ELIZABETH HOLMES GUILTY(?): Everything You Need to Know

Theranos founder Elizabeth Holmes has been found guilty in 4 of the 11 counts against her, with the jury unable to reach a conclusion on 3 counts. Let's get into the background of this case and talk about what this all means!

Transcript

The trial of Elizabeth Holmes founder and CEO of the now infamous blood testing company Theranos started back in September. Really end of August is when they started picking the jury. That's how long this is going on for all right, she was on trial for 11 counts of fraud and conspiracy and pled not guilty to all 11. But yesterday a jury found her guilty of four of those 11 counts. They were unable to reach a verdict on three of the counts. But she could still face up to 20 years in prison though some experts say it could be a lot less than that. Let's talk about what this all means. Alright, if you're new here, Hi, my name is Leeja I'm a real life lawyer on a mission to demystify the law and how it affects your everyday life. That being said, I may be a lawyer but I'm not your lawyer. Okay, and nothing I say should never be construed as legal advice. You should always seek the advice of a licensed attorney before making any legal decisions. Great. super chats and super stickers are enabled that allows you to donate money to this stream to keep it afloat. I also have a donation going for the American Red Cross. I don't know I thought what's a blood charity we could donate to in honor of the conviction of Holmes. So give generously to an org that actually does like blood things that are helpful for people. I respect your time and I'm going to try to get through this in like 30 minutes. So I'm going to take your questions at the end. And so hold on hold for that. Okay, so let's take a step back. Now I did a video on Elizabeth Holmes previously so you know if you've been hanging out with me since then, oh my God, thank you for being here. But this will be a bit of a repeat a refresher, if you will. Alright. Where are my slides. Oh, there they are. Hello. There's Elizabeth Holmes. Okay. She was very ambitious young girl. From a very young age. She told her family like I'm going to create something great. I'm going to change the world. Alright. And then she goes to Stanford. She lasts two semesters at Stanford. Okay. And that's just enough time though to woo the right people into believing in her vision. And her great idea that's going to change the world. What's that idea? Well, she's going to develop a blood test that can be done with just a drop of blood. So instead of having to sit and get vials of blood drawn, which is necessary for a huge array of illnesses, she wanted to develop a test that would only take one drop of blood. Seems kind of like simple, plain to someone not in the medical field or who hasn't had any illness that required blood to be drawn regularly, but it can be really life changing. For people who have to get blood drawn a lot. It could lead to greater access to preventative care for people. Okay, it's a great idea and a great vision. The problem is like we can all have great ideas. I have an idea what if what if we cured cancer. Isn't that a cool idea. Like that would be totally life changing for a lot of the world. So then I could just go to investors and say, like, Hey, I took two semesters of biology once and I have this vision. I'm going to cure cancer, because that's basically what she did. She got one Stanford professor to believe in her. And with his his influence, and her absolute conviction that her dream would become a reality. She got hundreds of millions of dollars in financing to start Theranos to create her dream blood testing device with no more understanding or proof that she could actually make it happen than I have today and claiming that I would like to cure cancer. It's absolutely batty. Okay, so this professor of hers that she convinced this guy

his name is Channing Robertson. He's a chemical engineering professor at Stanford. And he was a Theranos' first board member, he convinced reputable scientists to join the company. And once she got in the right people's ears, she managed to get in the room with some very powerful people and convince them off her vision to eventual members of the board of Theranos included Henry Kissinger, George Shultz, two former Secretaries of State. Like honestly, this case is a ringing endorsement for how often I scream about prestige and how much bullshit it usually is. One powerful guy can be like, Hey, listen, she wants to change the world. And then the rest of us follow suit without stopping to think like Hey, she's only got two semesters of chemical engineering under her belt. And no one's ever been able to do this before so like should we question things a bit more something. The board wasn't even made up of scientists. It was made up of like I said, like secretaries of state, politicians, people who have no scientific background. Which isn't necessarily a bad thing. But there really was no scientific oversight happening with this technology. And the scientists that were actually on the ground trying to develop this technology were allegedly sounding alarm bells early on regarding the fact that it just didn't work. I guess I don't even have to say allegedly anymore. They were sounding alarm bells. It didn't work.

