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Prosecutor in Theranos case says Holmes ‘chosen to cheat’ because of failure

Theranos founder and former CEO Elizabeth Holmes passes through a security checkpoint as she arrives at the Robert F. Peckham Federal Building on December 16, 2021 in San Jose, California.

Justin Sullivan | beautiful pictures

SAN JOSE, California — In a last-ditch effort to convince a jury that Elizabeth Holmes is guilty of fraud, Assistant U.S. Attorney Jeffrey Schenk said Theranos’ founder chose to deceive investors and patients. , a choice “not only callous but also criminal.”

Schenk delivered a three-hour closing argument on Thursday, making the case for Holmes’ conviction clear.

“Mrs Holmes made the decision to scam her investors, and then to scam patients,” Schenk said. “She chose to cheat rather than fail in business. She chose to be dishonest with investors and with patients.”

Schenk urges jury to ignore Holmes ‘claims abuse of ex-boyfriend Ramesh “Sunny” Balwani, who served as her second-in-command at the company, because “the verdict does not validate her abuse claims.” It’s a topic the prosecution has come back to many times throughout three months trial, assuming Holmes was in control and was calling shots.

During Holmes’ testimony for seven days, the former CEO of Theranos sometimes detailed allegations of emotional, physical, and sexual abuse from Balwani. She claimed Balwani was, in some way, controlling her, accusations Balwani vehemently denied.

“You don’t have to decide if the abuse happened,” Schenk told the jury. “The case is about false statements to investors, false statements to patients.”

The defense, which began their final arguments on Thursday afternoon, countered the prosecution’s assertions by saying Holmes never intended to deceive. Her lawyer said she was “building a company, not a criminal enterprise”.

The day began just before 2 a.m. PT, with journalists, spectators and members of Holmes’ entourage lining up in the rain to enter the courthouse.

Among those queuing up was Tyler Shultz, who worked at Theranos and became the main whistleblower. Shultz’s name appeared on a list of possible witnesses for the government, but he was never called to testify. Shultz, the grandson of former Secretary of State and original Theranos member George Shultz, declined to comment.

‘Another way’

Schenk stared at each juror as he delivered his concluding remarks. He highlighted the claims Holmes made about the company’s work with military and pharmaceutical partnerships, noting that they were all untrue.

“Mrs Holmes knew these honest claims would not lead to any revenue,” Schenk said. “She chose a different path.”

Schenk ran the jury through 29 government witnesses, showing photographs of each along with a brief summary of their testimony. He showed jurors a slide listing the ways they said Holmes exercised control at Theranos. The list includes public relations, business development, communication with doctors and investors, pharmaceutical partnerships, and financial forecasting.

“No event in Theranos happened without her decision or involvement,” says Schenk. Schenk also showed the jury a chart, titled “Knowledge of Falsehoods,” listing her false claims along with exhibits.

Holmes pleaded not guilty to 11 counts of telephone fraud and conspiracy to commit cell phone fraud. She could face up to 20 years in prison if convicted. Balwani faces similar charges in a trial that is expected to begin early next year. He also pleaded not guilty.

Sunny Balwani, former president and chief executive officer of Theranos Inc., leaves federal court in San Jose, California, October 2, 2019.

Michael Short | Bloomberg | beautiful pictures

Kevin Downey, Holmes’ defense, told the jury that the government’s case was not completed.

“The picture can change quite a bit by waiting for the full story,” Downey said, adding that prosecutors withheld important information from the jury. Downey told jurors about 11 successful partnerships Theranos had with pharmaceutical companies.

Prosecutors also examined the defense’s description of Holmes as a young, naive Stanford dropout. By the time investors put money into the company in 2013 and 2014, Holmes was nearly 30 years old and had been CEO for nearly a decade, Schenk said.

“Theranos doesn’t need extra experience to avoid cheating,” he told the jury.

During the trial, Holmes’ defense attorneys said she was a Hardworking but young CEO, who trusted Balwani, her chief executive officer, and her lab directors.

“It’s not a question of experience,” Schenk said. “They need a CEO and a COO who interacts with people honestly.”

Downey ended by asking the jury to consider this question: “If Miss Holmes were a criminal, what kind of board of directors would she appoint? Would she appoint agents?”

“She appointed these people, an incredibly illustrious group of people,” Downey said, pointing to a slide with each director’s name on it.

The defense is prepared to conclude its arguments on Friday. A jury of eight men and four women will be assigned the case according to the jury’s instructions. They are expected to weigh in during the week.

“The story of Theranos is in some ways tragic,” Schenk told them. “It is also the story of several individuals acting with remarkable integrity.”

CLOCK: Elizabeth Holmes trial begins final deliberations, ends arguments

https://www.cnbc.com/2021/12/16/prosecutor-in-theranos-case-says-holmes-chose-fraud-over-failure.html Prosecutor in Theranos case says Holmes ‘chosen to cheat’ because of failure

Sarah Ridley

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