Elizabeth Holmes trial begins – the downfall of a Silicon Valley medical hero

Published

3 years ago

September 1, 2021

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The trial of Elizabeth Holmes, founder and former chief executive of medical technology company Theranos, has begun in California.

She is pleading not guilty to perpetrating one of the biggest frauds in Silicon Valley history, “an elaborate, years-long fraud” as the US government alleges, and faces up to 20 years in prison.

Theranos itself, which she founded aged 19, has shut down after the unravelling of its claims to have invented a revolutionary finger-prick blood test.

Holmes is accused of knowing this test was unreliable and inaccurate and of hiding this information.

The Downfall

By 2014 the company had announced a partnership with US pharmacy chain Walgreens, and Forbes was hailing Elizabeth Holmes as the world’s youngest self-made female billionaire.

Theranos reached its peak in September 2015 when the company was valued at $9bn (£7bn) and Holmes shared a stage with former president Bill Clinton and Chinese entrepreneur Jack Ma in a panel discussion about equality and opportunity.

But a month later, the Wall Street Journal published a front-page story that claimed the company’s blood testing technology was so flawed Theranos was actually using equipment made by other businesses to carry out tests in its laboratories.

The Journal reported that the company’s former chief scientist had taken his own life two years earlier after telling his wife the finger-prick technology did not work.

The Charges

Investigations by medical and financial regulators soon followed and in 2018 criminal charges were filed against Elizabeth Holmes and Romesh Balwani, her former boyfriend and the president and chief operating officer of Theranos, accusing them of fraud.

The pair were charged with engaging “in a multi-million-dollar scheme to defraud investors, and a separate scheme to defraud doctors and patients” and each face two counts of conspiracy to commit wire fraud and nine counts of wire fraud.

Theranos made misrepresentations to doctors and patients about the reliability of its tests, the Department of Justice alleged.

The executives were also accused of making misrepresentations to investors about the financial condition of the company, celebrating expected sales of over $1bn when they were actually bringing in just a few hundred thousand.

The Trial

Lawyers for Holmes are expected to argue that she was working with an impaired mental state at the time of the fraud due to alleged sexual abuse and coercive behaviour by Ramesh Balwani.

Balwani’s lawyers have denied these claims.

His trial is set to take place next year after his lawyers sought to have him tried separately to avoid Holmes’ testimony prejudicing the jury. He too has pleaded not guilty.

According to an unsealed court document written by Balwani’s lawyers when seeking to have his case heard separately, she “plans to introduce evidence that Mr Balwani verbally disparaged her and withdrew ‘affection if she displeased him’; controlled what she ate, how she dressed, how much money she could spend, [and] who she could interact with”.

The jury selection process has been a challenge, with dozens already removed after confirming their familiarity with media coverage of the case, and with others now asked whether they have any experience of abusive relationships.

The main defence expected from Holmes’ lawyers is that Balwani’s controlling behaviour “erased her capacity to make decisions”, including in the case of knowingly defrauding investors, doctors and patients.

What does it mean?

Both defendants previously reached a settlement with the Securities and Exchange Commission, relinquishing their shares in the company and paying a $500,000 (£360,000) penalty.

But their case is also emblematic of what is often seen as a culture of ‘fake-it-until-you-make-it’ among Silicon Valley startups, as Sky News business presenter Ian King writes.

Analysis by Ian King, business presenter

There are many lessons to be drawn from the Theranos affair, but perhaps the most worrying thing that has emerged is the culture of secrecy that existed in Theranos, a culture that was – and is – by no means unique in Silicon Valley.

John Carreyrou, the investigative journalist at the Journal whose stories exposed the scandal, has since written a book on the saga, Bad Blood, which highlights the weirdly cultish nature of the company.

Again, in this regard, Theranos was perhaps not so different from a number of other companies in the Valley.

Quite apart from the crushing losses for investors, this secrecy and cult-like nature had other real-world consequences, with many patients likely to have received erroneous blood test results.

