The Holmes trial is about money

It was never about the people

Prosecutor Jeffrey Schenk opened his closing arguments in the case against Elizabeth Holmes by talking about a banker. Holmes knew Theranos, the company she founded, was running out of money, and she was on the phone asking her banker to clear a check early.

“Holmes had a choice to make,” Schenk said. She could figure out a way to raise funds to keep the company moving, or risk seeing it wither away. And her choice, he said, was to raise the funds through fraud.

The prosecution’s closing statement on Thursday was a reminder of what this trial is really about: money, and mostly rich people’s money. Those rich people, who gave their money to Theranos after Holmes pitched them on the promise of the company, are who the prosecutor referred to as ‘victims.’ Their money is what, according to the legal system, was manipulated during the years Theranos was the hottest startup in Silicon Valley.

That focus is because Holmes is on trial for fraud. That’s what she could get in trouble for in the aftermath of Theranos’ collapse — misrepresenting what the company could do in order to get money out of (mostly) investors (but technically also) patients and doctors. Holmes isn’t on trial because the tests her company made were bad. She’s not in trouble because her company gave people incorrect information about potentially devastating health issues. She couldn’t go to jail for overseeing workplace former employees described as secretive and unhealthy, and where the chief scientist died by suicide.

Theoretically, she could have continued to oversee a company doing all of those things, and not be facing 20 years in prison. The reason she’s staring down incarceration isn’t for making bad tests — it’s for lying about those tests in order to fundraise. “An honest pitch filled with honest representations to her investors and to patients would not have resulted in any revenue,” Schenk said.

She didn’t make an honest pitch, Schenk argued. And that’s why, he told the jury, she should be found guilty of fraud.

Before diving into the specific ways Holmes wasn’t honest, Schenk broke down exactly what the government had to prove in order to show that she met the technical, legal requirements for fraud. Holmes is on trial for two things: conspiracy to commit fraud, and fraud. She allegedly conspired to commit fraud against investors and patients, and allegedly committed fraud against investors and patients.

To meet the bar for a conspiracy, Holmes had to have been part of an agreement to make false statements for the purpose of getting money that would keep Theranos alive. In order to have committed fraud, she had to have known and participated in a plan to get money by making misleading statements, and those statements had to be things that could reasonably trigger someone to spend money. And — in a key element — she had to have acted with the intent to defraud someone.

Schenk spent around three hours pacing in front of the jury and walking them through all the ways Holmes made misleading statements to investors. He talked about the pharmaceutical company logos she admitted to adding on to Theranos-conducted lab reports, which investors said gave the impression those companies had prepared the reports themselves. He emphasized that she’d given investors misleading information about what types of tests could be run on the Theranos machines, and gave the impression that the machines were accurate even though they weren’t. He pointed to media interviews where she’d given the same types of answers, and said that Holmes then turned around and sent articles based on those interviews to investors.

Then, Schenk showed the jury evidence that he argued means Holmes gave that misleading information intentionally — like text messages about Theranos’ money issues, and emails about problems with demonstrations of the Theranos devices.

(Defense attorney Kevin Downey focused his closing statements on the idea that Holmes didn’t actually have intent. He started in on that argument on Thursday, and will continue it Friday morning).

Schenk pointed out that patients saw the misleading statements given in media interviews, as well, which is one way they were allegedly defrauded. Patients also got bad information about the accuracy of the Theranos tests in advertisements and on the company website, even though Holmes new that there were problems with certain tests — like the hCG test, which told patient Brittany Gould that she might be having a miscarriage.

Holmes intentionally directed misleading statements to patients for the same reason she did investors, Schenk said: to raise money. But, as he noted multiple times, individual tests raised less money than investors. He spent less time focusing on the patients and their experience than he did on the investors. Unlike the investors, he didn’t refer to the patients who were given bad medical test results as victims.

Closing arguments from the prosecution told a story about a company that was running out of money, and a CEO who lied to people in order to get them to give them more money. That’s illegal. And that’s what the legal system is equipped to get people in trouble for. Schenk summed that up quite well towards the end of his closing arguments: “This case is about real people, who lost real money.”