In preparation for a March 9, 2021 court date, Theranos founder and CEO, Elizabeth Holmes is reportedly making an effort to downplay the opulent lifestyle her now-defunct health company afforded her.
In newly released filings, prosecutors claim that Holmes supported lavish shopping sprees, a private jet, and a stable of errand runners with the profits made from Theranos’ brief but highly publicized run.
The issue here of course is that the blood testing technology that made Theranos such a highly-valued company ($9 billion) did not prove to be as effective as advertised.
In 2018, the U.S. Securities and Exchange Commission charged Holmes with lying to investors about the strength of their product after a series of regulatory investigations revealed low efficacy rates.
Holmes is also being accused of destroying patient data from a database called the Laboratory Information System (LIS), which contained three years’ worth of accuracy and failure results.
She and former Theranos president, Ramesh Balwani could face up to 20 years in prison if convicted.
“Elizabeth Holmes and Ramesh “Sunny” Balwani are charged with two counts of conspiracy to commit wire fraud and nine counts of wire fraud. According to the indictment, the charges stem from allegations that Holmes and Balwani engaged in a multi-million-dollar scheme to defraud investors, and a separate scheme to defraud doctors and patients,” the United States Department of Justice reports.
“Both schemes involved efforts to promote Theranos, a company founded by Holmes and based in Palo Alto, California. Theranos was a private health care and life sciences company with the stated mission to revolutionize medical laboratory testing through allegedly innovative methods for drawing blood, testing blood, and interpreting the resulting patient data.”
If prosecutors can prove that Holmes led an affluent lifestyle with money gained under false pretenses, they may be able to soften a jury toward a guilty conviction. The implication being: a person who takes on extravagant expenses and an entourage is consistent with the kind of corporate villain who would lie to investors and destroy subpoenaed evidence.
They might also note that Theranos didn’t rise to the top-selling woo-hoo cosmetics or recreational assets. Holmes and her team claimed to resolved limited health care access with a revolutionary blood testing method that could identify serious illnesses with a prick of a finger. This context further bitters the bad taste Holmes’ exorbitant spending is meant to provoke.
Holmes’ attornies would argue that how she spent the funds she made from Theranos’ success is irrelevant under the assumption that she’s in fact innocent of wire fraud. In fact, they argued exactly that in a motion filed late last week.
“The amount of money Ms. Holmes earned in her position at Theranos, how she chose to spend that money, and the identities of people with whom she associated simply have no relevance to Ms. Holmes’ guilt or innocence,” they wrote on Friday.
“Many CEOs live in luxurious housing, buy expensive vehicle and clothing, travel luxuriously, and associate with famous people – as the government claims Ms. Holmes did. The jury should not be subjected to arguments regarding Ms. Holmes’ alleged purchase of luxury travel, ‘fine wine,’ or ‘food delivery to her home.”
Their current goal is to block testimonies detailing Holmes’ spending habits from a jury.
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