What her abuse defense means for her fraud case

Former Theranos CEO Elizabeth Holmes’ possible defense strategy claiming her ex-boyfriend and former business partner abused her could benefit her in a high-stakes criminal fraud case, two legal experts have said at Yahoo Finance. The opening arguments begin on Wednesday in a lawsuit that could lead to a prison sentence of up to 20 years if she is convicted of using her blood testing startup to defraud investors and patients.

“I think that [abuse claims] are a possible advantage for her insofar as if a jury is inclined to acquit her for whatever reason, it gives her a reason to do so ”, Jessica Rot, Professor at Cardozo Law Schoolha told Yahoo Finance this week. “And she assumes no legal burden in raising this defense … if even a juror finds this argument compelling, it might be enough to hang the jury up.”

Last week, recently unsealed court documents revealed that Holmes had accused her ex-boyfriend and former CEO and Chairman of Theranos, Ramesh “Sunny” Balwani, of psychologically, physically and sexually assaulting her during their 10-year relationship. years. Balwani, who has denied the abuse allegations in a court file, has also been charged with fraud and is due to stand trial separately next year.

“[T]it is highly likely that evidence regarding the nature of Ms Holmes ‘relationship with Mr Balwani will be relevant to the trial, ”Holmes’ lawyers argued in an unsealed court document on Aug. 28.

Holmes suffered “a decade-long campaign of psychological abuse” at Balwani’s part, according to the documents. He would have controlled what she ate, how she dressed and how long she slept. Balwani monitored his phone calls, texts and emails and threw hard and sharp objects at him, according to the documents.

Did Elizabeth Holmes intend to cheat?

Holmes, 37, and Balwani, 56, are accused of defrauding investors who supported Theranos and patients who bought his diagnostic tests, by falsely claiming the company could perform dozens of tests using it too little more than a few drops of blood taken from a finger. sample. They are each charged with multiple counts of wire fraud and conspiracy.

Former Theranos CEO Elizabeth Holmes arrives for a hearing in federal court in San Jose, California, United States, July 17, 2019. REUTERS / Stephen Lam

“The question for the jury will be: Did Elizabeth Holmes intend to deceive when she made false statements?” Professor at the Faculty of Law of the University of Toledo and former white-collar defense lawyer, Gregory M. GilchristYahoo Finance said. (Gilchrist previously handled litigation for the law firm Williams & Connolly, which represents Holmes.)

Jurors are going to “want to point the blame somewhere,” Gilchrist said. “If you’ve got a guy that’s not in the room and there’s testimony that he was an abuser, and he’s older, and he’s been in business longer and has more of a connection to the sophisticated finance of Silicon Valley, so my God, what a wonderful place to hang the blame.

“The jury will probably want to hear from her”

Holmes’ attorneys have also taken the unusual step of revealing in closed-door preliminary hearings that Holmes is likely to testify about her relationship with Balwani, whom she first met when she was 18. However, defendants often decide to exercise their Fifth Amendment right. to refuse to testify in their own defense. And Holmes’ lawyers, who will only argue their case after the prosecution presents the government’s case, may decide it is best for her not to testify, according to Gilchrist.

“I can’t imagine going into a trial like this being sure, anyway, that the accused will testify,” Gilchrist said. “They are going to see what the government is doing and then make their decision … I wouldn’t be surprised if no one in the world knows about it just yet.”

However, Roth argued that while Holmes has every right not to testify, the abuse argument practically commits Holmes to taking a stand. “I think, for reasons of human nature, the jury will probably want to hear it, in their own words, about the [alleged] abuse, ”Roth said.

Holmes’ attorneys reserved the right to call a psychologist who examined Holmes as an expert witness to testify about his relationship with Balwani and the alleged abuse.

Roth and Gilchrist agreed that taking a position involves significant risk.

“She will be the subject of cross-examination, and the government often has considerable latitude during cross-examination to remove a witness, including an accused, by asking questions about specific acts that he or she does not. ‘might not have been able to submit to the jury otherwise,’ said Roth. noted.

“The downside to this defense is that if the jurors believe this is a ploy, if they see it cynically, it’s going to explode. I mean, that’s a terrible position to be in, in a lawsuit over your honesty and integrity, for any juror to start wondering: is this fair, or was it a convenient story they could tell? That would be a very big risk, ”said Gilchrist.

SAN JOSE, CALIFORNIA - JUNE 28: Former COO of Theranos Ramesh

SAN JOSE, CALIFORNIA – JUNE 28: Former COO of Theranos Ramesh “Sunny ‘Balwani leaves US Federal Court Robert F. Peckham on June 28, 2019 in San Jose, Calif. (Photo by Justin Sullivan / Getty Images)

Holmes, once proclaimed the world’s youngest self-made billionaire woman, has suggested in court documents that she is controlled by Balwani. It was Balwani, according to his lawyers, who created and prepared some of the corporate financial models presented to investors and the company’s former business partner, Walgreens. The statements she made about the records, they said, must therefore be weighed against the background of the abusive relationship.

Holmes ‘lawyers also pointed out that government witnesses raised the possibility that Holmes’ relationship with Balwani is questionable.

“Witnesses interviewed by the government indicated that Mr Balwani controlled Ms Holmes, that Ms Holmes was isolated by Mr Balwani and that Mr Balwani was combative with Ms Holmes,” her lawyers wrote.

“This is definitely something the government should face,” Roth said, adding that in order to do that the government did not necessarily have to rebut witness claims. “Both things could be true at the same time: she could have been in an abusive relationship with him, and she could also have acted with full understanding of what she was doing and the fraudulent intent.”

Professor of History at the University of Washington Marguerite O’Mara said in an interview for the Yahoo Finance documentary film “Valley of Hype” that she wouldn’t be surprised if Holmes looked at Balwani. “I think he’s really critical,” O’Mara said. “He’s sort of the bad cop for his good cop.”

Alexis Keenan is a legal reporter for Yahoo Finance. Follow Alexis on Twitter @alexiskweed.

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