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Elizabeth Holmes- Case Archive
Federal Criminal Trialtrial-daytrial-dayRobert S. LeachLance A. WadeSo-Han Spiveyjury_instructionsopening_statementdirectDay 4 - September 8, 2021Judge Davila instructed the jury before the parties presented competing opening theories of fraud and good-faith business failure. Former Theranos controller So-Han Spivey then testified about Holmes's receipt of financial reports, unaudited financial statements, early cash shortages, and declining reported revenue from 2009 through 2011.
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Day 4 - September 8, 2021

Jury Instructions, Competing Openings, and Theranos Financial Testimony

Judge Edward J. Davila
5Proceedings
5Pages
1Witnesses
597Lines
Day 4 of 51
Appearing:
Robert S. Leach Lance A. Wade So-Han Spivey

Judge Davila instructed the jury before the parties presented competing opening theories of fraud and good-faith business failure. Former Theranos controller So-Han Spivey then testified about Holmes's receipt of financial reports, unaudited financial statements, early cash shortages, and declining reported revenue from 2009 through 2011.

Full day summary

Before the jury entered, Judge Edward Davila deferred a defense request to exclude anticipated testimony until the questions, foundation, and evidentiary context developed. The court also established procedures for admitted exhibits and continued examining whether Juror 7's unpaid jury service and work schedule could be accommodated without excusing her. Judge Davila then instructed the jury on the 12 conspiracy and wire-fraud counts, the presumption of innocence, the government's burden of proof, the elements of the charged offenses, and the rules governing evidence and witness credibility. The prosecution alleged that Holmes and Ramesh Balwani obtained money from investors and patients through false or misleading claims about Theranos's technology, validation, finances, and commercial progress. The defense argued that Holmes believed in the company and its technology, that Theranos had genuine achievements, and that business and laboratory failures did not establish an intent to defraud. The prosecution's first witness, former Theranos controller So-Han Spivey, testified that she regularly reported the company's financial condition and cash position to Holmes. Spivey said KPMG issued no opinions on Theranos's 2009 through 2015 financial statements and described early-2009 cash shortages that required prioritizing vendors and addressing a bank hold to fund payroll. She understood that Balwani's personal funds supported a loan that eased the shortage. After Exhibit 578 was admitted without objection, Spivey identified reported revenue of about $2.79 million in 2009, $1.40 million in 2010, and $518,248 in 2011. The court excused her until Friday and repeated its admonition against outside research, communications, and media exposure.

1. Pretrial Motion Ruling and Trial Administration

Before the jury entered, the court addressed an evidentiary motion, trial administration, and Juror 7's financial hardship. The jury and alternates then entered for an inquiry and preliminary instructions before opening statements.

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Procedural
Court Convening and Party Appearances

The court convened with the jury out and recorded appearances for both sides.

Procedural
Pretrial Motion Ruling and Trial Administration

The court deferred a defense motion to exclude anticipated testimony and established daily procedures for managing and publicly posting admitted exhibits.

Procedural
Juror 7 Financial-Hardship Inquiry

The court temporarily retained Juror 7 while she explored whether adjusted work shifts could alleviate her financial hardship.

2. Preliminary Jury Instructions

Judge Davila instructed jurors on the charges, the governing legal standards, the presumption of innocence, and courtroom procedures.

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Jury Instruction
Preliminary Jury Instructions
5 lines

Judge Davila instructed the jury on the 12 conspiracy and wire-fraud counts, the government's burden, evidence and credibility rules, juror conduct, and the separate status of Ramesh Balwani's case.

Highlights

Preliminary Jury Instructionsprocedural actionThe court identified the 12 charged counts, reaffirmed the presumption of innocence, and instructed that the government must prove every element of every count beyond a reasonable doubt.Preliminary Jury Instructions“MS. HOLMES HAS PLEADED NOT GUILTY TO THE CHARGES AND IS PRESUMED INNOCENT UNLESS AND UNTIL THE GOVERNMENT PROVES MS. HOLMES GUILTY BEYOND A REASONABLE DOUBT.”— Edward J. DavilaStates the central presumption and burden governing all 12 counts.

3. Opening Statement by the Prosecution

The prosecution outlined its allegations that Elizabeth Holmes and Ramesh Balwani misled Theranos investors and patients about the company's technology, business prospects, and laboratory operations.

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Opening
Opening Statement by the ProsecutionRobert S. Leach
17 lines

The prosecution alleged that Elizabeth Holmes and Ramesh Balwani defrauded Theranos investors and patients through misrepresentations about the company's technology, partnerships, finances, retail rollout, and test accuracy. It previewed insiders, investors, patients, outside organizations, and records that it expected would support the wire-fraud and conspiracy charges.