There are many outstanding questions surrounding Theranos, not least the outcome of Ms Holmes and Mr Balwani’s forthcoming fraud trial, as well as whether the remaining patents being acquired by Fortress will turn out to have any lasting value.

The biggest of all, though, is whether there are other tech companies presently enjoying outlandish valuations that eventually turn out to be similarly flawed.

The chances must be that there are.

Jury selection has begun in the trial, which the court expects may continue into December.

US

Donald Trump can seek dismissal of hush money case as sentencing postponed

Published

21 hours ago

November 22, 2024

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Donald Trump can seek dismissal of hush money case as sentencing postponed

A judge has postponed sentencing in Donald Trump’s hush money case and granted permission for his lawyers to seek a dismissal.

It comes after the Manhattan district attorney said he wouldn’t oppose a motion to delay the sentencing.

In May, a New York jury found Trump guilty of 34 counts of falsifying business records to commit election fraud.

It was the first time a US president had been convicted of or charged with a criminal offence.

Trump had tried to cover up “hush money” payments to a porn star in the days before the 2016 election.

When Stormy Daniels‘ claims of a sexual liaison threatened to upend his presidential campaign, Trump directed his lawyer to pay $130,000 (£102,000) to keep her quiet.

The payment buried the story and he later won the presidency.

Trump denied the charges and said the case was politically motivated. He also denied the sexual encounter took place.

New York State Supreme Court Justice Juan Merchan today delayed the sentencing, which had been due to take place on Tuesday.

The office of district attorney Alvin Bragg had asked the judge to postpone all proceedings until Trump finishes his four-year presidency, which starts on 20 January.

Trump’s lawyers say the case should be dismissed because it will create “unconstitutional impediments” to his ability to govern.

Responding to Friday’s decision, a Trump campaign spokesman said: “The American People have issued a mandate to return him to office and dispose of all remnants of the Witch Hunt cases.”

The judge set a 2 December deadline for Trump’s lawyers to file their motion, while prosecutors have until 9 December to respond.

He did not set a new date for sentencing or indicate when he would rule on any motion to throw out the case.

Even before Trump’s win in this month’s election, experts said a jail term was unlikely and a fine or probation more probable.

But his resounding victory over Kamala Harris made the prospect of time behind bars or probation even less likely.

Trump, 78, was also charged last year in three other cases.

One involved him keeping classified documents after he left office and the other two centre on alleged efforts to overturn his 2020 election loss.

A Florida judge dismissed the documents case in July, the Georgia election case is in limbo, and the Justice Department is expected to wind down the federal election case as it has a policy of not prosecuting a sitting president.

Trump last week nominated his lawyers in the hush money case, Todd Blanche and Emil Bove, for senior roles in the Justice department.

When he re-enters the White House, Trump will also have the power to shut down the Georgia and New York cases.

US

Pam Bondi: Key proponent of Trump’s false 2020 election claims set to head justice department after Gaetz withdrawal

Published

1 day ago

November 22, 2024

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Pam Bondi: Key proponent of Trump's false 2020 election claims set to head justice department after Gaetz withdrawal

Donald Trump has pledged for years to surround himself with ultra-loyalists who can mould his government to his vision without barriers.

That’s precisely why he picked Matt Gaetz. Now he’s out, Pam Bondi is in and she’s equally loyal.

Gaetz was uniquely unpopular on Capitol Hill but ultra-MAGA and ultra-loyal to the president-elect.

He was chosen by the president-elect to do his bidding inside the Justice Department as attorney general.

Critics called his pick “a red alert moment for democracy” and the man a “gonzo agent of chaos” – language that would surely only affirm Trump’s decision in his own proudly disruptive mind.

If it wasn’t for the fact that the president-elect is himself a convicted felon, and a man found liable in a civil court of his own sexual offences, the prospect of Gaetz, with all his baggage, making it through the nomination process would have seemed remote.

But Donald Trump’s return to the White House suggested anything is possible.

And so, beyond his loyalty, Gaetz was Trump’s test for his foot soldiers on Capitol Hill. How loyal were they? Would they wave through anyone he appointed?