But apparently there was just something about that Elizabeth Holmes, Henry Kissinger described her as ethereal which was funny to me, James Mattis, who was Trump's secretary of defense. He said if he could describe Elizabeth Holmes, it would be with the words integrity and competence. He also said, both technical and scientific, but also focused on human rights in the most classical sense of what human rights are about, which I don't really know what that means. But again, this guy has no scientific background, and again, she took two semesters of chemical engineering. It's just shocking. Anyway, so she drops out of Stanford at 19 in 2003, and starts this company with the funding she gets by wooing the right people with her grand vision for the world. And for the first 10 years, it operates under the radar in stealth mode, trying to develop this technology. Again, it's not working. People know it's not working. But for the first 10 years, they were kind of under the radar about it. All right, in 2009 This guy Sonny balwani joins the company. He's this tech guy he's apparently had success in past investments like during the .com boom he got out like right before it exploded. And he drives apparently a really ostentatious black Lamborghini and is absolutely again, no scientific background. He holds various roles in the tech company. Or held. Previously, he was on the board. He was president and he was the COO. And at some point in there, they start a romantic relationship and they begin living together. It was like clandestine for a decade. Okay, this is relevant for reasons which I will get into. All right, then in 2013. That's when they leave stealth mode. Oh Bye Moira, and they start heavily publicizing this product as a miracle that tests blood with a single drop or a few drops and get diagnosed hundreds of ailments. All the while the technology wasn't there. And scientists on the ground trying to develop the technology were like, it's not there. Okay. By 2015 Elizabeth Holmes is like this new Steve Jobs esque behemoth in the startup world in Silicon Valley. Everyone thinks she's this groundbreaking Trailblazer. She's on the cover of Forbes and fortune and they're flying high with funding and hype. She's got bodyguards she's living this like luxurious life going on TV and on the record with media saying this that this technology works over and over again. We can take a drop of blood and we can do tons of tests with it. And they get this giant deal with Walgreens who's going to start carrying this machine. They're calling it the Edison. Talk about hubris. At every Walgreens store so everyone in America would be within five minutes of a simple blood testing solution. And we'll give them highly accurate results within hours but it usually takes multiple vials of blood and days to get results back. Something something about you know when it sounds too good to be true it usually is. At its peak, this company Theranos was valued at $9 billion making Elizabeth the youngest female self made billionaire. All the while. It doesn't work. The tech simply is not there. It doesn't work. And according to whistleblowers, Elizabeth and Sunny were told this time and again, because generally when you're a scientist, you have a reputation you'd like to maintain your job and your credibility. So you don't often want to tie yourself to tech that just doesn't work. So scientists are coming to the heads of the company to warn them, in fact, and content warning, self harm, you can mute it for like 30 seconds if you don't want to hear. One scientist who was convinced to join the company by Channing Robertson that Stanford professor. He was there for 10 years. He knew that the tech didn't work. And he eventually ended his own life due allegedly to the extreme depression that he experienced while at the company because he knew it just didn't work.

Even though there was so much fanfare around this technology, the FDA had only approved the test for one diagnosis: Herpes. But they were being used on actual patients and returning false positives that were absolutely devastating. People thinking that their cancer is in remission only to be told because of this Theranos tests that it's back, being told they're pre diabetic for example, and these types of diagnoses lead to a regimen of drugs or invasive procedures like people's health and lives were being toyed with because Holmes had this grand dream of changing the world and seemed not to care whether it actually worked or who she was hurting in the process. Anyway enough whistleblowers eventually start to come forward, including the grandson of George Schultz, that former Secretary of State who's on the board, and the Wall Street Journal does some investigating and they end up publishing this extremely damning investigation into these allegations that the tech doesn't work and that Theranos was actually doing the majority of its tests by taking full vials of blood and performing the tests on third party machines. Like they bought their competitors blood testing machines, and did the tests on those instead of this Edison machine that they claimed worked. And by 2016, the FDA was heavily investigating their analysis and Walgreens had pulled out of the agreement with Theranos and that same year 2016 Sunny balwani left and things were clearly crumbling. Okay. Then the private lawsuits start rolling in first from investors who claim they were defrauded because of the lies they were told about the tech, then by Walgreens. These were all later settled out of court for undisclosed sums. Okay. Then, in 2018, Elizabeth and Sunny they're charged by the SEC, that's the Securities and Exchange Commission, which is a branch of the federal government that handles Money, Money fraud, they're charged with committing massive fraud over many years and they're charged with defrauding investors in amount of $700 million. You see, it is very against the law to tell potential investors lies in order to induce them to give you their money. We don't like that. Also, Moira is snorting up a storm. She's