This is how Elizabeth Holmes plans to skirt fraud charges

In addition to a series of wire fraud charges, former Theranos CEO, Elizabeth Holmes is under federal investigation for allegedly destroying subpoenaed evidence. The evidence in question belonged to a database known as the Laboratory Information System (LIS). 

The LIS is responsible for logging data for modern laboratory operations. In the case of Theranos, government officials claim that three years’ worth of safety and failure rates for the health company’s proprietary blood-testing system, (then called The Edison) was intentionally terminated.

“On or about August 31, 2018 — three months after a federal grand jury issued a subpoena requesting a working copy of this database – the LIS was destroyed,” prosecutors wrote in the court filing.

“The government has never been provided with the complete records contained in the LIS, nor been given the tools, which were available within the database, to search for such critical evidence as all Theranos blood tests with validation errors. The data disappeared.”

This week, Holmes’s legal team officially responded to these allegations in a court filing. They contend that the lost LIS documents are consequences of negligence on behalf of prosecutors.

“Rather than accept responsibility for that investigative failure, and the resulting evidentiary holes in its case, the government has chosen a different path. The government has insinuated that the loss of the LIS data reflects on Ms. Holmes’ supposed guilt even though she had nothing to do with it.

The reason the government lacks this evidence is because the prosecutors sat on their hands for years before attempting to acquire it, and then sat on their hands again after acquiring it. They are entirely to blame,” Holmes’s defense wrote.

“The reason that the government has built its case on this teetering card house of irrelevant evidence is that it lost—or, worse, did not want to analyze pre-indictment—the actual evidence of testing results in this case,”

This—not unlike the defense’s motion to block reports of Holmes’s lavish spending—is meant to prove that the ousted magnate had limited knowledge of Edison’s deficiencies. 

Dr. Kingshuk Das, who served as laboratory director of Theranos between December 2015 and June 2018, is set to repudiate this claim during Holmes’s criminal trial. If the prosecution gets their way, Das will testify against her alongside 11 patients and 11 doctors who can substantiate his testimony.

In an interview with federal agents, Das said that Theranos’s blood-testing technology “did not perform well, and the accuracy and precision did not meet the level needed for clinical testing.”

This assertion can be countered in a number of different ways. One of which was detailed in Holmes’s official statement above. There is also something to be said about the nature of the clinical testing process in favor of her legal team’s stance.

Even if Holmes was aware of Edison’s testing failures to some degree, it could still be argued that she intended to provide investors with a working version of the product they took interest in down the line. After all, the point of testing is to determine what does and doesn’t work.

“Just as the fact of a heart attack does not prove what caused the heart attack, the fact of an incorrect blood test does not prove what caused the error,” Holmes’s defense added.

The problem is, prosecutors are saying that internal emails prove that Theranos leaders made concerted efforts to hide LIS test results from a grand jury. When Theranos eventually provided backup copies of these results they failed to recall passwords relevant to their acquisition.

Moreover, the results that were recovered were reportedly “so inaccurate, it was essentially a coin toss whether the patient was getting the right result. The data was devastating,” prosecutors wrote in a court filing earlier this week.

Holmes is set to appear in criminal court on July 13th.