The jury in the Elizabeth Holmes trial has unanimously agreed that she is guilty of a series of crimes, including conspiracy to defraud and obstruction of justice. The first “smoking gun” was an email from Theranos CEO Ramesh Balwani to Ms. Holmes in which he asked her for help with an article on how blockchain will transform healthcare practice. They then deliberated about whether this information would be used for marketing purposes or not, ultimately deciding it would not be useful for marketing but could still fall under fraud charges regardless because they were misrepresenting the company’s capabilities instead of focusing on building them out as promised.
The “elizabeth holmes theranos” is an American entrepreneur who founded a company called Theranos. The company promised to revolutionize blood testing and was valued at $9 billion before it shut down in 2018. Elizabeth Holmes was found guilty of fraud on Friday, September 27th after two “smoking guns.”
SAN JOSE (California) — In the second week of deliberations, jurors in Elizabeth Holmes’ trial seized on two “smoking guns” that sealed the fate of the Theranos Inc. founder, according to one juror.
The four women and eight men huddled in a fifth-floor courtroom, debating whether she had deceived huge Theranos investors about her blood-testing firm. Susanna Stefanek, known as Juror No. 8 during the trial, said jurors focused on two pieces of evidence that she thought demonstrated Ms. Holmes knowingly deceived to investors.
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The first smoking gun for some, according to Ms. Stefanek, was a report Theranos delivered investors that Ms. Holmes changed to make it appear like it was an endorsement from Pfizer Inc. The second was a financial projections sheet provided to potential investors, including prosecution witness Lisa Peterson, who works for the DeVos family office, which invested $100 million in Theranos, according to the jury.
Ms. Stefanek, an editorial manager at Apple Inc., said, “There were simply so many inaccuracies on one page of paper.” Although government witnesses told jurors that Theranos had no such contracts at the time, the 2014 plan estimated $40 million in yearly income from pharma firms.
The conversation was one of the most important in the more than 50 hours of deliberations before the jury convicted Ms. Holmes, who claimed to have revolutionized blood testing, guilty on four counts of conducting a multi-year fraud scheme against investors.
Four of the 11 criminal-fraud counts against Theranos founder Elizabeth Holmes were found guilty by a federal jury. Each offense carries a potential penalty of 20 years in jail. Sara Randazzo of the Wall Street Journal presents highlights from Holmes’ testimony. The Wall Street Journal’s Josh Edelson took this photo.
According to Ms. Stefanek, the jury of pensioners, government employees, retail, and technology-industry workers meticulously followed the judge’s directions and studied evidence supporting each of the charges. They were also collegial and didn’t raise their voices, even while discussing.
They were deadlocked on three additional charges in which Ms. Holmes was accused of defrauding investors, and they acquitted her on four counts in which she was accused of defrauding patients. In an interview, the foreman, juror No. 2, said he first felt Ms. Holmes was guilty on the patient charges, but changed his mind following a jury argument. According to him and Ms. Stefanek, the jury did not feel there was evidence tying Ms. Holmes to patient claims of receiving fake blood-testing results.
On the seventh day of deliberations, jurors grappled with Ms. Holmes’ most riveting evidence, in which she tearfully claimed in horrifying detail that her former Theranos Inc. subordinate and longtime lover had mistreated her, something he has denied.
Ms. Stefanek said that while jurors believed Ms. Holmes was abused by her former deputy and boyfriend, they quickly concluded that prosecutors were correct in closing arguments that those allegations had no bearing on whether Ms. Holmes committed fraud against patients and investors while running Theranos.
“There was some skepticism that it was a sympathy ploy,” Ms. Stefanek, 51, said, adding that she believed Ms. Holmes’ charges but that they had no place in the trial.
The courtroom complex in San Jose, Calif., where jurors heard 15 weeks of evidence in the trial of Theranos founder Elizabeth Holmes.
Photo courtesy of The Wall Street Journal’s Jason Henry.
