When jurors deliberated on the case of Elizabeth Holmes, the founder of failed medical diagnostics startup Theranos, two pieces of evidence helped them convict her of fraud: a false report from a pharmaceutical company and financial projections swollen.
Holmes was convicted earlier this week on one count of conspiracy to commit wire fraud and three counts of wire fraud, all involving investors. She was acquitted of defrauding patients and the jury was stuck on charges of defrauding three other investors. The four women and eight men who served as jurors rendered their decision after more than 50 hours of deliberation.
On the four counts, jurors found the evidence clearly convincing, with one juror describing two exhibits as “smoking guns” in one. interview with the Wall Street Journal. One of them was a report written by Theranos that Holmes gave to investors; there was a Pfizer logo at the top of every page, making it look like the drug company had written down or endorsed its findings. The second was a set of financial projections that Holmes shared with investors, including Lakeshore Capital Management, the DeVos family office.
“There were so many lies on that sheet of paper,” said Susanna Stefanek, editorial manager at Apple, known at trial as Juror # 8. “She was trying to make this thing look better than it looked. ‘was, and it was clearly a deceptive act.
Projections showed that Theranos would bring in $ 140 million in revenue in 2014 and lose just $ 3 million. For 2015, the company forecasts revenue of $ 990 million and profit of $ 230 million. But the most damning element for the jury was the claim that Theranos would bring drug companies $ 40 million in revenue in 2014 despite the lack of contracts.
On the same document, Lisa Peterson, who oversaw the Theranos investment for the DeVos family, mentioned “900 stores,” which she said referred to Holmes’ claim that Theranos has its devices in 900 Walgreens stores. . For Stefanek and the other jurors, this figure was overwhelming. They heard in testimony that months before Holmes turned the document over to Peterson, Walgreens had significantly reduced the rollout to 200 stores. In the end, the Theranos tests were introduced in only 41 stores.
Hyperbole isn’t unusual in Silicon Valley, Stefanek said, but “when it came to providing those hard money numbers that were completely wrong, that’s when I had to say no “.
Jurors have had a harder time finding Holmes guilty of allegations she defrauded patients. Yes, the lab was very poorly run, they agreed, but they didn’t think the prosecution presented enough evidence to convince them Holmes intentionally marketed problematic tests to patients.
“If all we had to prove was that she knew there might be some issues in the lab and that could end up hurting patients, that would be one thing,” Stefanek said. But she and others felt the bar was higher for the charges. The foreman, who did not want to be identified, said he initially supported a guilty verdict for defrauding patients, but changed his mind after the jury debated the matter.
Credibility of witnesses
In reviewing testimony heard in court, jurors rated the credibility of each witness on a scale of one to four stars, with four being the most credible. Most received top marks, including Theranos patients, medics, former Defense Secretary Jim Mattis, and those who had worked for Walgreens and Safeway.
A key witness, Erika Cheung, was named a star for appearing to be “invested in a certain outcome,” Stefanek said. Cheung had worked in Theranos’ research and development lab and its clinical lab. She ended up resigning after seven months and filed a whistleblower report with the Centers for Medicare and Medicaid Services, claiming the company was regularly sorting out the data.
Cheung responded by telling the WSJ: “I respect the effort, time and energy of the jury,” but noted that his credibility ranking with the jury showed “an indication that there is still a stigma against whistleblowers. “. The lawsuit substantiated his claims, Cheung said, adding that “one of my goals in life has never been to play a role in sending someone to jail.”
The lowest ranked witness was Holmes herself. Jurors generally believed Holmes’ allegations of abuse by her ex-boyfriend and Theranos executive, Ramesh “Sunny” Balwani. But they didn’t think it played a role in the fraud against investors.
With Holmes’ testimony, the jury felt “there was a certain cynicism that this was a ploy of sympathy,” Stefanek said.