Elizabeth Holmes tries and fails to get jury’s fraud verdict thrown out for good

Theranos founder Elizabeth Holmes, convicted by a jury in January of four counts of defrauding investors in her now-defunct Palo Alto blood-testing startup, appeared in federal court in San Jose on Thursday seeking to have the verdict thrown out, with no new trial. But the judge in a preliminary ruling denied her bid.

“The evidence does support the jury’s findings,” Judge Edward Davila said, adding that he would review arguments by the defense and prosecution, and earlier court filings from both sides, before issuing a final decision in writing soon.

Holmes’ lawyer Amy Saharia told Davila her team planned to try again to overturn the jury’s findings, based on “new evidence.” The category of legal motions Saharia referred to suggested that any further attempts to dismiss the jury’s findings would, if successful, lead to a new trial, rather than a complete acquittal.

Holmes, 38, was convicted by a jury Jan. 3 of bilking investors out of more than $144 million, and conspiring with her former lover and the company’s chief operating officer Sunny Balwani, as she raised money for her purportedly revolutionary startup. Jurors found her not guilty on four charges of defrauding patients. She gave birth to a son in July 2021, and remains free on a $500,000 bond. Balwani was convicted in July on 10 fraud counts.

In written arguments filed earlier, Holmes’ legal team claimed there was no evidence Holmes knowingly misled investors, and that positive information about Theranos that she shared with them came from reports to her by company employees. Investors, her lawyers argued, knew Holmes’ financial projections were “aspirational.” Information Holmes gave to investors suggesting her machines were in use on the battlefield was not false, as parts of African countries where U.S. forces were testing the devices’ ability to withstand extreme conditions “were engaged in armed conflict at the relevant time,” her lawyers argued.

Saharia on Thursday told Davila that although Holmes had admitted while on the witness stand near her trial’s end to affixing pharmaceutical company logos to internal Theranos reports provided to investors, she was just using “a picture” to show which companies Theranos had worked with in partnership. “There’s no evidence that Ms. Holmes thought that she was doing something wrong,” Saharia said.

Holmes, a Stanford University dropout, founded the Palo Alto blood-testing startup in 2003, and attracted a high-profile board, including former U.S. Secretary of State Henry Kissinger and former U.S. secretaries of defense James Mattis and William Perry, and uber-wealthy investors including Walmart’s Walton family and media tycoon Rupert Murdoch. The company went bust in 2018 as Silicon Valley’s most-notorious startup crash after Holmes was charged with fraud.

The case spawned three documentaries, a TV series and a best-selling book; Jennifer Lawrence is expected to star as Holmes in an upcoming movie.

In the gallery Thursday were Holmes’ parents Noel and Christian — her mother was a near-constant attendee during Holmes’ four month trial — and three friends. Absent was hotel heir Billy Evans, the father of her one-year-old son, who often attended her trial.

Although Saharia argued in court that there was no evidence Holmes conspired with Balwani, federal prosecutor Kelly Volkar said emails and texts between the pair showed they did, including messaging regarding Murdoch that represented “two people who are lying to an investor about the state of their lab, the state of their technology, in order to get money.”

While Saharia argued that Holmes’ statements to investors concerned Theranos’ later-model “miniLab” blood analyzer, and not the earlier “Edison” that jurors heard had serious accuracy problems, Volkar countered that Holmes in written materials given to investors “bounced back and forth” between the two devices, making no distinction. “That’s an example in itself of the deceptiveness,” Volkar told Davila.

Davila described some of Holmes’ statements presented to the jury as “half-truths” and “misstatements,” prompting Saharia to argue that to be guilty of defrauding investors, Holmes had to have provided them with direct misinformation, rather than just omitting information. Davila when delivering his preliminary order said a rational juror could conclude Holmes made “false statements” to investors.

The jury’s decision to convict Holmes on only four of 11 counts “suggests that they conducted a thorough and rational decision-making process,” Davila said.