Theranos founder Elizabeth Holmes will claim her judgment was impaired because of physical and sexual abuse from her boyfriend and business partner, her attorneys say.
Holmes, who stands accused of wire fraud, presided over the collapse of the heavily hyped blood-testing company that was worth US$9 billion before it failed.
Filings posted by her defence team will pin the blame on Ramesh “Sunny” Balwani, who is due to be tried separately.
Holmes is expected to take the stand at her trial which begins in San Jose, California on Tuesday (Wednesday NZT).
Holmes, 37, who claimed her blood-testing technology would revolutionise medicine, is now accused of misleading investors by claiming her company would generate US$1b in 2015 alone and lying to patients about the efficacy of the devices.
Details of Holmes’ strategy emerged over the weekend, with papers filed by her legal team.
She will accuse Balwani of monitoring her calls, text messages and emails. Holmes also alleges he was physically violent, throwing “hard, sharp objects” at her.
“This pattern of abuse and coercive control continued over the approximately decade-long duration of Ms Holmes and Mr Balwani’s relationship, including during the period of the charged conspiracies,” they wrote.
Holmes and Balwani have each been charged with 10 counts of wire fraud – using telecommunications for dishonest financial purposes. They are also accused of two charges of conspiring to commit wire fraud. If convicted they could be jailed for up to 20 years.
They also face massive fines – US$250,000 for each offence – as well as being ordered to repay the investors they allegedly conned. Both have pleaded not guilty.
The daughter of a vice president at Enron, the company at the heart of one of America’s biggest ever corporate scandals, Holmes was a high flyer from her teens.
Fascinated by computers, her first business was selling programmes to Chinese universities. She learned Mandarin and studied chemical engineering at Stanford, before dropping out and using her tuition money to fund another venture.
Based in Palo Alto, California, the company was called Real-Time Cures. Citing her fear of needles, Holmes’s pitch was that extensive medical diagnoses could be carried out using just a few droplets of blood.
In the winter of 2003-2004, she changed the company’s name to Theranos, a catchy combination of therapy and diagnosis and a slick way of getting her message across to clients and potential investors.
The key to Theranos was a device known as Edison, which, it was claimed, was capable of running multiple tests on a pinprick of blood and delivering rapid results to the patient and doctor.
In short, it enabled Theranos to muscle in on the US$75b a year diagnostic lab-testing industry.
Investors were impressed. Rupert Murdoch put US$121 million into the company. The family of Betsy DeVos chipped in another US$100m.
Walgreens, the biggest pharmacy chain in the US, partnered with Theranos, initially putting the devices in 40 of its stores as part of a planned nationwide roll-out.
The company’s blue-chip credentials were reinforced by a raft of public figures joining the board, among them former US secretaries of state Henry Kissinger and George Schulz; and Jim Mattis, who served as Donald Trump’s defence secretary.
Holmes’ personal profile was stratospheric. In September 2015 she appeared on stage with Bill Clinton at a meeting of his Global Initiative in New York.
Hailed as the youngest female self-made billionaire, Holmes was the woman who had burst through the Silicon Valley glass ceiling.
She featured in Forbes Magazine wearing her trademark black polo-neck sweater.
Blood-testing device didn't work
There was just one small problem. The device didn’t work.
A pathologist and blogger called Adam Clapper noticed there had never been any peer-reviewed data of the Edison.
The Wall Street Journal then began its own investigation, speaking to former Theranos employees.
Several gave evidence to the Securities and Exchange Commission, laying bare how investors were duped.
They were invited to give a pinprick of blood themselves to be tested on a Theranos machine.
“Theranos often actually tested their blood on third-party analysers, because Theranos could not conduct all of the tests it offered prospective investors on its proprietary analysers,” the SEC alleged in its indictment.
The WSJ stories led to a blizzard of litigation, culminating in the criminal case in California.
Legal experts believe one option for Holmes would be to seek a plea deal, which would involve some jail time – but considerably less than she would face if convicted by a jury.
The Telegraph has approached lawyers acting on behalf of both defendants for comment.
Balwani has not publicly responded to Holmes’ new claims.
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