A series of back and forth motions regarding the upcoming criminal trial (August 30, 2021) for Elizabeth Holmes, the former CEO of the now defunct Theranos, resulted in a partial victory for the defendant. Holmes, who has already experienced civil lawsuits, is facing criminal charges for her blood-testing start-up which turned out to be smoke and mirrors – and fraud. A point of debate was whether or not jurors should be allowed to hear about the details of the high-end luxury lifestyle Holmes enjoyed which included private jets, the best hotels, an expensive rental property, and extravagant purchases.
Is her lifestyle outside of the office relevant? Absolutely, say prosecutors; it was funded through the deceptive practices of Theranos. Not so fast, says Holmes’ legal defense – no need to prejudice the jury with specific details even if she was once considered the world’s first female self-made billionaire.
Here is what U.S. District Court Judge Edward Davila had to say in his response to motions regarding the relevance of Holmes’ lifestyle and spending, issued Saturday, May 22, 2021:
“The Government may introduce evidence that Holmes enjoyed a lifestyle as Theranos CEO that is comparable to those of other tech company CEOs. This includes salary, travel, celebrity, and other perks and benefits commensurate with the position,” wrote Davila. However, he added that “references to specific purchases or details reflecting branding of clothing, hotels, or other personal items is not relevant, and the prejudicial effect of that evidence outweighs any probative value.”
“Each time Holmes made an extravagant purchase, it is reasonable to infer that she knew her fraudulent activity allowed her to pay for those items,” Davila wrote. “While the benefits of these purchases are not as directly tied to the fraud…it may still be probative of Holmes’ scienter.” wrote Davila.
Another win for Holmes, who has pled not guilty to a series of criminal wire fraud charges, had been Judge Davila’s denial of admitting text messages between Holmes and Ramesh “Sunny” Balwani wherein they discuss the dismal situation of the company. Prosecutors drafted a motion to have specific text messages admitted, citing their belief that said messages offer proof that the co-defendant duo were well aware of the impending collapse.
Holmes reached a settlement with the SEC regarding civil charges without admitting or denying wrongdoing. She paid a fine of $500,000 and cannot hold a position as a director in a public company for ten years. Holmes, who is now expecting a baby, potentially faces 20 years in prison if convicted of the criminal charges against her.
Sources
Jurors in Elizabeth Holmes trial can hear some evidence about extravagant lifestyle as Theranos CEO
Ex-Theranos CEO Elizabeth Holmes says ‘I don’t know’ 600-plus times
Theranos and its founder settle U.S. fraud charges: SEC | Reuters