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Theranos founder Elizabeth Holmes to use Silicon Valley culture as defence in fraud case

Elizabeth Holmes was once considered the next Steve Jobs

By Margi Murphy,
US TECHNOLOGY REPORTER, SAN FRANCISCO
5 May 2021 • 9:51am
https://www.telegraph.co.uk/technology/2021/05/05/theranos-founder-elizabeth-holmes-use-silicon-valley-culture/

Theranos founder Elizabeth Holmes will use Silicon Valley's culture of exaggeration and hyperbole as a defence against fraud claims, a California court has heard.

In her first court appearance in more than a year, Ms Holmes’ lawyers convinced a judge that anecdotes relating to high profile founders like Larry Ellison, Oracle chairman, and Steve Jobs, the late Apple co-founder, should be permitted when trying to convince a jury that she should be acquitted.

Fledgling startups and entrepreneurs looking for investment in Silicon Valley are schooled in how to convince investors of a business's future prospects, often focusing on growth rather than profit and company missions over actual products.

But it will be up to a jury to decide whether this propensity for hyperbole constitutes misleading investors to the point of criminality when Ms Holmes' trial kicks off in August.

Ms Holmes’ defence lawyer told US District Judge Edward Davila that they were worried that prosecutors for the United States might try to claim that “in Silicon Valley nobody uses exaggeration”.

Agreeing, Judge Davila said he would not prohibit a discussion on the ways in which venture capitalists and entrepreneurship functioned in the San Francisco bay area, even suggesting that it may form an important part of the prosecution’s case.

He said: “I sense there is going to be some natural discussion of startup companies and how they operate.”

Ms Holmes and Theranos’ former president, Ramesh Balwani, are charged with two counts of conspiracy to commit wire fraud and nine counts of wire fraud relating to allegations that the pair engaged in a multi-million dollar scheme to defraud Theranos investors, doctors and patients.

Ms Holmes was once billed as the next Steve Jobs when aged 19 she launched devices that she claimed could replace traditional blood tests, giving accurate results with a microscopic amount of blood with just a finger prick test.

However, attorneys acting on behalf of the US argue that both Ms Holmes and Mr Balwani, who were once in a relationship, knew that Theranos was unable to produce accurate results and lied about using proprietary technology, instead using parts from different manufacturers which often broke.

At its height in 2014 the company was valued at $9bn.

https://www.telegraph.co.uk/technology/2021/05/05/theranos-founder-elizabeth-holmes-use-silicon-valley-culture/