Elizabeth Holmes’ defense rests its case

By Sara Ashley O’Brien, CNN Business

Elizabeth Holmes’ defense rested its case Wednesday, shortly after the founder and former CEO of Theranos concluded her seventh day on the witness stand in her own criminal trial.

While the prosecution called 29 witnesses to testify, the defense’s case relied almost entirely on Holmes. During her testimony, she offered up a complicated, and at times seemingly contradictory, portrayal of herself while at Theranos’ helm. On the one hand, Holmes confirmed that the buck stopped with her at Theranos. On the other, she claimed she was a victim of a decade-long abusive relationship with the company’s COO, Ramesh “Sunny” Balwani, who she said tried to control nearly every aspect of her life. (Balwani’s attorneys have previously denied those allegations.)

“He impacted everything about who I was, and I don’t fully understand that,” Holmes said in a tearful testimony last week.

Holmes was the third witness called to the stand by the defense, following a paralegal for the law firm representing Holmes and a former Theranos board member who joined after its downfall had begun.

Holmes, 37, was once upheld as a rare female founder who’s startup had skyrocketed to a $9 billion valuation, making herself a billionaire. Now, she’s a rare Silicon Valley entrepreneur on trial for criminal fraud, more than six years after a Wall Street Journal reporter published the first expose about the company. She faces nine counts of wire fraud and two counts of conspiracy to commit wire fraud. Holmes has pleaded not guilty and faces up to 20 years in prison and a fine of $250,000, plus restitution, for each count of wire fraud and each conspiracy count.

Holmes’ seven days on the witness stand

Under oath, Holmes acknowledged the company only ever performed 12 tests on its own devices, that she herself doctored Theranos reports by adding pharmaceutical logos to them, and that Theranos never deployed its devices with the military.

But Holmes, in confronting these points, cited her good faith explanations, which countered what jurors had heard from government witnesses. She repeatedly pointed the finger at others for their representations of the company’s capabilities and steps the company took that are under fire. At times, she expressed some contrition, or completely denied earlier witness testimonies.

She testified that Theranos only ever performed a dozen tests, rather than hundreds, using its proprietary technology, but she said it was largely relying on modified third-party machines to accommodate a key retail partnership with Walgreens. The government’s witnesses had claimed that Theranos’ leaned on machines manufactured by others due to its own technological failings.

Holmes testified Theranos did not disclose its use of third-party machines to Walgreens, investors and journalists because it was a closely-held trade secret that she fought to protect, citing the advice of her counsel.

Holmes testified that Theranos devices were never deployed in Afghanistan, on military medevacs, or for use by soldiers, despite conversations and aspirations to eventually do so. Numerous witnesses during the government’s case testified that they’d been told some variation of that, and had been impressed by it. When pressed on this point by Leach, who ticked off a list of witnesses who’d testified as such, Holmes, under oath, denied this: “My testimony is that I don’t think I said that.”

Holmes also testified that she herself added logos of pharmaceutical companies to Theranos reports before circulating them to stakeholders as validations of its technology — something numerous government witnesses testified misled them into thinking those companies had prepared the reports. She expressed contrition about this decision, saying that she had heard witness testimony during this case: “I wish I had done it differently.”

According to Jessica Roth, a Cardozo Law School professor and former federal prosecutor, it can be a “credible strategy” for a defendant to acknowledge some things that may be irrefutable because it buys goodwill with the jury when objecting to others.

Jill Huntley Taylor, a jury consultant, similarly told CNN Business this approach could add to Holmes’ credibility with the jury. “It lets her control that narrative.”

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