Will Elizabeth Holmes Swap Her Black Turtleneck for Prison Stripes?

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Former Theranos CEO’s Trial Began Aug. 31

More than three years after being indicted on federal fraud and conspiracy charges over her defunct blood-testing company Theranos, disgraced tech pioneer Elizabeth Holmes went on trial on Aug. 31 in San Jose, California. Holmes is charged with 10 counts of wire fraud and two counts of conspiracy for defrauding investors, medical professionals and customers. The trial is expected to last three months.

Unlike most criminal defendants, Holmes is not languishing in a cramped jail cell as she stands trial for fraud. Instead, she lives with her husband, Evans Hotel Group heir Billy Holmes, in a home on Green Gables, a 74-acre, $135 million estate in Woodside, California. In addition to the main house, the estate includes six additional homes, three swimming pools, a tennis court, gardens and a reservoir, according to a recent New York Post report.

Despite her posh surroundings, Holmes has arguably experienced a stunning fall from grace. Her story is reminiscent of a fairytale: At age 19, she dropped out of Stanford University to found biotech startup Theranos in 2003. To boost the company’s credibility, Holmes assembled an impressive board of directors that included former U.S. Secretary of State Henry Kissinger and retired U.S. Navy admiral Gary Roughead. She also raised nearly $900 million in funding from billionaire investors like media mogul Rupert Murdoch and Oracle co-founder Larry Ellison.

The company was worth an estimated $9 billion before a series of Wall Street Journal articles published in 2015 revealed deadly flaws in Theranos’s technology, which the company claimed could quickly and cost-effectively detect hundreds of medical conditions simply by testing a few drops of someone’s blood. The WSJ discredited those assertions, claiming that Theranos wasn’t using its own technology for all the tests it offered. The articles caused Theranos’s stock to plummet and sparked an investigation by the U.S. Food and Drug Administration and a civil lawsuit by the Securities and Exchange Commission that resulted in a $500,000 settlement.

Now Holmes is in federal court, facing up to 20 years in prison and a $3 million fine. She has pleaded not guilty, blaming her former boyfriend and the company’s former president Ramesh “Sunny” Balwani for inflicting emotional abuse during their 10-year relationship, rendering her incapable of making sound company decisions. According to court documents, Balwani controlled what she ate, how she dressed, how long she slept, and also monitored her phone calls, texts and emails. Many consider this a curious defense for the former CEO, who was once the country’s youngest female self-made billionaire.

In opening statements on Sept. 8, Lance Wade, one of Holmes’ lawyers, portrayed her as a hardworking, young and naïve businesswoman whose company failed because Balwani implored her to carry out a scheme to defraud investors and patients. Instead, the prosecution accused Holmes of “lying and cheating” to attain wealth and fame at the expense of investors and customers, defrauding investors from 2010 to 2015 and misleading patients when the company’s tests became commercially available.

Should Holmes take the stand, recently unsealed court filings have indicated she will testify to “intimate partner abuse” inflicted by Balwani, who also faces multiple charges in a separate trial set to begin next year. “That will be extraordinary,” said author Ken Auletta, who observed Holmes and Balwani together on numerous occasions while writing a 2014 profile for the New Yorker magazine. “My impression was she was the dominant one in that relationship. If she started a sentence, he would wait for her to finish it.”

Besides detailing Holmes’s dramatic rise and fall, her trial could also delve into a belief held by some that style sometimes overshadows substance in Silicon Valley. This “fake it until you make it” strategy” has been taken by other startups eager to rise to the level of Apple, Google, Facebook and other tech pioneers that have flourished in the corridor between San Francisco and San Jose. Holmes even went so far to fit into the shoes of Apple co-founder Steve Jobs that she imitated his fashion style, wearing mostly black turtlenecks. Whether or not Balwani had anything to do with that decision is yet to be determined.

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