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Prosecutors: Texts from Elizabeth Holmes prove she knew Theranos was in trouble

Text messages allegedly sent between disgraced Theranos founder Elizabeth Holmes and her one-time lover and business associate Ramesh ‘Sunny’ Balwani show the pair panicking before the blood testing company collapsed. 

The messages have been included in a motion compiled by prosecutors ahead of Holmes’ fraud trial, which is scheduled to start on March 9 of next year. 

Theranos, a start-up which promised to revolutionize the healthcare industry by offering automated rapid-speed blood testing, was shut down in 2018 after the failures of the company’s technology were exposed. 

Holmes, 36, and Balwani, 55, who worked as Theranos’ president, have both been charged with fraud, with prosecutors claiming the couple concealed shortcomings and inaccuracies about the company’s blood-testing machines. 

Balwani is pictured

Text messages allegedly  sent between disgraced Theranos founder Elizabeth Holmes and her one-time lover and business associate Ramesh ‘Sunny’ Balwani show the pair panicking before the blood testing company collapsed

In a message sent back in November 2014, Balwani allegedly described one section of the Theronos laboratory as a ‘f**kng disaster zone’. 

The following year, as the Centers for Medicare and Medicaid Services conducted a survey of the Theranos lab, Balwani purportedly texted a message to Holmes which stated: ‘Our validation reports are terrible. Really painful going thru this process…  Going bad so far. Pray.’

Holmes responded: ‘Praying… Praying continually.’

The Centers for Medicare and Medicaid Services subsequently reported that the lab posed ‘immediate jeopardy to health and safety.’ 

Things began to unravel quickly for Holmes and Balwani, even as they continued to tout that Theronos would revolutionize the blood testing industry. 

The company raised more than $700 million from venture capitalists and investors, and was valued at a whopping $10 billion by 2014. 

Holmes and Balwani were charged with fraud in 2018,  accused of duping investors and medical professionals. Both have pleaded not guilty to all charges.  

Prosecutors want to have the texts included as evidence in Holmes’ upcoming trial, claiming it shows that both she and Balwani knew Theranos technology was significantly flawed.  

Theranos, a start-up which promised to revolutionize the healthcare industry by offering automated rapid-speed blood testing, was shut down in 2018 after the failures of the company's technology were exposed. Holmes is pictured in a company advert before the collapse

Theranos, a start-up which promised to revolutionize the healthcare industry by offering automated rapid-speed blood testing, was shut down in 2018 after the failures of the company’s technology were exposed. Holmes is pictured in a company advert before the collapse 

Meanwhile, Holmes’ legal team filed a motion last week in an attempt to block prosecutors from mentioning her wealth, spending habits and luxurious lifestyle during her fraud trial next year. 

According to a filing submitted on Friday and obtained by CNBC, the government is alleging that Holmes ‘had her Theranos-paid assistants run personal errands, perform personal tasks, and purchase luxury goods’.

But her defense attorneys are claiming that prosecutors are trying to use a motive argument based on the assumption that Holmes’ lavish lifestyle may have motivated her to ‘commit fraud to acquire or maintain that lifestyle’.

‘The amount of money Ms Holmes earned in her position at Theranos, how she chose to spend that money, and the identities of people with whom she associated simply have no relevance to Ms Holmes’ guilt or innocence,’ her attorneys wrote in the motion. 

According to a filing submitted on Friday, the government is alleging that Holmes (pictured in June 2019 leaving a court house) 'had her Theranos-paid assistants run personal errands, perform personal tasks, and purchase luxury goods'

According to a filing submitted on Friday, the government is alleging that Holmes (pictured in June 2019 leaving a court house) ‘had her Theranos-paid assistants run personal errands, perform personal tasks, and purchase luxury goods’

‘Many CEOs live in luxurious housing, buy expensive vehicle and clothing, travel luxuriously and associate with famous people – as the government claims Ms Holmes did,’ her attorneys said. 

Before Holmes’ fall from grace she employed personal assistants to run her luxury shopping sprees, traveled by private jet and stayed at exclusive hotels.    

Holmes is set to go to trial March 9 after it was pushed back due to the coronavirus pandemic. Balwani will face trial separately at a later date. 

Holmes, a Stanford University drop out, launched her Palo Alto blood-testing start up in 2003 when she was 19 years old. 