having a peanut butter Kong. It makes her real excited. That's what you're hearing right now. Right? So Elizabeth Holmes ends up settling with the SEC. This was a separate lawsuit from the trial we're talking about this was not a criminal matter. This was the SEC doing its regulatory job and Elizabeth agreed to step down and to not run a company again for another decade. And Sunny, however, is planned on fighting these charges, which I believe is still ongoing. Okay. And then a couple months later, Elizabeth and Sunny are indicted on federal criminal wire fraud charges. That's what this trial was about. Again, this is in 2018. And that case, just now finished trial only for Elizabeth Holmes, not for Sunny Balwani. Sunny's case, goes to trial in February. Okay, so the trial was originally set to begin in July of 2020. But then was pushed back because pandemic and then it was scheduled for July of 2021. However, Elizabeth who is allowed to be free, she gets out on bail. She's not a flight risk. It wasn't a violent crime. So like, she's just out living her life. She gets pregnant. Conveniently, she's just living her life in a nice apartment. She's got this boyfriend who's heir to some hospitality fortune, and then she gets pregnant and is conveniently due when? July 2021. Convenient, too inconvenient to start her trial on time anyway. So it gets pushed back. And it starts at the end of August. Okay, so what are the accusations here? Okay, so she is charged with nine counts of wire fraud and two counts of conspiracy, both for defrauding investors and for defrauding patients. Let's quickly review what the prosecution has to prove in a wire fraud case. Alright. Here are the four essential elements okay. One that the defendant voluntarily and intentionally devised or participated in a scheme to defraud another out of money. The defendant did so with intent to defraud, that it was reasonably foreseeable that interstate wire communications would be used and that interstate wire communications were in fact used. That's why it's called wire fraud because interstate wiring happened. This is why the Feds get involved because it crosses state lines. Now when I think wire fraud I think of like old timey telegrams, wiring money, that's not the case. Email could count as wire fraud. Transferring money between banks could count as wire fraud sending something in the mail could count as wire fraud. Okay,

let's let's have that clear. So so that's what they had to prove. conspiracy to commit wire fraud, and then the actual wire fraud itself. Okay, jury selection started the end of August. 80 potential jurors were called into the San Jose courtroom. And of them seven men and five women were chosen with five alternates and I believe the final jury ended up being I think, eight men and for women, there were some there were some COVID scares. A couple people got cut for various reasons. But jury selection only took a few days they were asked to fill out a questionnaire and then they were brought in and asked questions to determine whether they could be impartial regarding this case, it was a lot less intense than some jury selections could be like, for example, the OJ trial 250 potential jurors were called and it took a month and a half to get them selected. But I imagine you know, despite the huge publicity of this trial there is less intense emotion it's wire fraud, it's not murder, you know, people probably feel a little bit more able to, you know, be impartial. And listen to all the facts. So opening arguments happened in September, which is important because it gives us kind of the time to figure out more of what the defense was going to be arguing plus because well, technically, there can't be any real surprises during trial. Each side has to turn over evidence to the other side and lists of witnesses. But when it comes to a criminal trial, the defense does have some air of mystery in that they don't have to explain exactly who are going to be witnesses. They just have to turn over a list of witnesses so we weren't really sure exactly what they were going to do going into this okay. For their opening arguments, the defense described Elizabeth Holmes as all in on Theranos mission of making testing cheaper and more accessible, and they said that she worked herself to the bone. For 15 years she poured her heart and soul into that effort, and in the end, Theranos failed and Miss Holmes walked away with nothing, but failure is not a crime. trying your hardest thing coming up short, it's not a crime. That's a quote from opening arguments from the defense. The main issue, though, is that she didn't just try really hard. She tried really hard and then failed, and then concealed that and then openly lied to investors that she succeeded. That is a crime. All right. Anyway. So I love opening arguments. It's really exciting to get to see each side layout basic arguments, the prosecution opened by arguing what we already knew they would argue, that Elizabeth Holmes material, materially misrepresented the technology that Theranos was developing. She knew it didn't work. And yet, she told investors, the public and patients that it did work in order to obtain money from investors, and she told investors that the company was doing well when she knew that it was not. And she did this knowingly, voluntarily and she conspired to do this with Sunny. They also claimed that she ran fake tests on investors while telling them that it was the Theranos technology that was running the test, but knowing full well that it was not and they were using third party tests. They also claim that Elizabeth made claims to investors that they had a deal with department the Department of Defense when they did not okay the main thing that they had to prove is that Elizabeth Holmes knew what she was doing. She knew that she was defrauding these people that her and she knew that her statements were false. she intended to defraud them and it's really hard to prove what's going on in someone's head. So the prosecution had to prove that intent beyond a reasonable doubt.

