A former rising star of Silicon Valley who faces 20 years in prison. A start-up that promised a revolution. Deceived businessmen and statesmen, called to testify. The trial of Elizabeth Holmes, which opens in September, will be followed closely, as a textbook case for investors but also as a Hollywood film.
By launching Theranos in 2003, at the age of 19, the very charismatic Elizabeth Holmes promised faster and cheaper diagnoses than those in traditional laboratories, thanks to methods supposed to allow up to 200 analyzes with a few drops of blood.
Jurors who will be selected from Tuesday in San Jose, Calif., Will have to determine whether Ms. Holmes, once compared to the late Apple founder-boss Steve Jobs, was guilty of fraud.
Prosecutors will try to persuade them that the ex-entrepreneur knew her machines weren’t working and that she lied to investors, doctors and patients to raise funds – more than $ 700 million, according to the SEC, the gendarme American scholarship holder.
“In terms of financial losses, there have been far larger cases of fraud in the healthcare industry. But in terms of interest and media attention, this is one of the biggest files in the decade, “notes Jason Mehta, lawyer and former prosecutor specializing in health fraud cases.
Postponed several times – especially because the accused had a child in early July – the trial is due to open on September 7 and last for several months.
– The end justifies the means” –
On the list of potential witnesses are well-known names, such as former Secretary of State Henry Kissinger and former Defense Minister James Mattis, who served on Theranos’ board of directors.
The media mogul Rupert Murdoch also appears there, for his investment in the start-up. Ironically, he owns the Wall Street Journal, the American daily which was the first to arouse suspicion of a potential scam at the end of 2015.
Patients who were victims of faulty analyzes could also be called to the bar, to tell how they experienced bad diagnoses of cancer, AIDS or even pregnancies.
Defense lawyers try to oppose it, for fear that the emotion will influence the jury too much.
For Jason Mehta, this is a significant argument, but “these testimonies give substance to the cases. They show that the government’s accusations relate to real damage to people, beyond financial crimes.”
Especially since the prosecution will not be able to base its argument on the database of the laboratory of Theranos.
This was indeed delivered to the government on a hard drive in August 2018, but the company was subsequently dismantled, along with its servers, making the copy impossible to read.
The most awaited testimony remains that of Elizabeth Holmes herself, if she decides to speak.
According to John Carreyrou, the Wall Street Journal reporter who exposed the scandal and pulled a book out of it, the leader genuinely believed in her vision for easy, quick and cheap blood tests.
“She knew she was lying at times, but her noble end seemed to justify the means”, he declared at the beginning of July to the American channel CNBC.
– Let’s be serious –
The combative young blonde woman who fascinated far beyond Silicon Valley experienced a fall all the more brutal as her fortune was estimated at 3.6 billion dollars by Forbes in 2014. She was then the youngest billionaire n ‘not having inherited his fortune.
“She has an incredible tolerance for risk. In her situation, 99% of people would have chosen to plead guilty (and avoided trial), but she prefers to try everything in court,” added John Carreyrou.
In 2018, the SEC presented the affair as a “lesson” for Silicon Valley, a kind of warning against the culture of “Fake it till you make it” – “Pretend time to succeed”.
But most investment funds specializing in biotechnology or health have kept themselves largely away from the brave start-up.
“I am often asked the question, how to avoid the next Theranos?”, Says Jenny Rooke, the founder of Genoa Ventures, which invests in particular in diagnostic solutions.
“Then I try not to laugh,” said the one who was already convinced at the time that the project was doomed. “Experts see the gulf between claims and what is possible and what is not. There are many signs that have scared professionals: no publication reviewed by scientists, no experts involved and the lack of transparency, in particular.”
Ramesh “Sunny” Balwani, the former president of Theranos, is also due to stand trial, but separately, in January 2022.