Who is definitely responsible for the spectacular downfall of the blood-testing startup Theranos? Is it Elizabeth Holmes, the lady boss founder who faces 11 counts of wire fraud for allegedly deceptive buyers? Or is it the corporate’s staff who signed off on varied stories suggesting the know-how carried out effectively? What about Theranos’ board members—like George Shultz, James Mattis, and Henry Kissinger—who received paid tons of of hundreds of {dollars} to advise the corporate? Or is it Ramesh Balwani, Holmes’ enterprise accomplice and ex-boyfriend, who individually faces 11 counts of fraud?
Each of those theories has been explored prior to now a number of days as Holmes took the stand, 11 weeks right into a trial that has captivated Silicon Valley and past. It marks the primary time she has advised her story for herself since Theranos formally shut down in 2018, the identical 12 months she was charged with fraud.
Holmes started her testimony on Friday afternoon, which drove document numbers of individuals to look outdoors of court docket on Monday and Tuesday morning. Spectators started lining up as early as 2 am this week, shivering as they waited for one of many restricted seats within the San Jose Courthouse. The crowd was stuffed with reporters, involved residents, and one man who shouted “God bless you, girl boss!” as Holmes arrived on Tuesday. “The Valley hasn’t seen such a high-profile case of business fraud like this before,” says historian Margaret O’Mara, who in contrast the spectacle to early iPhone releases. Holmes benefitted from hype when her firm was getting off the bottom within the early 2000s. Now she’s discovered herself in a special form of hype cycle.
As a younger CEO, Holmes usually portrayed herself as a wunderkind. She appeared on the covers of magazines and welcomed comparisons to Steve Jobs. But in court docket, Holmes—who’s now 37, and not wears her once-trademark black turtlenecks—emphasised the elements of her job that she delegated to others.
When requested who was accountable for validating that the blood exams labored as promised, Holmes pointed to Adam Rosendorff, Theranos’ lab director. A botched partnership with Walgreens got here all the way down to Daniel Young, the “incredibly smart” worker who Holmes had put in cost. The choice to not disclose that Theranos generally used third-party units was attributed to the corporate’s authorized counsel, which Holmes stated advised her the data constituted a “trade secret.” Balwani, not Holmes, was in control of the corporate’s monetary projections. And the well-known advertising suggesting Theranos used solely “a single drop of blood”? Holmes testified that she didn’t personally log out on each piece of promoting materials that was created by Chiat Day, the costly promoting agency she employed.
This kind of diffusion of blame is extraordinarily frequent in fraud instances, says David Sklansky, who teaches and writes about prison legislation at Stanford. “It’s probably the most common kind of defense mounted in cases involving allegations of large-scale financial fraud,” he says. “Whether it works depends on how credible it seems to the jury.”
