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 Holmes Trial Update #21 

Michael Santos

Michael Santos

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THE CROSS-EXAMINATION OF ELIZABETH HOLMES: TRIAL UPDATE #21

INTRODUCTION

As the defense team for Elizabeth Holmes only called several minor witnesses to the stand, her entire defense boils down to Holmes’ own performance on the witness stand. 

This blog reviews the highlights of the government’s cross-examination.

How much the jury credits what Holmes said directly to them will heavily influence the outcome of her trial. Holmes directly denied any intent to mislead investors, patients, or the public.

DISCUSSION

Trial reports indicate that Holmes’ memory seemed to fail her a lot during her cross-examination. 

Throughout the government’s cross-examination, Holmes said she “couldn’t recall” and “couldn’t remember” events, even when presented with documents aimed at refreshing her memory.

When asked about whether she was the one who gave exaggerated financial projections to investors considering Theranos, Holmes indicated, “I remember some parts of that conversation, but I don’t remember talking about revenue with them.”

Holmes also didn’t remember when a former Theranos lab employee told Holmes that Theranos wasn’t ready to launch in Walgreens in 2013. Asked if she denied telling the lab employee “that Theranos didn’t have much of a choice, that you have a promise to deliver to the customer,” Holmes’ answer under oath was:

I don’t remember saying that, but that’s something that I could have said.

You just have no memory of it?” the prosecutor asked.

“I don’t,” Holmes answered.

That type of exchange was common between Holmes and the prosecutor asking questions. 

The main areas prosecutors covered during the cross-examination of Elizabeth Holmes are below.

TEXT COMMUNICATIONS BETWEEN HOLMES AND BALWANI

As expected, the government made extensive use of text messages between Holmes and Balwani to cross-examine Elizabeth Holmes. 

In general, this technique in cross-examination can be very effective because it is harder for a witness to walk away from things they said via text messages and emails, contemporaneously, to people they trust. 

In the Holmes case, the prosecution took the strategy up a notch by having Holmes read aloud intimate text messages between her and Balwani. 

The prosecution chose to use text messages tending to show that, Balwani and Holmes actually enjoyed a close and intimate relationship, contrary to her depiction of abuse and domineering. 

Balwani has denied all allegations of abuse.

Holmes said on direct examination that Balwani sexually and psychologically abused her throughout their decade-long relationship.

Holmes became emotional when reading the text messages prosecutors asked her to read on the witness stand. 

U r God’s tigress and warrior. You are extraordinary,” one 2015 text from Balwani read. “Coming from my tiger means the whole universe to me,” Holmes replied.

Balwani texts Holmes, “Love you, I prayed from the bottom of my heart for you, I have never prayed with this intensity in my life for anything.” 

Holmes responds, “I love this, my nirvana.

 In another exchange in 2015, Balwani writes, “your gods tigress and warrior you’re extraordinary.” Holmes responds, “Coming from my tiger means the whole universe to me.” 

I love you, I worship you,” Balwani writes.  

In closing arguments, prosecutors will tell the jury that Holmes and Balwani expressed love to one another for a good portion of their relationship, with scant evidence of the abuse Holmes now claims. Prosecutors point out that in 12,000 text messages between Holmes and Balwani, the word love appears 594 times. 

Prosecutors hope these text messages undermine Holmes’ claim that the relationship was emotionally and sexually abusive. For a relationship plagued with abuse, Holmes sure did express a lot of love, and Balwani responded with a lot of positive energy towards her.

The prosecution displayed many other business text messages between Holmes and Balwani. Balwani shows concern about the accuracy of Holmes’ statements publicly on news channels or with investors about Theranos’ machines. Balwani’s text messages indicate that even in 2015, after the Walgreens rollout, Theranos contemplated using a long-term hybrid solution involving finger prick and traditional needle in the arm blood draws. There are text messages from Balwani to Holmes sharing his concerns about the representations that Theranos made on their website.

Holmes admitted on cross-examination that she was “ultimately responsible for Theranos” because she had more equity in the company than anyone else.

Delving into private messages to discredit Holmes is not an easy strategy for prosecutors to act on. The prosecution has to walk a fine line to establish that Holmes was in control of her actions and emotions, not a victim of intimate partner abuse. It is now up to the jury to determine whether they believe that Holmes was a survivor of abuse at the hands of Balwani, and even if she was, whether Holmes should be held accountable for fraud regardless.

Indeed, the text messages also show Holmes and Balwani strategizing about Theranos. Balwani raised concerns about everything from Holmes’ overexposure in the media to Theranos getting more tests approved for its finger stick blood tests.

Worried about over-exposure without solid substance which is lacking right now,” Balwani said in a May 2015 text. “We must hit our volume goals now,” he said a month earlier, adding that it had to be “a matter of life and death.”