So during the course of the trial, 32 witnesses were called. That's why this lasted so long. Those included Trump's former Defense Secretary James Mattis, who sat on the board, as well as a woman named Lisa Peterson who managed money for the DeVos family, Betsy DeVos, another Trumper. There were other others like Rupert Murdoch and Henry Kissinger were on the witness list, but they did not end up being called as witnesses. And the prosecution also presented hundreds of pieces of evidence like they really drove home Elizabeth Holmes role in fake demonstrations of these blood test capabilities falsified reports, misleading claims overstated financials. It included recordings, documents, videos, I mean, she was really public about this. There was no shortage of evidence, okay. And for their part, the defense attempted to discredit the Theranos whistleblowers and investors, especially the investors by accusing them of not doing more research into Theranos before investing, you should have known better that she was lying, I guess. Then in the end, at the very end of the trial Elizabeth Holmes herself took the stand and she gave seven days of testimony. During that time she reinforced that she really did believe that the Theranos test worked and she ended up just relying on other people who are more qualified than her who were running this technology and she believed them when they told her that it worked. Okay, as predicted she also accused Sunny Balwani, again remember they were in a romantic relationship for like a decade. She accused him of emotional and sexual abuse saying that he controlled every aspect of her life, her schedule, how she dressed when she spent time with her family. What she ate when they had sex, everything. Okay? I'm not gonna say that's not true. I have no idea who to believe. I tend towards believing women obviously. That being said, this woman is now a like a proven liar. So who's to say, it could be true. Could be partially true could be a convenient fabrication. Sunny has denied all the allegations. The problem, however, is that the defense then didn't introduce any expert witnesses to connect Sunny's manipulation and the alleged relationship abuse with the fraud charges. Like why is this abuse relevant? You know, and I believe that goes to the first element of fraud, which remember requires that the defendant voluntarily participates in the scheme to defraud. So Sunny induced her to act. She was under some sort of coercion, and it wasn't voluntary, but there was no expert to take the stand to testify as the involuntary nature of her actions like how relationship abuse could lead to this type of coercion such that she shouldn't be found guilty. You know, I thought that was odd. Maybe you know, experts greater than I could tell you why they didn't do that, but I didn't get it. In the end, Elizabeth, you know, she was able to charm her way out of some of the counts against her. And she just flies through life that way. I don't know. Okay, so like I said, there were 11 counts total, one for conspiracy to commit fraud against investors. believe I have a slide for this. Let me let me make it clear. I'm such a visual learner. I want to show you exactly what happened. Okay. So 11 counts total one for conspiracy to commit fraud against investors, one for conspiracy to commit fraud against patients, six for actually committing fraud against different investors and three for actually committing fraud against different patients. Now, because this is wire fraud, the counts are for different instances of wiring things from one place to another, what puts this case under federal the federal government's purview, so she likely committed far more potentially allegedly committed for more than just these acts, individual acts of wire fraud, but these are the ones for which the government has obtained enough evidence to press charges. And they included things like telephone calls, bank transfers and sending test results all of which, like I said, count as wire transfers. All right, so the jury deliberated for seven days. And at the end, she was found guilty of four counts one count of conspiring to commit wire fraud against investors, three counts of actually committing wire fraud against investors, including a fund connected to former education secretary Betsy DeVos' family, okay. And then she was acquitted of the one count of conspiring to commit wire fraud against patients and the three counts of actually committing wire fraud against patients. And then the jury was deadlocked and did not reach a verdict on the remaining three counts of actually committing wire fraud against individual investors. So that's the breakdown. What does this mean? Okay. It means that Elizabeth Holmes and her lawyers successfully put doubt in the minds of jurors as to whether she intentionally committed acts of wire fraud or conspired to commit those acts against Theranos patients, meaning there either wasn't enough evidence for those counts to convince jurors of with beyond a reasonable doubt that she intended to defraud these individual patients and these instances, or Elizabeth successfully testified away the idea that she had no intent to lie to patients. Therefore,

