Elizabeth Holmes was a big draw at the first day of testimony in her fraud trial.
The biotechnology billionaire says she should be able to avoid being convicted of securities fraud because of insufficient evidence that her company, Theranos, lied to investors.
Holmes sat quietly through the opening arguments Friday as prosecutor Michael Steinbach told jurors that Holmes and her business partner, Sunny Balwani, lied about several key issues, including the true state of the two blood-testing machines used by Theranos. The machines made Theranos one of the hottest biotech companies in Silicon Valley when it was still in its earliest stages.
“The investor commitments these defendants made are not on the record,” Steinbach said.
Steinbach also asserted that Holmes and Balwani lied when they said their company had been operating for nine years, rather than nine months.
Theranos would announce news of its success over the next year with multiple press releases. They would announce more machine approvals when they would actually purchase and install a new machine. For instance, Theranos would announce that Medicare had approved a new testing machine the company owned. Then the company would announce that the machine had been installed on an existing clinical lab. In other words, Theranos had been putting out false press releases when it was actually selling equipment, according to Steinbach.
Theranos’ story of an inexpensive, quick blood-testing device that could replicate the results of traditional labs has crumbled after the company was forced out of business. The federal government accused the company of fraud, and the Theranos board replaced Holmes as CEO.