Embattled Theranos founder Elizabeth Holmes back in court as trial date approaches

Embattled Theranos founder Elizabeth Holmes will be in California court Tuesday as both sides prepare for her upcoming summer trial.

Holmes, who is pregnant, is slated to stand trial starting on Aug. 31 in connection with federal charges of wire fraud and conspiracy to commit wire fraud. Pre-trial motion hearings are scheduled for both Tuesday and Wednesday at 10 a.m. local time. 

She faces 11 counts for alleged crimes committed surrounding her health care tech startup Theranos. Prosecutors allege that she and Theranos’ former chief operating officer, Ramesh "Sunny" Balwani, duped the public, investors and policymakers by leading them to believe the blood-testing technology was more accurate than it actually was.

Both have pleaded not guilty.

During previous pre-trial motion hearings, Holmes' attorneys and prosecutors sparred over what should and should not be included in the trial, according to The Wall Street Journal. Such concerns have already been laid out in court papers over the course of several months. 

Holmes’ attorneys have argued repeatedly in court papers that details of their client’s "wealth, spending and lifestyle" should be kept away from jurors. But prosecutors have said Holmes’ "desire to retain her wealth and status created a powerful motive for Defendant to continue and conceal her fraud," past court documents show. 

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U.S. District Judge Edward Davila ruled that prosecutors will be allowed to include information pertaining to her wealth – and the lifestyle benefits she was afforded as a result of her job and status – but must refrain from including specific spending details, The Wall Street Journal reported.

According to Davila, "each time Holmes made an extravagant purchase, it is reasonable to infer that she knew her fraudulent activity allowed her to pay for those items," the report states.

In another instance, prosecutors and the defense team butted heads over evidence that either went missing or was destroyed. 

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Prosecutors claimed as part of their Northern District of California case that Theranos "destroyed" its Laboratory Information System, or LIS, database and, in turn, a slew of potential evidence. But Holmes’ attorneys argued that the government doesn’t have the evidence "because the prosecutors sat on their hands for years before attempting to acquire it, and then sat on their hands again after acquiring it."

Davila ruled that this topic will be off-limits, but he can alter his decision if the circumstances change, according to the report. 

Defense attorneys have also asked the court to exclude at trial any evidence of anecdotal test results, arguing that the any blood test can give incorrect results "for reasons having nothing to do with a defect in Theranos’ technology."

But Davila ruled that such examples of inaccuracy can be used during the trial, according to the report. 

"Evidence of even one inaccurate result tends to show that Theranos was producing inaccurate results, even if it does not fully prove the point," Davila reportedly wrote.

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They have also asked the court to exclude any correspondence between Holmes and attorneys who were hired to represent the company.

Earlier this month, a magistrate judge ruled that emails between Holmes and big-name attorney David Boies, of Boies Schiller Flexner LLP, are admissible at trial because Boies was legal counsel for Theranos, not Holmes, at the time, according to The Wall Street Journal.

Holmes dropped out of Stanford University at 19 to found Theranos in 2003, pitching its technology as a cheaper way to run dozens of blood tests with just a prick of a finger and a few droplets of blood.

A notoriously secretive company, Theranos shared very little about its blood-testing machine with the public or medical community. Holmes said she was inspired to start the company in response to her fear of needles.

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She carefully crafted her image as well, wearing almost entirely black turtleneck sweaters that earned her the moniker in Silicon Valley as "the next Steve Jobs."

Investors bought what Holmes was selling and invested hundreds of millions of dollars in the company. At one time, Theranos was worth more than $10 billion.

But an investigation by The Wall Street Journal in 2015 found that Theranos’ technology was inaccurate at best, and that the company was using routine blood-testing equipment for the vast majority of its tests. The story raised concerns about the accuracy of Theranos’ blood testing technology, which put patients at risk of having conditions either misdiagnosed or ignored.

The Journal’s investigation marked the beginning of the end of Theranos. Walgreens ended its blood-testing partnership with the company, and the Department of Health and Human Services effectively banned Theranos in 2016 from doing any blood testing work at all.

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Forbes reported in 2015 that Holmes, who was once considered the nation’s youngest female billionaire, boasted an estimated net worth of $4.5 billion. But the empire she built and the fortune she amassed swiftly crumbled.

In late 2016, Theranos began shutting down its clinical labs and wellness centers and laid off more than 40% of its full-time employees. The company reportedly ceased operations in September 2018.

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Holmes forfeited control of the blood-testing startup in 2018, when she agreed to pay $500,000 to settle charges that she oversaw a "massive fraud."

The Associated Press contributed to this report.