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Opening salvos due in Theranos founder’s fraud trial

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Opening argumemts are due this week in the fraud trial of fallen Silicon Valley biotech star Elizabeth Holmes./AFP
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Sep 08, 2021 - 08:38 AM

SAN JOSÉ, UNITED STATES — California jurors tasked with deciding whether fallen biotech star Elizabeth Holmes is guilty of a stunning fraud or is herself a victim were set to hear opening arguments in her trial on Wednesday.

Federal prosecutors in the heart of Silicon Valley have in their filings portrayed Holmes as a villain who swindled investors in the diagnostics company Theranos — which she founded at age 19 — with tests that did not work.

But her high-powered defense team has indicated in court documents she was psychologically abused and controlled by her business partner and ex-boyfriend Ramesh “Sunny” Balwani, who is standing trial separately.

Defense and prosecution were set to lay out their positions in opening remarks to a jury of seven men and five women in federal court in the city of San Jose.

Holmes was a tech world celebrity whose multibillion dollar start-up looked set to revolutionize medical testing before it crashed and burned in a blaze of fraud claims.

She and Balwani, the former Theranos chief operating officer whom she dated for a time, are charged with conspiring to defraud Theranos investors and customers.

During jury selection last week, Holmes’s attorney Kevin Downey asked potential members if they had experience with “abuse by an intimate partner,” signaling the defense plans to raise the issue.

Prosecutor Jeffrey Schenk of the US Attorney’s Office is expected to call on medical professionals to undermine that notion.

US district court judge Edward Davila told jurors the trial is likely to last at least 13 weeks.

Holmes, 37, faces charges of wire fraud and conspiracy to commit wire fraud that, if found guilty, could see her jailed for up to 20 years.

‘Fake it till you make it’ 

When she launched the diagnostics company Theranos in 2003, the charismatic Holmes promised results that were faster and cheaper than traditional laboratories, running an analytical gamut on just a few drops of blood.

Political figures like Henry Kissinger and former defense secretary James Mattis were drawn to the company’s board and media mogul Rupert Murdoch invested cash in what seemed to be a sure-fire winner.

Mattis, Murdoch and Kissinger are on a list of potential witnesses filed with the court by prosecutors.

Holmes was lauded as a visionary, drawing comparisons with Apple founder Steve Jobs.

But years of hype, and billions of dollars later, those promises unspooled: the miracle machines did not work.

And, say prosecutors, Holmes knew it, yet continued to lie to investors, doctors and patients so she could raise more than $700 million for the company.

At one point she had a net worth estimated at $3.6 billion, according to Forbes magazine. At the time she was the youngest billionaire not to have inherited her fortune.

In 2018, the Securities and Exchange Commission presented the Theranos case as a lesson for Silicon Valley, a warning against the “fake it till you make it” culture.

The trial has been postponed several times — most recently because Holmes had a child in early July.

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