As a result, Ms. Holmes’s risky choice to testify on her own behalf—along with her team’s plan to raise the abuse accusations without linking them to what occurred at Theranos—failed miserably. According to Ms. Stefanek, the jurors devised a star system to assess witness credibility, and Ms. Holmes received the lowest score of any witness, a 2 on a scale of 1 to 4.
Ms. Holmes’ attorneys and a spokesperson from the United States Attorney’s Office for the Northern District of California did not reply to requests for comment.
During the week before Christmas, jurors started debating and selecting a foreman. After 15 weeks of evidence from 32 witnesses, each presented their first thoughts. They were seated in a rough arc around a screen and computer provided to them to see evidence in a courtroom in downtown San Jose, according to Ms. Stefanek.
Many participants were “quite noncommittal” in the initial poll, according to Ms. Stefanek, accepting the judge’s advice not to make up their minds before deciding.
They arranged their opinions on the 29 government and three defense witnesses after that, poring through exhibits and notes and writing out the major points each made on huge, white pieces of paper that they taped to one courtroom wall.
Many of the credibility ratings given to witnesses by the jury were high, according to Ms. Stefanek, including those given to former Defense Secretary Jim Mattis, representatives from Theranos business partners Walgreens Boots Alliance Inc. and Safeway Inc., and patients and doctors who testified about receiving Theranos results that concerned them.
According to one jury, former Defense Secretary Jim Mattis received a high credibility rating as a witness in the Elizabeth Holmes trial.
Bloomberg News/Bloomberg News/David Paul Morris
Witnesses who looked to have an agenda, such as former lab worker Erika Cheung, who appeared to be “engaged in a specific conclusion,” lost stars, according to Ms. Stefanek.
“I admire the jury’s work, time, and energy,” Ms. Cheung said in an email on Thursday. She described the rating as “an evidence that whistleblowers are still stigmatized.”
“A life aim of mine was never to have a part in putting someone to jail,” Ms. Cheung said, noting that prosecutors presented evidence at trial verifying the warning flags she had raised about Theranos.
Ms. Holmes received a two-star rating because of how much was at stake in the case and the probability that she was twisting her evidence to make herself appear good, according to Ms. Stefanek. There was no witness who obtained a one-star rating.
Michael Kew, jury No. 11, stated on Wednesday night from his balcony in Santa Cruz, Calif., that he thought Ms. Holmes was more trustworthy than some of his other jurors. Other jurors either refused to respond or could not be contacted.
Jurors recapped the testimony throughout their first three days of deliberation, according to Ms. Stefanek. On Dec. 27, the jury reconvened and conducted an anonymous poll on each of the 11 charges.
Erika Cheung, a former Theranos lab worker, was cross-examined during the Holmes trial.
Vicki Behringer is shown here.
Three charges were unanimously found guilty: pitches made by Ms. Holmes to three of the indictment’s investors. When the foreman totaled the findings on a whiteboard, the other eight counts came back muddled.
Despite their early disagreements, jurors eventually decided to acquit Ms. Holmes on one count of conspiracy to commit wire fraud and three counts of wire fraud involving patients, according to Ms. Stefanek.
According to her, the jury decided that prosecutors didn’t offer enough evidence to establish that Ms. Holmes willfully sold a defective product in order to get people to pay for testing.
According to Ms. Stefanek, the jury agreed that the Theranos lab was operated shoddily and not in the manner anticipated of a corporation aiming for the best quality in medical treatment. Jurors, on the other hand, believed that the burden of evidence on scamming patients was greater.
“If all we had to show was that she was aware that there may be difficulties in the lab that could endanger people, that would be one thing,” Ms. Stefanek said.
The testimony of one patient, Erin Tompkins, who said she got an inaccurate Theranos blood test result suggesting she may be HIV-positive, did not convince jurors.
Ms. Stefanek was skeptical that the test revealed Ms. Tompkins was HIV-positive.
Ms. Tompkins acknowledged on Thursday that the jury’s task was difficult. Ms. Holmes’ defense counsel, she said, confused her testimony by asking what she saw as perplexing questions that made it seem as though she had misconstrued the outcome. She maintains her belief that the Theranos test result revealed she was HIV-positive.