she genuinely believed or at least had no reason not to believe that the tests worked. Okay. So the jury was unable to reach a decision on three of the counts related to individual incidents of wire fraud against investors. We don't know what take took place during their deliberations, but they likely got hung up on Holmes's intent in the individual instances. Again, intent is really hard to prove what's going on in someone's mind. You have inherently circumstantial evidence. Okay, so what happens when a jury can't reach a verdict? This is known as a hung jury it is expected at a hearing next week, though I've read conflicting reports it's either already been announced or at a hearing next week. The judge will announce a mistrial on those three counts. At that point, the prosecutor can decide whether or not they want to proceed with a new trial on just those three counts. My prediction is that they won't redo a trial on those counts. Each count of fraud comes with a possible 20 years in prison, which we would likely be served concurrently, meaning it doesn't stack on top of each other 20 years plus 20 years plus 20 years it is all the counts. All 20 years will be served concurrently. So the max she'll probably get would be 20 years. She already faces up to 20 years, so adding more fraud counts against her, that much effort and money expended in preparing a second trial. Probably not worth it. Okay. So they're saying next week the judge will also schedule a sentencing hearing. We talked about sentencing hearings at last week's Ghislaine Maxwell livestream. But at sentencing the judge will look at what's called a pre sentencing report which is prepared by probation. It lays out Elizabeth Holmes history who she is her upbringing any prior convictions. Because she doesn't have any prior convictions, experts are saying she likely won't receive the full 20 years but she could receive a heightened sentence due to the sheer quantity of money involved, which was nearly a billion dollars. Okay. But I've seen people estimating she'll get one year she'll get seven years she'll get higher. So literally no one knows but the judge and I doubt the judge even knows exactly what she's going to do yet. Because judges look at what are called sentencing guidelines to determine the length of a sentence. So the statute gives a maximum of 20 years but then the judge has some wiggle room based on their discretion to choose the sentencing and they use the sentencing guidelines for that purpose. They allow for a lower sentence if the person has no past convictions, but allows for higher sentences depending on the severity of the crime. So it's unclear when sentencing will be likely in the coming weeks and until then Holmes is free. She's not taken into custody after being found guilty. She's been free this whole time. Like I said, So Holmes's team said that they do plan to appeal this conviction which is pretty typical. She can appeal both the sentence itself whenever she is sentenced or parts of the trial or both. I wasn't able to get a good read on what specifically she would appeal but typically grounds for appeal can include improperly admitted evidence and improper Trial Management like things that affected jury impartiality, things that the news media did. I read that there were issues with COVID scares, juror travel, a water main broke in the courthouse, and one juror was dismissed for being a Buddhist I don't I didn't get too deep into why but like there were things there that could be juror potential biases or you know, changing the outcome of the trial that she could potentially appeal. So they're gathering probably everything they can to build a strong appeal. However, appeal is a steep slope to begin with. You have to show that the judge abused her discretion in the choices that she made or that the jury was so tainted or whatever that it led to an unfair trial. And that's not it's a hard thing to prove. So but people do it. So we'll see. I'm sure she will be appealing. And, you know, we'll see how much she is sentenced for and if she actually ends up serving that sentence in federal prison. Like I said, Sunny balwani, named as her co conspirator is set to face trial next month. So time will tell what's to come for Elizabeth Holmes, it appears likely that she will spend at least some time in federal prison. And that's the background my friends. Tell me your questions. Now's the time reminder that we are doing a fundraiser for Red Cross because blood you know, give blood or give money because for me when I tried to give blood I pass out a little bit so I'd rather give money you know. Thank you to those of you who have given very appreciated. Please tell me your questions. I should let's see. We have this chat box. Oh yeah.