Highlights

Opening Statement by the ProsecutionotherThe prosecution introduced its theory that Elizabeth Holmes and Ramesh Balwani agreed to defraud Theranos investors and patients through allegedly false claims about analyzer capabilities, military use, pharmaceutical validation, and revenue.Opening Statement by the Prosecution“THIS IS A CASE ABOUT FRAUD, ABOUT LYING AND CHEATING TO GET MONEY.”— Robert S. LeachA concise statement of the prosecution's central theory and rhetorical framing.

4. Opening Statement by the Defense

Defense counsel completed the opening statement, arguing that Holmes believed in Theranos and that its business and laboratory failures were mistakes rather than fraud, with a recess and Juror 7 scheduling inquiry occurring between portions of the argument.

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Opening
Opening Statement by the DefenseLance A. Wade
6 lines

Defense counsel argued that Holmes genuinely believed in Theranos, characterized the company's collapse as business failure rather than fraud, and previewed technological, customer, and financial evidence it expected would support that account.

Procedural
Juror 7 Hardship Inquiry — Employer Scheduling

Judge Davila asked Juror 7 to seek a trial-day work-schedule adjustment, but her manager was unavailable until Friday, leaving the hardship inquiry unresolved.

Opening
Opening Statement by the Defense — ResumedLance A. Wade
19 lines

The defense portrayed Theranos as a genuine but failed effort, conceded laboratory problems, and argued that Holmes acted in good faith, relied on qualified personnel, and did not defraud informed investors or patients.

Highlights

Opening Statement by the DefenseotherDefense counsel presented the central theory that Holmes genuinely believed in Theranos and that company failure or managerial mistakes did not establish criminal fraud.Opening Statement by the Defense“BUT FAILURE IS NOT A CRIME. TRYING YOUR HARDEST AND COMING UP SHORT IS NOT A CRIME.”— Lance A. WadeConcise statement of the defense's distinction between an unsuccessful company and criminal fraud.Opening Statement by the Defense — ResumedadmissionThe defense conceded that Theranos's clinical laboratory had operational problems and some underperforming tests, but disputed that Holmes knowingly provided inaccurate results and argued that she relied on Balwani, laboratory directors, and scientific personnel.

5. So-Han Spivey — Direct

So-Han Spivey testified about Theranos's finances, auditing history, cash shortages, and declining revenue before the court ended the day with a jury admonition and a scheduling inquiry for Juror 7.

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Direct
So-Han SpiveyRobert S. Leach
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Theranos's former corporate controller described Holmes's access to financial information, the absence of KPMG audit opinions, the company's 2009 cash constraints, and financial records admitted as Exhibit 578.

Procedural
End-of-Day Jury Admonition

Judge Davila recessed for the day, repeated the jury's outside-information admonition, and scheduled testimony to resume Friday at 9:00 a.m.

Procedural
Juror 7 Hardship Inquiry — End-of-Day Follow-Up

Juror 7 confirmed she could return Friday morning after moving her work shift and agreed to contact her supervisor, leaving the hardship inquiry unresolved.

Highlights

So-Han Spivey — Directtestimony highlightSpivey testified that after Howard Bailey left, Theranos generally had no CFO until an interim appointment in 2016; she reported directly to Holmes for much of 2008 through 2016 and regularly provided Holmes with financial-condition and cash-position reports.So-Han Spivey — Directtestimony highlightSpivey explained that KPMG did not issue opinions on Theranos's 2009 through 2015 financial statements and attributed the initial impasse to an unresolved valuation issue involving May 2010 stock options and a later financing round.So-Han Spivey — Directtestimony highlightSpivey described Theranos's early-2009 cash constraints, including selecting which vendors to pay, considering withholding Holmes's payroll, and working with Holmes to address a bank hold so the company could fund payroll.So-Han Spivey — Direct“I LET HER KNOW THAT WE WOULD NOT BE ABLE TO PAY ALL OF THE VENDORS AND IN ONE INSTANCE THAT I ALSO TOLD HER THAT WE WOULDN'T, YOU KNOW -- I ALSO SUGGEST TO HER THAT WE MAY HAVE TO WITHHOLD HER PAYROLL SO THAT WE COULD PAY A FEW MORE VENDOR WITH THE MONEY. AND THERE'S ALSO A SITUATION THAT WE HAVE TO CONTACT THE BANKER TO CLEAR A CHECK SO THAT WE CAN MAKE THE NEXT PAYROLL.”— So-Han SpiveySpivey described the cash problems she communicated directly to Holmes and the measures considered to meet vendor and payroll obligations.So-Han Spivey — Directevidence eventUsing Exhibit 578, Spivey identified Theranos revenue of $2,793,846 in 2009, $1,401,305 in 2010, and $518,248 in 2011.
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