Erin Tompkins, wearing sunglasses, testified that she received an inaccurate Theranos blood test result that indicated she may be HIV-positive, but one juror claims the panel was not convinced.
PHOTO: REUTERS/PETER DASILVA
The jurors provided arguments and counterarguments during the proceedings. Ms. Stefanek said that she often assumed the role of raising arguments raised by the defense.
However, she was unable to refute the evidence of two former Theranos lab directors, who claimed that they seldom or never visited the facility and did nothing more than sign papers.
“It was funny, really,” she said of the “stuntman directors” as the jury dubbed them, adding, “there was no way to put a positive spin on it.”
The jury switched to the investor numbers after deciding on the patient counts halfway through the second week, according to Ms. Stefanek.
That’s when they focused on the “smoking guns” regarding the doctored Pfizer paper and the overstated financial predictions to the DeVos family office, according to Ms. Stefanek.
Ms. Stefanek said of the Pfizer report, “She was attempting to make this thing appear better than it was, and it was simply plainly a fraudulent conduct.”
Ms. Peterson, a DeVos family office employee, scrawled “900 shops” at the top of the page, which she claimed was a reference to Ms. Holmes’ statement that Theranos intended to expand out to 900 Walgreens pharmacies.
That was especially troublesome, according to Ms. Stefanek, since jurors had heard that Walgreens had cut down its estimates for the launch to 200 locations months earlier when Theranos failed to meet goals. Theranos centers were never found at more than 41 Walgreens locations.
Ms. Stefanek said she was inclined to give Ms. Holmes the benefit of the doubt since hyperbole is prevalent in Silicon Valley. “I had to say no when it came to presenting those hard money statistics that were entirely fake,” she added.
She said the government’s assertion that Ms. Holmes inflated Theranos’ connection with the US military didn’t convince all of the jurors, and it didn’t play a big role in the deliberations.
Ms. Holmes’ demonstrations to investors and VIP visits to Theranos were criticized by the jury. According to government witnesses, Theranos used a Potemkin-village method in these situations, presenting their proprietary-testing gadgets but then returning the blood samples to its lab to be processed on normal lab machines.
The jury couldn’t agree on three charges involving early Theranos investors: Black Diamond Ventures, Hall Group, and Alan Eisenman.
Jurors discussed in a federal courtroom on the fifth floor in San Jose, California.
Photo courtesy of The Wall Street Journal’s Jason Henry.
Ms. Stefanek said she was in the minority in voting “not guilty” on these charges because she believed there was considerably less proof of deception to these investors. Mr. Kew acknowledged that the jury was split down the middle.
Some jurors determined that one circumstance cut against a conviction in the case of Mr. Eisenman, a fiery Texan who spoke back during cross-examination and was often chastised by the judge. Theranos had offered to buy back his shares. According to Ms. Stefanek, this behavior made it impossible for some jurors to see Mr. Eisenman as a victim of a money-laundering conspiracy.
Mr. Eisenman was unavailable for comment.
According to Ms. Stefanek and the foreman, the jury deliberated those three charges connected to investors for days. They stated they realized they were stuck by the end of the second week, but they allowed themselves the long weekend to attempt to reach an agreement one more time.
Jurors wrote a memorandum to U.S. District Judge Edward Davila on Monday, stating that they had reached a deadlock. When Judge Davila instructed them to resume working, they spent three more hours debating the charges.
Neither side was willing to budge on their positions. They’d done all they could.
Ms. Stefanek said, “We all felt she started out with the greatest of intentions of improving the world and doing a fantastic thing.” “However, we both acknowledged that this resulted in her making some major errors and engaging in some deceptive behavior.”
Following the finding of the jury of four women and eight men, Theranos founder Elizabeth Holmes and her family left.
BRITTANY HOSEA-SMALL/REUTERS/BRITTANY HOSEA-SMALL/REUTERS/BRITTANY HOSEA-SM
—This essay was co-written by Christopher Weaver and Heather Somerville.
Theranos and the Trial of Elizabeth Holmes
Sara Randazzo and Meghan Bobrowsky may be reached at [email protected] and [email protected], respectively.
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