Theranos Trial: United States vs. Elizabeth Holmes, Day 13 (We Are All Scientists Now?)

This case could have and should have been simple. Instead, the government seems ready to snatch defeat from the jaws of victory by forcing jurors to become lab technicians in order to render a verdict.

Email, June 13, 2014, Christian Holmes to Elizabeth Holmes: seems like we have a capacity issue... "Let's discuss-- need better redundancy."

Jurors must decide whether removing two outliers out of six data points is acceptable. Dr. Adam Rosendorff said he approved or accepted the aforementioned method implemented by Daniel L. Young, but if Rosendorff and Young were unable to fix problems, their opinions don't help. Because the government raised outlier removal as part of Theranos' fraud and its own witness just approved Theranos' outlier removal process, the government has lost credibility. Even if a new expert testifies Theranos' outlier removal, when combined with algorithmic programming, was deficient based on generally accepted scientific methods, most jurors would still blame lab directors; however, if the government doesn't divert culpability from the lab, jurors may think the government doesn't understand its own case, much less the science. More importantly, if the government doesn't understand the science behind Theranos, it's admitting Elizabeth Holmes--who lacks formal education--isn't the typical CEO and could have reasonably deferred to lab directors despite her title. As I told prosecutor John Bostic in the elevator, "Are you prosecuting the lab director or someone else?"

It didn't have to be so complicated. Instead of shining a spotlight on the lab, the government could have tasked the jury with setting standards for prospective investors. It could have said,

"You are here to help your community prosper by drawing a line in the sand about the kinds of claims entrepreneurs can make to potential investors. We will try to convince you the line must be drawn here, in this case, where someone unqualified to make the claims she was making managed to raise hundreds of millions of dollars. We understand our investors were sophisticated and had opportunities to investigate Elizabeth Holmes. We understand our investors signed boilerplate language agreeing an investment in Theranos was speculative. Those aren't the issues. Don't let yourself get distracted. The issue is how far you allow someone to go when selling an idea. If we don't draw the line here, then anyone with sophisticated lawyers can use the law as a shield against accountability. It gets worse--Elizabeth Holmes is not only asking you to make the law into a shield, she wants you to let her use the law as a sword against honest, forthright entrepreneurs who will be hobbled by overly distrustful venture capitalists, bankers, and individual investors unless we draw the line right here..."

The aforementioned opening statement is laser-focused on Holmes. It doesn't need lab directors, and if the defense calls them, Holmes looks desperate because the case isn't about science--it's about ensuring 1) anyone with a good idea can market it freely; and 2) the market is as open as possible to new ideas and new people by establishing a minimum level of trust. 

Had the government made the above opening statement, it could have pursued a straightforward path: 1) here are investors who will repeat what Holmes told them; 2) here are journalists who will support the statements investors say Holmes made; 3) here are the patients who received faulty results because Holmes over-hyped her company's product; and 4) here are Walgreens and/or Safeway executives who negotiated the roll-out of Theranos' devices based on Holmes' statements, only to realize they placed their customers in harm's way or would have done so had they not required FDA approval. (Note the absence of scientists necessary to make the government's case, which would have forced Holmes' lawyers to call them to prove Theranos was doing "real work.")

In this alternate universe, the defense would argue the case isn't about drawing a line, but about giving entrepreneurs acting in good faith enough time to do what they said they were going to do. The defense would then have called, as part of its direct examination, all the scientists and lab directors it desired. In response, the government could have used cross-examination to create a coherent timeline, one where it could argue the end goal was too speculative to have legally allowed Holmes to advertise the way she did.

Wire fraud isn't complex. It's a shame the government is making it as hard as possible for Americans to prevail.

© Matthew Mehdi Rafat (2021)

ISSN 2770-002X 

Bonus: for what it's worth, almost every interaction I've had with the government's lawyers has been flippant or rude. Robert Leach dismissed my comments in our elevator ride from the fifth to the second floor. John Bostic, the most likable person in court, didn't respond when I asked a question. No jurors were present during either interaction.