The former CEO of Theranos, Inc., which operated one of its blood testing laboratories in Scottsdale, was in a federal courthouse Tuesday for the first of several hearings leading up to a three-month jury trial this summer on multiple criminal charges of wire fraud and conspiracy.
Elizabeth A. Holmes founded the medical technology company as a 19-year-old college dropout in 2003. It was based in Silicon Valley, but opened a facility in Arizona in 2013 at which time Holmes claimed Theranos could test for hundreds of medical conditions by simply using one or two drops of a patient’s blood taken from a finger prick.
Holmes was considered a poster child for the merger of technology and healthcare. She also became very wealthy. But it all started unraveling in 2015 when a series of news articles blew the whistle on the fact Theranos had not come close to perfecting the testing technology Holmes continued to promote.
The articles also revealed a high number of incorrect test results, and in June 2018 Holmes and one-time Theranos COO Ramesh Balwani were indicted by a federal grand jury after the U.S. Attorney’s Office argued the two executives knowingly misled medical professionals, investors, and its customer-patients about the capabilities of the company’s technology.
Holmes has remained out of custody pending trial which is set to begin Aug. 31 and run through Nov. 30 at the U.S. District Court in San Jose, California. The case was delayed throughout most of 2020 due to COVID0-19, and earlier this year U.S. District Judge Edward Davila refused to delay the trial further when it was announced Holmes is now pregnant.
Instead, the judge has ordered court officials to ensure Holmes has access to a private room to breastfeed the child due to be born next month. Balwani’s jury trial is set to begin at the same federal courthouse in January 2022. It too is expected to last three months.
During Tuesday’s hearing, attorneys for Holmes argued that publicity about the case “is pervasively negative” toward their client who they argue is often referred to “in derisive and inflammatory terms” such as fraud, con artist, and scam artist. Davila was asked to approve a 40-page prospective juror questionnaire created by the defense that contained more than 100 questions about what jurors know about Holmes and Theranos, as well as their attitudes toward healthcare and technology companies.
The judge, however, refused the extensive enquiry and will draft a questionnaire one-half as long.
Many Arizonans are following the Holmes case, as more than 1 million direct-to-customer Theranos test kits were sold by the company. Arizona Attorney General Mark Brnovich eventually secured $4.5 million in consumer fraud refunds for state residents related to those sales.
In addition, thousands of residents underwent blood testing at nearly 40 Theranos “mini-labs” located in Walgreens in the greater Phoenix area, Several of those customer-patients joined an ongoing federal class-action lawsuit against the company and Walgreens due to incorrect test results.
Following Tuesday’s hearing, Holmes was ordered by Davila to return to court June 30 for a motion related to one of the medical witnesses. Then on July 7 the judge will hear arguments in support of a defense motion to suppress evidence related to customer complaints and testing results.
Theranos was once valued at $9 – $10 billion, while Holmes’ had a reported personal wealth of nearly $4 billion. But the 2015 news articles revealed the company never performed close to its claims and was, in fact, using other companies’ equipment to conduct the majority of its blood tests.
One pretrial issue the parties have already fought over involved what evidence the jurors will hear about Holmes’ lavish lifestyle, which prosecutors contend is part of the motive for why the CEO did not pull the plug on the blood testing project. Court records show Davila will allow jurors to be given an overall picture of Holmes’ personal life without specific information on her purchases.
The story of the company’s rise and fall along with that of its founder was the subject of an HBO documentary in 2019 starring Oscar-winning actress Jennifer Lawrence as Holmes.