and that was a big thing that got us to invest."
- Holmes explained that Theranos was jointly working
on several studies with the U.S. Department of Defense,
but she acknowledged that no military partnerships
ever resulted from the studies.
Another key moment came when Holmes conceded
to one of the prosecution's key pieces of evidence.
She admitted to altering Theranos documents
to include the logos of major pharmaceutical companies.
Investors testified that the doctored reports
helped convince them to buy into the startup.
- She said, "Yes, I added the logos
of pharmaceutical companies to the top,
but I didn't think that was misleading.
I just thought it showed that this report
was done in consultation with the pharmaceutical companies."
So she didn't frame it in the same way the prosecution did,
even as she said she was the one responsible for it.
- [Shelby] Another key issue in the trial was Theranos's use
of blood-testing devices made by other companies.
Prosecutors played this video clip of Holmes
speaking with CNBC's Jim Cramer in 2015.
- Every test that we offer in our laboratory
can run on our proprietary devices.
- [Shelby] Holmes falsely claimed Theranos could run
more than 200 tests on its proprietary device.
In reality, the device could only perform a dozen tests.
- We heard her basically say publicly for the first time,
what they did with these third-party devices,
and that, yes, they bought third-party machines
and modified them so that they could run
their tiny blood samples that they said were being run
on their own proprietary machines.
- A pivotal moment in Holmes's testimony came
when she claimed she had suffered sexual
and emotional abuse.
- It was, of course, very traumatic
and serious allegations that she brought,
saying that her former boyfriend, Sunny Balwani,
who was also for top deputy at Theranos,
really controlled her life on a micro level,
controlling when she could sleep, when she could eat,
how she ran her business,
what she should do to be a better businessperson,
and even saying that he forced her
to have sex when she didn't want to.
- [Shelby] Sunny Balwani has denied the abuse allegations.
Prosecutors presented evidence
in the form of hundreds of text messages
between Holmes and Balwani showing loving exchanges.
Balwani faces a separate trial next year
for the same fraud and conspiracy charges as Holmes.
He has denied the allegations against him.
- It really was emotional, powerful testimony.
The problem was, it didn't relate
to the fraud that was being alleged that had happened.
She even explicitly said, "No,
I'm not saying that Sunny told me what to tell investors
and what to tell business partners."
But she was saying he clouded
kind of everything about what she did.
- [Shelby] In the prosecution's cross-examination,
Holmes expressed remorse for how Theranos
treated lab employees and handled situations with reporters.
Prosecutors told jurors how Theranos
threatened scientists with legal action
to keep them from talking to journalists
about problems at the lab.
Holmes also testified about her attempts
to quash "Wall Street Journal" reporting.
The "Journal" broke story after story
about Theranos's failed technology.
- I think the strategy there is to make her look more human.
If you take the stand and say, "I did nothing wrong,
I've never done anything wrong in my life,"
a juror's going to have a hard time relating to that.
But when she said things like,
"The way we handled the 'Wall Street Journal' process
was a complete disaster," and, "Yes, I really wish
we had treated Erika Cheung, one of the lab scientists,
better, you know, we could have done that differently,"
it showed she was taking some responsibility.
- Holmes's final verdict could have a lasting impact
in the world of Silicon Valley venture capital startups.
- White collar cases are very hard to bring.
Fraud is very hard to prove.
And there's always a lot of questions
over whether it's worth it for the government
to bring a case like this.
And so this could give other companies
in Silicon Valley pause,
but it certainly is notable in that it's very rare
for a startup and startup culture
to be considered a crime.
(contemplative music)