Elizabeth Holmes trial: Theranos bled money while Holmes sought investors

Prosecutors put two witnesses on the stand Tuesday: former Theranos financial manager, So Han Spivey, and a Theranos whistleblower, Erika Cheung.

Story Highlights:

  • Holmes skyrocketed into Silicon Valley stardom with her biotech startup company, Theranos. Investors pumped millions of dollars into Theranos as the company claimed to have invented mini blood testers that could get lab results with just the prick of a finger. But all that glitters is not gold.

  • ‘We’ll get them’: Elizabeth Holmes’ private text messages released

Legal experts said Spivey’s testimony is helping to establish a motive for why Holmes would need to defraud investors. With net losses year after year, Holmes’ company was in danger of running out of money.

The company went for years without having its financial statements audited.

Lead prosecutor Robert Leach said Holmes knowingly lied when she wooed investors with an invention that didn’t work. Theranos had net losses of $11 million in 2009, $16 million in 2010, and $27 million in 2011.

Whistleblower Erika Cheung (Getty Images)

Cheung testified that Theranos’ blood tests routinely failed quality control tests, and when she raised concerns to the company, her emails were ignored.

Holmes looked intently at her former employees as they testified against her. Michele Hagan, a former San Francisco deputy district attorney, said Holmes needs the jury’s sympathy to convince them that she had good intentions as Theranos CEO. The verdict is more likely to swing in Holmes’ favor if the jurors can relate to Holmes, Hagan added.

Elizabeth Holmes’ trial to dissect downfall of a tech star One female juror was dismissed Tuesday from the trial and she was replaced by a male alternate. This was not in Holmes’ favor because women are more likely to identify with Holmes, Hagan said.

Holmes’ defense team is expected to try to pin the blame on Ramesh “Sunny” Balwani, Holmes’ ex-boyfriend and Theranos COO. In court documents, her lawyers accused Balwani of controlling, manipulating, and abusing her. Elizabeth Holmes and Sunny Balwani are being put on trial separately. (Getty Images)

After the jury was reshuffled, the judge warned the courtroom gallery against trying to sway the jury in any way. The judge said he was concerned that one trial observer shouted “don’t forget the ‘Me Too’ movement” when jurors were entering the courthouse. One woman left the courtroom in a huff and never came back.

Legal experts say the defense could try to use the #MeToo movement in its favor. He “essentially dominating her and erasing her capacity to make decisions.,” defense attorneys wrote.

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