Prosecutors Tell Jury That Elizabeth Holmes Chose ‘Fraud Over Business Failure’

SAN JOSE, Calif. (Reuters) – A U.S. prosecutor told jurors on Thursday that if Theranos founder Elizabeth Holmes had been truthful with investors and patients about her blood-testing startup, the venture never would have attracted critical funding and revenue.

“She chose fraud over business failure. She chose to be dishonest,” Assistant U.S. Attorney Jeff Schenk told jurors at the start of closing arguments. “That choice was not only callous, it was criminal.”

Holmes, 37, is on trial in San Jose, California, in a case that has shed light on Theranos’ failed endeavor to revolutionize lab testing with small machines that used only a few drops of blood.

Theranos was once valued at $9 billion and vaulted Holmes to Silicon Valley fame. Wealthy private investors including media mogul Rupert Murdoch invested millions in the company after meeting with the founder, who was known for her Steve Jobs-like black turtleneck.

Schenk recapped testimony from more than two dozen witnesses, including patients who had received inaccurate results from Theranos tests for HIV and cancer.

He also recalled testimony from six investors that Holmes gave them false impressions that Theranos devices could carry out a broad range of tests and that they were being used by the U.S. military in the field.

Statements to investors and patients form the basis for nine counts of fraud.

Holmes also conspired to commit those frauds with former Theranos chief operating officer Ramesh “Sunny” Balwani, Schenk said, with Holmes acting as the public face of Theranos and Balwani running its lab operations. She also faces two counts of conspiracy.

Testifying in her own defense during the three-month trial, Holmes has said she did not intend to mislead anyone, and that the company’s laboratory directors were responsible for ensuring test accuracy.

Balwani, who is also charged with fraud and will stand trial separately, has pleaded not guilty.

Theranos collapsed after the Wall Street Journal published a series of articles starting in 2015 that suggested its devices were flawed and inaccurate. Holmes was indicted in 2018.

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