Theranos's Elizabeth Holmes tries again to keep lab failings from jury

Lawyers for Theranos Inc. founder Elizabeth Holmes made a last-ditch effort to eliminate some evidence prosecutors can use ahead of the former CEO's highly anticipated criminal-fraud trial.

Ms. Holmes's lawyers argued Friday that U.S. District Judge Edward Davila should exclude from the trial seven news articles about Theranos and Ms. Holmes, limit testimony from doctors who had used Theranos's lab tests, and redact large portions of reports from government agencies that had penalized Theranos while it was in operation. They have made these requests repeatedly.

The judge, who has rejected previous attempts to exclude the material, didn't rule on the requests Friday. Jury selection in the case starts Aug. 31; opening arguments are set to begin Sept. 8.

Government prosecutors and Ms. Holmes's lawyers have argued over which evidence and how much of it should be allowed in the proceedings. Ms. Holmes's attorneys have argued for narrowing the thousands of pages of evidence brought by the government and disputed whether testimony from patients who received inaccurate Theranos lab tests, internal company emails and details about Ms. Holmes's wealth should be admissible.

Ms. Holmes faces a dozen counts of wire fraud and conspiracy to commit wire fraud for what federal prosecutors say was a scheme to defraud investors and patients about the nature of Theranos's technology. The blood-testing startup closed in 2018 after raising nearly $1 billion from investors with a pitch to reinvent the laboratory testing business by creating a machine that could test for a wide range of health conditions using a few drops of blood.

Ms. Holmes, who gave birth last month to a baby boy in Redwood City, Calif., appeared in court Friday for the second time this week. A separate trial for Ramesh "Sunny" Balwani, a former Theranos executive and Ms. Holmes's ex-boyfriend, who faces the same dozen charges, is slated to begin early next year. Both have pleaded not guilty.

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The Wall Street Journal first reported in 2015 that Theranos's proprietary technology was unreliable and the company often ran tests on commercial analyzers. The inaccurate results from the Theranos tests at times created traumatic health events for patients and confusion for doctors.

An attorney for Ms. Holmes, Patrick Looby of Williams & Connolly LLP, asked that certain news articles be omitted from trial because, "they each contain reporting that parrots The Wall Street Journal reporting," which he said amounted to hearsay. Government prosecutors objected, saying the demand was premature as the government wasn't sure when or if it would mention the articles in trial.

Judge Davila, who wore a mask and sat behind plexiglass, a change from his barefaced appearance on Monday, said there was merit in the defense waiting to see if the news articles came up in trial before making their objection.

U.S. prosecutors allege Ms. Holmes and Mr. Balwani engaged in a scheme to defraud patients and investors by touting the ability of Theranos's proprietary blood-testing device to accurately test for a wide range of health conditions, when they knew it was unreliable and performed a limited number of tests. They also allegedly misrepresented the company's financial condition to potential investors, according to a federal indictment.

Lawyers sparred over a report from the Centers for Medicare and Medicaid Services, the federal agency that provides oversight of clinical laboratories, which found extensive deficiencies in Theranos's lab. Mr. Looby said large portions of the report were about the laboratory conditions and so not relevant to the charges against Ms. Holmes. The defense is requesting about three-quarters of the report be redacted.

"These findings have no place in the case," said Mr. Looby.

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Judge Davila ruled in May that prosecutors could present evidence from CMS inspection reports. The judge said the evidence was relevant to the question of Ms. Holmes's intent and knowledge during the period that prosecutors say she was misleading investors and patients about the company's technology. At the time, Judge Davila also invited further discussion about whether certain parts of the CMS reports should be kept from the jury.

"They are trying to turn your honor's ruling on its head mere weeks before trial," said Kelly Volkar, an attorney for the government, at the hearing on Friday. "This has already been discussed and decided."

Ms. Holmes has also sought to block testimony from Kingshuk Das, Theranos's laboratory director in the company's final years, saying he was added as a witness without enough notice for the defense. In Dr. Das's hourlong interview with the government in February, he told prosecutors that he found the Theranos blood-testing machines weren't accurate or precise, according to court filings.

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Ms. Volkar said the testimony from Dr. Das, hired by Theranos in 2015, would be limited to his job duties, but that those responsibilities also included informing Ms. Holmes of deficiencies in the testing technology.

Lawyers will meet again on Aug. 26 to discuss a motion by Dow Jones & Co., publisher of the Journal, to unseal some portion of the documents in the case that remain under seal, which has added an unusual level of secrecy to the case. Judge Davila said this month he was concerned about the practice of sealing documents, and would make suggestions of redacted filings that could be unsealed.

--Sara Randazzo contributed to this article.