Holmes’ Luxury Lifestyle

Prosecutors questioned Holmes about her expensive habits and lifestyle. Specifically, they talked about the $9 million Atherton, California home that Holmes and Balwani bought together in 2013. 

The government showed how Holmes had parties and invited investors to the home. Holmes also hosted company parties there. Holmes was not afraid to show her private life to outsiders. 

This line of questions also alludes to Holmes’s wanting people to see the private side of her life with Balwani. She would regularly invite people into their home to show off their fabulous estate and represent herself as being in a happy, stable relationship with Balwani.

THE WALL STREET JOURNAL INVESTIGATION

Holmes and Balwani strategized about the handling of the Wall Street Journal investigation in their text messages. The texts show that Holmes was very concerned about getting ahead of the WSJ’s story and discrediting anyone feeding negative information to the WSJ.

There were text messages and correspondence between Holmes and media mogul Rupert Murdoch, owner of the WSJ. Murdoch was also a $125 million investor in Theranos. Holmes attempted to gain some favor with Murdoch, trying to make the WSJ story disappear or do less damage. 

Prosecutors focus on the effort to quash the WSJ story to argue that it is contradictory for Holmes to maintain that she didn’t do anything wrong or ever thought anything was wrong at Theranos while also fighting so hard against the WSJ revelations.

Prosecutors confronted Holmes about her tactics, trying to suppress whistleblowers ahead of the Wall Street Journal’s damning Theranos stories.

Holmes acknowledged that she hired high-powered lawyers to serve paperwork to former staffers Erika Cheung and Tyler Shultz after learning that they were talking to the WSJ. Holmes’ testimony is that she was concerned about protecting trade secrets and stopped short of conceding that she, or the company, had retaliated against either.

When prosecutors pointed out that Theranos hired two private investigation firms to “aid in its efforts against Cheung,” Holmes testified, “I’m not sure.” The documents did not refresh her recollection.

Cheung was an early whistleblower who testified earlier in the trial. Cheung was a former lab worker for Theranos who raised concerns about the company’s lab practices, to no avail. When the defense cross-examined  Cheung, Holmes’ defense counsel tried to undermine Cheung’s qualifications and highlighted her junior role at Theranos, her first job out of college.

Confronted with the evidence of Theranos’ hardball tactics, Holmes told the jury that she “sure as hell” wished they had treated Cheung differently and that Theranos had listened to her concerns.

I couldn’t say more strongly, the way we handled the Wall Street Journal process was a disaster,” Holmes testified. “We totally messed it up.

Like many others Holmes had to make during her cross-examination, this admission may be too little, too late.

THE PHARMA LOGOS

On direct examination, Holmes owned up to adding the logos of pharmaceutical companies to reports Theranos prepared to create the appearance that those pharmaceutical companies backed Theranos’ technology. Holmes also altered some of the words on the reports.

Trial witnesses such as investors and business partners testified that they believed the reports and were comforted to think that Pfizer and Schering-Plough endorsed Theranos’ technology. Prosecutors brought up a third pharmaceutical company logo that Holmes used to create a false impression.

When the government asked Holmes whether she also added GlaxoSmithKline’s logo to a report about a study done with the pharmaceutical company before sending it to Walgreens, Holmes said, “I assume so.” 

When asked did she have permission from GlasoSnithKline, Holmes said, “I don’t know.” GlaxoSmithKline did not give Theranos permission to use its logo. 

Pressed further, Holmes confirmed that she never had permission to use the logos of the three pharma companies mentioned above. Holmes admitted that she never told any of the three that she used their logos.

Also, Holmes sent Walgreens executives three reports, falsely claiming that the reports were independent validation of Theranos’ technology.

THERANOS AND THE MILITARY

On cross-examination, Holmes denies ever telling any potential investors or business partners that Theranos devices were in use on military medical helicopters. 

Holmes stated unequivocally that the military never used Theranos’ devices in medical helicopters, never deployed them to Afghanistan or Iraq, and never used them to assist soldiers on the battlefield. In fact, Holmes agreed with the government that it would have been wrong to tell that to potential investors. 

They were not used for clinical care on medevacs,” Holmes testified.

The government mentioned that several witnesses told the jury how they believed that Theranos devices were on medevacs or otherwise being used in the military. Holmes replied that she never told anyone Theranos devices were used for clinical care on medevacs. 

My testimony is I don’t think I said that,” she said.

CONCLUSION

Witness testimony has concluded in the criminal fraud trial of Elizabeth Holmes. The decision will soon be in the hands of the jury. 

Holmes has directly denied any intent to mislead investors, patients, or the public.

Prison Professors, an Earning Freedom company, works alongside (not in place of) civil and criminal defense counsel to help clients proactively navigate through investigations and prosecutions. Our team also helps clients prepare mitigation and compliance strategies.

If you have any questions or are uncertain about any of the issues discussed in this post, schedule a call with our risk mitigation team to receive additional guidance.

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