Former Theranos CEO Elizabeth Holmes outside a hearing in her criminal fraud trial on May 4, 2021.
A pregnant Elizabeth Holmes appeared in court for the first time in 15 months for three days of hearings that will set the stage for her criminal fraud trial.
At Tuesday’s session in the San Jose federal courthouse, Judge Edward Davila allowed only Holmes, her defense attorneys and the prosecution inside. As Holmes walked into the courthouse she refused to answer questions from CNBC’s Scott Cohn.
The hearing, which lasted more than seven hours, featured both sides sparring over critical motions that will determine what evidence the jury hears, including how the culture of Silicon Valley might have influenced Holmes’ behavior as CEO of Theranos. The company shut down in 2018 after a Wall Street Journal investigation exposed unproven technology and dubious business practices.
“Silicon Valley exaggeration occurs, there’s going to be natural discussion of start-up companies and how they operate,” said Davila. He ruled the defense won’t be able to categorize her as having been unfairly singled out.
Prosecutors warned the judge about giving Holmes too much room to argue her actions were no different than any other start-up’s.
“I want to caution against what the defense is painting with a very broad brush when they say trade secret practices at Theranos,” said Jeff Schenk, an assistant U.S. attorney.
A courtroom sketch of former Theranos CEO Elizabeth Holmes’ court appearance on May 4, 2021.
Vicki Behringer licensed to CNBC
Lawyers for Holmes say prosecutors have built a sweeping case on anecdotal evidence. Theranos technology performed between seven and ten million tests over two years. Amy Saharia, a lawyer for Holmes, said the trial is “going to be a sprawling mess of irrelevant, prejudicial evidence.”
She added, “We have all become very familiar with testing this year. Testing involves many different variables. What the government offers is without scientific basis, they have to establish Theranos technology was responsible for erroneous results. Just because it happened doesn’t mean it was because of Theranos technology.”
The issues were just a few of more than two dozen motions the judge is expected to rule on this week.
One is a motion from Holmes to block evidence of her wealth, spending and lifestyle from the jury. Prosecutors allege Holmes’ “desire to retain her wealth and status created a powerful motive” to continue and conceal her fraud. Holmes was once considered the youngest female billionaire, with an estimated net worth of $4.5 billion.
One former Theranos executive who was close to Holmes told CNBC, “I don’t think Elizabeth considered that there was daylight between her and the company. She saw herself as the company.” This person asked not to be named for fear of jeopardizing future employment opportunities.
Holmes, once a media darling who made the rounds appearing on television networks and magazines, has stayed mum since being charged with nine counts of wire fraud and two counts of conspiracy to commit wire fraud. The former executive told CNBC she’s “an innately optimistic person.”
“There was such a mythology built around her. And I think to some degree, she recognized that and embraced it.”
“Anyone who’s paid attention has only really heard negative things about her,” said Danny Cevallos, an NBC News legal analyst. “Her fall from grace was spectacular. There are going to be a lot of jurors who likely have heard about Holmes and it’s probably not good.”
Jury selection is scheduled to begin August 31.
“She has her core [of] supporters, a small one, but supporters who to their dying day say she was unfairly portrayed and mistreated,” the former Theranos executive said.