It turns out that Gaetz, and the storm around his private life, was too much for a proportion of them.

At least five Senate Republicans were flatly against Matt Gaetz’s confirmation. We understand that they communicated to other senators and those close to Trump that they were unlikely to be swayed.

They included the Republican old guard like Senator Mitch McConnell.

Beyond the hard “no” senators, there were between 20 and 30 other Republicans who were very uncomfortable about having to vote for Gaetz on the Senate floor.

The key question is whether Gaetz was Trump’s intentional wild card crazy choice that he knew, deep down, would probably never fly.

Was Gaetz the candidate he had accepted would be vetoed by senators – who would then feel compelled to wave the rest of his nominees through?

Will Pete Hegseth’s alleged sexual impropriety concern them as they consider the suitability of the former Fox News host and army major to run the Department of Defence?

What about Tulsi Gabbard, the candidate Russian state TV calls ‘our girl’, and the appropriateness of her running America’s intelligence agencies?

These are all appointments that the politicians on Capitol Hill must consider and confirm in the weeks ahead.

We don’t yet know who Trump will choose to direct the FBI.

There are some names being floated which will make the establishment of Washington shudder but then that’s precisely why Trump was elected. He is the disrupter. He said so at every rally, on repeat.

He was quick to pivot to another name to replace Gaetz.

Bondi is the former attorney general of Florida. Professionally she is in a different league to Gaetz. She’s been a tough prosecutor, with a no-nonsense reputation.

She is also among the most loyal of loyalists. Her attachment to Trump stretches way back.

I first came across her in Philadelphia in November 2020 when she was among Trump surrogates claiming the election back then had been stolen from them by Joe Biden and the Democrats.

She was a key proponent of the false claims the election had been rigged and Trump was the rightful winner.

The court cases concluding that was all nonsense didn’t seem to convince her.

Now she is poised to head up the Department of Justice as the country’s top law enforcement official.

US

Donald Trump on day one: Pace of change ‘like nothing you’ve seen in history’, warns campaign official

Published

2 days ago

November 21, 2024

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Within hours of taking office, president-elect Donald Trump plans to begin rolling out policies including large-scale deportations, according to his transition team.

Sky News partner network NBC News has spoken with more than half a dozen people familiar with the executive orders that his team plans to enact.

One campaign official said changes are expected at a pace that is “like nothing you’ve seen in history”, to signal a dramatic break from President Joe Biden’s administration.

Mr Trump is preparing on day one to overturn specific policies put in place by Mr Biden. Among the measures, reported by sources close to the transition team, are:

• The speedy and large-scale deportations of illegal immigrants

• Ending travel reimbursement for military members seeking abortion care

• Restricting transgender service members’ access to gender-affirming care

But much of the first day is likely to focus on stopping illegal immigration – the centrepiece of Trump’s candidacy. He is expected to sign up to five executive orders aimed at dealing with that issue alone after he is sworn in on 20 January.

“There will without question be a lot of movement quickly, likely day one, on the immigration front,” a top Trump ally said.

“There will be a push to make a huge early show and assert himself to show his campaign promises were not hollow.”

But Mr Trump’s campaign pledges also could be difficult to implement.

Deporting people on the scale he wants will be a logistical challenge that could take years. Questions also remain about promised tax cuts.

Meanwhile, his pledge to end the war between Russia and Ukraine in just 24 hours would be near impossible.

Even so, advisers based at Mr Trump’s Mar-a-Lago resort or at nearby offices in West Palm Beach, Florida, are reportedly strategising about ending the wars in Ukraine and the Middle East.

Following his decisive victory on 5 November, the president-elect has moved swiftly to build a cabinet and senior White House team.

As of Thursday, he had selected more than 30 people for senior positions in his administration, compared with just three at a similar point in his 2016 transition.

Stephen Moore, a senior economic adviser in Mr Trump’s campaign, told NBC News: “The thing to realise is Trump is no dummy.

“He knows he’s got two to three years at most to get anything done. And then he becomes a lame duck and we start talking about [the presidential election in] 2028.”