Look at all these chats. Okay. Tell me your questions. What do we got? Wow, I'm like exhausted. That was so much. Oh, let me lean over so you guys can see my face. Hello? Yeah, her new baby. She had a new baby in July. And now I mean, she's been out hanging out with the baby this whole time. So that's nice, I guess but yeah. Yeah, bad blood, the podcasts super great, highly, highly recommend it goes obviously way more into detail than I could do. This was very much a high level level overview for if you have 25 minutes and you just want to learn what the heck's going on. But bad blood is a great podcast ah, oh my gosh, the turtleneck coincidence or on theme Sorry, I'm, it's I didn't. I didn't even think about it. Absolute coincidence, but you know what, I'm glad. I'm glad I ended up doing it. Because that's funny. Thank you for your donations. You know, I didn't listen, I didn't listen to the actual court testimony. I don't know. I don't know what her voice was a fake voice. There's a lot of controversy around that voice. If you've not heard her voice. She talks on a very low like fake I can't even do it. But like this fake, low voice that she claimed was her real voice but then like, turns out it wasn't. Sonny is charged he faced he's his trial starts next month. So they have to do this all over again. He that's another question actually, as I just is why they severed the two parties, you know from each other because they're both named in the case. So I don't I don't know why they did that. But yes, his trial starts next month and I think he's still facing charges from the SEC in relation to this too. Oh the dropout? Maybe that's the one I'm thinking about. The dropout is great as well. I spent a lot of time listening to the dropout. I believe I've seen the HBO documentary. The judge already called the mistrial. Perfect. Thank you for that. I've seen UFO photos more believable than her voice. That's good. Yeah, the the wide eyed non blinking, I'm not sure. I'm not sure what's going on with that. Would restitution be on the table? There is with criminal trials like this at the federal level there is like a Victims Fund. So there are like people who work in like US Attorney's offices who handle victim fund and restitution and things like that. So I'm sure the SEC is going to get some money out of them probably already has, but it depends. Oh my gosh, JediJen remind me what your daughter's name is. Again. I know you've told me but thank you so much. I love the space buns as well and thank you for having me at your tea party. Nxium I have watched the Nxium the documentaries, I don't know is it relevant? You think people would watch a Nxium video? Because wasn't it? What's her face? Convicted isn't it done is there more coming up? Sophia Grace thank you so much for having me at your tea party. Yeah, her Is it her husband now is she now married to the guy the the baby daddy. Anyway, she's been living she's been living life. She's been just fine living with him. All right. Well, thank you so so much for everyone who's been here. Thank you for watching. Thank you for donating to the Red Cross. Very appreciated. Do it in honor of the conviction. I don't know it's people are saying some people are saying like, Oh, it's gonna be like, Silicon Valley's having a reckoning now and there's more coming down with a lot of other people who I think have a little bit more insider knowledge of Silicon Valley are also like this isn't gonna stop anything like the amount of potential profit people that they're not going to be thinking really carefully about whether or not what they're saying is fully true. Could she also be sued for damages? Yes, there have been private lawsuits filed against her. So this was a criminal trial. So there have been civil lawsuits filed against her for damages. I know at least by investors and like Walgreens, I don't know if individual patients have sued I would assume so. Moira Oh, she got the peanut butter just clogging her up. It's true. Nexium does there's the it's a cult, there's sex. There's branding, like who's who's not going to want to watch that. So yeah, maybe I'll do a nxium one for the next live stream we'll see. Comment below or in the chat if there are other big trials coming up that you'd like me to cover. I try to stay abreast of the big trials. But you know, there's a lot going on in the world and in my world, so it's hard to keep track. Thank you so much for your donations. I hope everyone has a great night and the baby I don't know it's it really depends if child services are gonna get involved that's yeah, that would be a separate a separate thing. Would the conviction help in civil suits against her, potentially. It's hard to say. I'm going to be a lawyer about it and say it depends. Alright, we'll end on that point. You want to say hello to the people. You want to say hi for a palate cleanser. Omg her belly is so full of peanut butter. Say hello. Okay. Thank you so much for being here. I hope that everyone has a lovely evening. Lovely Tuesday. I have a new video coming out tomorrow. Keep an eye out. It's a highly requested reaction video. I'm not telling you which one. Okay, have a great evening. Love you guys.