Prosecutor in Trial of Theranos CEO Holmes Says She 'Chose Fraud Over Business Failure'

Closing arguments began in the fraud trial of former Theranos CEO Elizabeth Holmes on Thursday, with federal prosecutor Jeff Schenk telling the jury that Holmes "chose fraud over business failure" while urging the jury to find her guilty.

Holmes' defense attorneys, however, said she was just an entrepreneur who always believed the company's blood-testing technology could be perfected. They also pointed out she was in an alleged abusive relationship that she said affected her decisions as CEO.

"She chose to be dishonest," Schenk said near the start of his closing arguments. "This choice was not only callous; it was criminal."

He spent three hours reviewing the testimony of 29 witnesses called by the prosecution, outlining the decisions Holmes made in her 15 years as the CEO. Schenk accused her of repeatedly refusing to acknowledge or tell the truth about flaws in the company's technology because she saw a chance to make money.

Kevin Downey, Holmes' lawyer, said the government's case was only a partial picture of her time at the company, and said she "was building a business and not a criminal enterprise."

Schenk played recordings as part of his closing arguments, of Holmes speaking with a group of investors in Dec. 2013 and a reporter for Fortune magazine in May 2014.

He pointed out the often-exaggerated claims Holmes made about what the technology was capable of. She also made several existing and potential partnerships with the military and companies like Walgreens and Pfizer seem like larger deals than what had been agreed to.

"You should find her guilty, but you shouldn't find her guilty because of my words," Schenk said. "You should find her guilty because of her words."

Closing arguments are expected to conclude Friday when the case would be handed to the jury for deliberations to begin.

The closing arguments are the final act in a three-month-old trial revolving around allegations that Holmes duped investors, business partners and patients into believing that Theranos had invented a more humane, quicker and cheaper way to test blood.

Schenk opened his closing argument by painting a sordid portrait of Holmes, once a Silicon Valley billionaire — on paper — now trying to avoid conviction on fraud charges that could result in a 20-year prison sentence.

Instead of relying on needles to draw vials of blood from a vein, Holmes spent years promising Theranos would be able to scan for hundreds of diseases and other health problems with just a few drops of blood taken with a finger prick.

It was such a compelling concept that Theranos raised more than $900 million, struck partnerships with major retailers Walgreens and Safeway and turned Elizabeth Holmes into the subject of cover stories on business magazines.

But unknown to most people outside Theranos, the company's blood-testing technology was flawed, often producing inaccurate results that could have endangered the lives of patients who took the tests at Walgreens stores.

After the flaws were exposed in 2015 and 2016, Theranos eventually collapsed and the Justice Department filed a criminal case in 2018 that charged Holmes with 11 felony counts of fraud and conspiracy.

While Schenk made the case for conviction, Holmes peered at both the prosecutor and the jurors from across a packed courtroom in San Jose, California. Just a few feet behind her, Holmes' mother and current partner, Billy Evans, sat in the front row listening intently, as did Holmes' father, who hadn't previously attended the trial in the presence of the jury.

In his presentation, Downey urged jurors to carefully pore through evidence that includes more than 900 exhibits to get a fuller picture and understanding of what she was trying to do. He pointed to contracts that Theranos had with several pharmaceutical companies that the government didn't mention during its case as an example of the half-baked story that he said prosecutors presented.

The prosecution focused on a series of events at Theranos that "look bad, but at the end of the day when all the evidence flows together, isn't that bad," Downey said.

Downey also emphasized that the jury needed to be convinced "beyond a reasonable step" to declare Holmes guilty on any count. To illustrate the difficulty of that challenge, he displayed a graphic showing the seven steps that had to be scaled before reaching that threshold.

The verdict could hinge on how the jury reacts to seven days of testimony from Holmes in her own defense. During a particularly pivotal two hours on the stand, Holmes told the court she was raped while she was a freshman at Stanford University before dropping out in 2003 to found Theranos when she was 19.

Around the same time, Holmes testified, she became involved in a lengthy romance with a successful technology executive, Sunny Balwani, who eventually became Theranos' chief operating officer while the couple were secretly living together. During that time, Holmes said, Balwani controlled everything from her diet to her friendships while subjecting her to mental, emotional and sexual abuse that she implied affected her judgment as Theranos' CEO.

Balwani's attorney has adamantly denied Holmes' allegations, but the jury in her trial never heard from Balwani, who intended to invoke his Fifth Amendment right against self-incrimination had he been called to testify. He faces a separate trial on similar fraud charges in February.

Schenk urged the jury to disregard Holmes' abuse revelations as an irrelevant attempt to garner sympathy.

"If you return a guilty verdict, you are not saying you don't believe her abuse allegations," Schenk said.

The Associated Press contributed to this report.