Private jet flights, luxury hotel trips, fawning media reports and hobnobbing with the world’s elite — Elizabeth Holmes’ desire for recognition and wealth allegedly motivated her to commit fraud with her now-defunct blood-testing company Theranos.
That’s a major motive argument that federal prosecutors would like to make when Holmes’ trial starts in July in U.S. District Court in San Jose, Calif.
Holmes’ attorneys are seeking to prevent the government from presenting evidence of the former Silicon Valley entrepreneur’s lavish lifestyle, arguing that it would amount to “improper emotional appeals.”
Prosecutors in a motion filed Jan. 8 said they wanted to show how Holmes benefitted from having an assistant on the company payroll who also handled personal clothes and jewelry shopping, home decorating, food and grocery buying, and other items.
Theranos’ stock soared as a result of Holmes’ exaggeration of the company’s achievements, with a valuation in the billions at one point, according to prosecutors. The business community both in California and across the country came to admire Holmes, who enjoyed numerous profiles in publications and TV appearances. Holmes closely monitored daily news to cultivate her image.
Prosecutors went on to explain in the Jan. 8 motion: “Simply put, the fact that defendant gained a variety of tangible and intangible benefits from the fraud tends to show that she intended to defraud in order to obtain those benefits. Similarly, Defendant’s desire to retain her wealth and status created a powerful motive for defendant to continue and conceal her fraud.”
Holmes and Theranos were once Silicon Valley darlings, with Holmes claiming that her company was set to revolutionize blood testing with technology that could analyze tiny amounts of blood. Forbes in 2015 even recognized Holmes as America’s richest self-made woman based on Theranos’ multibillion-dollar valuation at the time.
Investigative reporting, though, soon dismantled the claims Holmes was making about Theranos’ technology, raising questions about whether she and others had misled investors. The downward spiral culminated in the 2018 shutdown of the company, with the SEC criminally charging Holmes and former Theranos president Sunny Balwani over what it described as a “massive fraud.”
Balwani’s trial is expected to follow the Holmes trial.