But her defense attorneys are claiming that prosecutors are trying to use a motive argument based on the assumption that Holmes' (pictured in January arriving to court) lavish lifestyle may have motivated her to 'commit fraud to acquire or maintain that lifestyle'

But her defense attorneys are claiming that prosecutors are trying to use a motive argument based on the assumption that Holmes’ (pictured in January arriving to court) lavish lifestyle may have motivated her to ‘commit fraud to acquire or maintain that lifestyle’ 

A notoriously secretive company, Theranos shared very little about its blood-testing machine with the public or medical community. 

Holmes said she was inspired to start the company in response to her fear of needles. 

But an investigation by The Wall Street Journal in 2015 found that Theranos’ technology was inaccurate at best, and that the company was using routine blood-testing equipment for the vast majority of its tests. 

Holmes (pictured), a Stanford University drop out, launched her Palo Alto blood-testing start up in 2003. She and Balwani are accused of scamming investors out of more than $700million

Holmes (pictured), a Stanford University drop out, launched her Palo Alto blood-testing start up in 2003. She and Balwani are accused of scamming investors out of more than $700million 

Theranos' ground-breaking invention, a machine Holmes claimed could perform hundreds of tests on a drop of blood taken from a pin-pricked finger, was exposed as a humiliating sham

Theranos’ ground-breaking invention, a machine Holmes claimed could perform hundreds of tests on a drop of blood taken from a pin-pricked finger, was exposed as a humiliating sham

The story raised concerns about the accuracy of Theranos’ blood testing technology, which put patients at risk of having conditions either misdiagnosed or ignored.  

The Journal’s investigation marked the beginning of the end of Theranos. Walgreens ended its blood-testing partnership with the company, and the Department of Health and Human Services effectively banned Theranos in 2016 from doing any blood testing work at all. 

She and Balwani were then accused of scamming investors out of more than $700million. 

They claimed their machines could conduct a full range of tests using a few drops of blood from a finger prick – but the technology was not able to, it was inaccurate and unreliable.

Both have denied the allegations and pleaded not guilty to wire fraud and conspiracy to commit wire fraud. 

If convicted, they could each face maximum penalties of 20 years in prison and a $2.75million fine, plus possible restitution, the Department of Justice said.

Lawyers for Holmes argued in December that the government’s case was ‘unconstitutionally vague’ and lacked specific claims of misrepresentation.

Prosecutors have identified 170 witnesses from more than a dozen states who plan to testify in the trial.

15 YEARS OF THERANOS

2003 – Holmes dropped out of Stanford University at 19 to found Theranos, pitching its technology as a cheaper way to run dozens of blood tests with just a prick of a finger and a few droplets of blood. Holmes said she was inspired to start the company in response to her fear of needles.

2004 – Theranos raises $6.9million and is valued at $30million. 

2007 – Theranos is valued at $200billion.

2010 – Investors bought what Holmes was selling and invested hundreds of millions of dollars in the company. She said in a July Securities and Exchange Commission (SEC) filing that it had raised $45million. It is valued at $1billion.

2013 – Theranos announces partnership with Walgreens.

2014 – Theranos was worth more than $9billion and Holmes the nation’s youngest self-made female billionaire, hailed by Fortune magazine.

Elizabeth Holmes, founder and chief executive officer of Theranos Inc., speaks during the 2015 Fortune Global Forum in San Francisco, California, on November 2, 2015

Elizabeth Holmes, founder and chief executive officer of Theranos Inc., speaks during the 2015 Fortune Global Forum in San Francisco, California, on November 2, 2015

February 2015 – In The Journal of the American Medical Association, a Stanford School of Medicine professor criticizes failure to publish anything in peer-reviewed biomedical journals. A notoriously secretive company, Theranos shared very little about its blood-testing machine with the public or medical community.

October 2015 – An investigation by The Wall Street Journal found that Theranos’ technology was inaccurate at best, and that the company was using routine blood-testing equipment for the vast majority of its tests. The story raised concerns about the accuracy of Theranos’ blood testing technology, which put patients at risk of having conditions either misdiagnosed or ignored, and Theranos temporarily halts finger prick tests.

June 2016 – Walgreens ended its blood-testing partnership with the company.

July 2016 – Department of Health and Human Services effectively banned Theranos in 2016 from doing any blood testing work at all.

2018 – Holmes forfeits control of Theranos and agrees to pay a $500,000 fine to settle charges by the SEC that she had committed a ‘massive fraud’ that saw investors pour $700million into the firm.


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