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.
Image: Holmes shared the stage with Bill Clinton and Alibaba co-founder Jack Ma
The Downfall
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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.
Image: Holmes has pleaded not guilty to the charges
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.
Image: Theranos president Ramesh Balwani has also been charged with fraud – which he denies
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.
Image: Holmes will be tried at a court in San Jose, California
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.
Donald Trump‘s berating of Mr Zelenskyy has led to a show of support from European leaders as they try to formulate their own way forward.
The US president attacked the Ukrainian leader again on Monday, telling reporters he should be “more appreciative”.
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Image: The tens of billion in US aid has included Patriot air defence systems. Pic: Reuters
Writing on Truth Social, Mr Trump also said Mr Zelenskyyhad made “the worst statement that could have been made” after he commented that peace was still “very, very far away”.
“America will not put up with it for much longer!” he posted.
“It is what I was saying, this guy doesn’t want there to be peace as long as he has America’s backing,” the president added.
Mr Zelenskyy then posted on X, saying Ukraine was “working together with America and our European partners and very much hope on US support on the path to peace”.
“Peace is needed as soon as possible,” he said.
‘Music to the ears of Putin’
By David Blevins, US correspondent
President Trump’s decision to pause military aid to Ukraine marks a significant shift in US foreign policy, one previously considered unthinkable.
This blow to Ukraine’s defences in the face of Russian aggression will be music to the ears of President Putin. US military aid has kept Ukraine in this David and Goliath battle for three years.
It has funded what military analysts simplify as “the big stuff” of battle – artillery, anti-tank weapons, rockets and armoured vehicles. Trump’s decision to push pause disregards efforts by Keir Starmer and other European leaders to devise a peace plan.
Those already questioning Europe’s reliance on the US for defence will conclude they have been given the answer.
But the decision sets President Trump up for a potential confrontation with Republicans, who had approved the funding, in Congress.
White House sources say he wants President Zelenskyy to go on TV and apologise for the jaw-dropping showdown last Friday. But the Ukrainian president feels he has no apology to make for expressing his doubt about Russia’s commitment to peace.
Earlier, Trump side-stepped a question about a Kremlin diplomat claiming the US administration and Moscow were now aligned on foreign policy.
This weakening of Ukraine’s defence capability moves that question front and centre as he prepares to address Congress on Tuesday.
Despite the diplomatic crisis, President Trump has said a deal is still possible.
An agreement giving the US access to Ukraine’s rare earth metals was meant to have been signed by the two presidents on Friday.
It was billed as an important step in a future peace deal – and part payback for aid already received.
However, the dramatic falling out has thrown that into jeopardy.
Mr Zelenskyy wants the metals deal to include guarantees on halting Russia should it break the terms of any peace agreement.
However, vice president JD Vance suggested on Monday that the metals pact was the best way to secure a lasting end to the war.
“If you want real security guarantees, if you want to actually ensure that Vladimir Putin does not invade Ukraine again, the very best security guarantee is to give Americans economic upside in the future of Ukraine,” Mr Vance said.
“That is a way better security guarantee than 20,000 troops from some random country that hasn’t fought a war in 30 or 40 years,” he added.
European and world allies – who met the Ukrainian leader in London at the weekend – have discussed a “coalition of the willing” to deploy peacekeepers and deter further Russian aggression.
The prime minister said Britain was prepared to put “boots on the ground and planes in the air” under the plan – but it’s unclear who else might participate.
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Keir Starmer told MPs on Monday that Britain must “lead from the front” on supporting Ukraine and the “security of our continent, the security of our country”.
However, the prime minister believes any international deployment of troops must have a US “backstop” deterrent to be taken seriously by Russia.
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Donald Trump has confirmed 25% tariffs on goods from Mexico and Canada, taking effect at 5am UK time on Tuesday.
The US president confirmed the tariffs in a speech at the White House – and his announcement sent US stocks down sharply.
The tariffs will be felt heavily by US companies which have factories in Canada and Mexico, such as carmakers.
Mr Trump said: “They’re going to have a tariff. So what they have to do is build their car plants, frankly, and other things in the United States, in which case they have no tariffs.”
There’s “no room left” for a deal that would see the tariffs shelved if fentanyl flowing into the US is curbed by its neighbours, he added.
As of 12:01am Eastern Standard Time (5.01am GMT), Mexico and Canada face tariffs of 25%, with 10% for Canadian energy, the Trump administration confirmed.
And tariffs on Chinese imports will double, raising them from 10% to 20%.
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Canada announced it would retaliate immediately, imposing 25% tariffs on US imports worth C$30bn (£16.3bn). It added the tariffs would be extended in 21 days to cover more US goods entering the country if the US did not lift its sanctions against Canada.
China also vowed to retaliate and reiterated its stance that the Trump administration was trying to “shift the blame” and “bully” Beijing over fentanyl flows.
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2:45
What is America’s trade position?
Mr Trump’s speech stoked fears of a trade war in North America and sent financial markets reeling.
Markets the Dow Jones Industrial Average, and the Nasdaq Composite fell by 1.4% and 1.76% respectively.
The share prices for automobile companies including General Motors, which has significant truck production in Mexico, Automaker and Ford also fell.
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Consumers in the US could see price hikes within days, an expert has said.
Gustavo Flores-Macias, a public policy professor at Cornell University, New York, said “the automobile sector, in particular, is likely to see considerable negative consequences”.
This is due to supply chains that “crisscross the three countries in the manufacturing process” and ” because of the expected increase in the price of vehicles, which can dampen demand,” he added.
Donald Trump has hit out at the Ukrainian president once again, just four days after an explosive on-camera spat between the pair.
The US president posted on Truth Social saying Volodymyr Zelenskyy made “the worst statement that could have been made” when he said the end of the war with Russia is “very, very far away”.
“America will not put up with it for much longer!” Mr Trump posted.
“It is what I was saying, this guy doesn’t want there to be peace as long as he has America’s backing,” the president added.
He also appeared to attack Mr Zelenskyy and Europe after yesterday’s Ukraine summit in London at which leaders, according to Mr Trump: “stated flatly that they cannot do the job without the US.”
“What are they thinking?” Mr Trump asked.
A deal to end the war was still “very, very far away”, Mr Zelenskyy said earlier, adding he expects to keep receiving US support despite the two leaders’ public spat.
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“I think our relationship (with the US) will continue because it’s more than an occasional relationship,” the Ukrainian president added.
Mr Trump said in his Truth Social post: “This is the worst statement that could have been made by Zelenskyy, and America will not put up with it for much longer!
“It is what I was saying, this guy doesn’t want there to be Peace as long as he has America’s backing and, Europe, in the meeting they had with Zelenskyy, stated flatly that they cannot do the job without the U.S. – Probably not a great statement to have been made in terms of a show of strength against Russia. What are they thinking?”
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