Elizabeth Holmes' criminal fraud case heads to jury as closing arguments conclude

Nic Coury/AP

(CNN) -- After three months of testimony from 32 witnesses, the criminal fraud case of Theranos founder Elizabeth Holmes has made its way to the jury of eight men and four women who will decide her fate.

In dueling closing arguments spanning two court days, the prosecution and defense put forth strikingly different portrayals of Holmes. The prosecution described her as an experienced executive who intentionally chose to mislead investors, doctors and patients in order to take their money and avoid having her blood-testing startup fail. Holmes' defense portrayed her as a well-meaning entrepreneur who worked hard to build a technology that she believed had tremendous potential.

"The parties agree that Ms. Holmes worked hard, that she wanted Theranos to succeed," prosecutor John Bostic said in his rebuttal to the defense's closing argument on Friday. "The defense holds that out as a reason to doubt Ms. Holmes' intent to defraud in this case. But, in fact, that was her motive," he added.

Once the back-and-forth arguments concluded Friday, the judge read out jury instructions, which give jurors a set of guidelines through which to view their potential verdict. The jurors were handed the case around 4:45 p.m. local time, and they will return Monday at 8:30 a.m. to deliberate.

Holmes, once hailed as the next Steve Jobs, now faces nine counts of federal wire fraud and two counts of conspiracy to commit wire fraud. If convicted by the jury, Holmes faces up to 20 years in prison as well as a fine of $250,000 plus restitution for each count of wire fraud and each conspiracy count. She has pleaded not guilty.

In his closing remarks on Thursday and Friday, Holmes' attorney, Kevin Downey, attempted to undercut the government's case by painting Holmes as a committed entrepreneur who "gave up her youth" as well as her friends and her close relationship with her family "because she believed she was building a technology that would change the world." Downey concluded by stressing that Holmes remained at Theranos until the end and "went down with that ship when it went down."

Downey's remarks built on his arguments the prior day, in which he portrayed Holmes as a young entrepreneur "building a business and not a criminal enterprise." He ticked through evidence that he said showed she lacked intent to deceive. In order to convict Holmes, prosecutors need to convince a jury of eight men and four women of her intent.

"You know from your own experience and from your own common sense how to evaluate people's intent," he said near the end of his remarks Friday. "And you know that at the first sign of trouble, crooks cash out, criminals cover up, and rats leave a fleeing ship."

The prosecution, on the other hand, stressed that Holmes made a choice to lie to investors as her blood-testing startup was running out of money. "She chose fraud over business failure," prosecutor Jeffrey Schenk said in his initial closing remarks on Thursday.

Bostic returned to the alleged deceptive approach of Holmes and her company in his rebuttal. "The disease that plagued Theranos wasn't a lack of effort," he said, "it was a lack of honesty."

From the boardroom to the courtroom

Holmes, now 37, dropped out of Stanford in 2003 at age 19 to start what would become Theranos. A decade later, she took the veil off the company, courting press and touting a Walgreens partnership while claiming to have invented technology that could accurately and reliably test for a range of conditions with just a few drops of blood. She raised $945 million from investors, catapulting the company to a $9 billion valuation, making herself a paper billionaire.

Then it all came crashing down, beginning with a Wall Street Journal investigation in 2015 that revealed the company wasn't relying on its own technology to test blood, and that its blood tests weren't producing reliable results.

First criminally indicted more than three years ago, the trial was delayed by the pandemic and the birth of her first child. The public interest in Holmes hasn't faded since her downfall. There are documentaries, a forthcoming limited series and a planned feature film.

By 3:15 am local time on Friday, 34 members of the public and press had already lined up outside the federal courthouse in San Jose where the trial has been underway. There are just 34 seats available, plus another roughly 45 spots in an overflow room. The trial is not being televised.

How Holmes' defense tried to convince the jury

In his remarks Friday, Downey attempted to cast doubt on some of the prosecution's witness testimony, stressing that jurors only heard from three patients and pointing the finger at others in order to try to show Holmes' innocence.

In particular, Downey said some Theranos investors called as witnesses by the government either did little due diligence or did extensive research but decided to invest in Theranos anyway. A commonality between all of them, Downey suggested, was that they knew others connected to Theranos and they were particularly interested in its retail partnership with Walgreens, not because they were swayed by details such as the number of finger stick tests Theranos performed.

Downey previously pointed to evidence that he said shows Holmes had nothing to hide. He claimed to jurors that Holmes didn't conceal the truth about the company's testing methods from regulators or her board of directors (something the government disputes), that Holmes wasn't afraid to submit Theranos' technology for review by outsiders, and that when a regulatory audit found significant issues in its lab, she moved to have those addressed including agreeing to void two years of its blood tests at the suggestion of Theranos' lab director.

"You'll see that there's a lot of just innocent events, and only when you put on the government's lens and look through the government's eyes will you see some nefarious intent or bad conduct," Downey said Thursday.

On both days, Downey projected a visual of a staircase, illustrating the eight levels he said jurors would have to climb in their minds to convict Holmes. At the bottom: "no evidence." Further up: "reasonable evidence." And at the very top: "beyond a reasonable doubt."

"If someone is acting in good faith or someone does not believe that what they are doing actually is part of a scheme to defraud, then the correct verdict is a not guilty verdict," Downey told jurors Thursday.

The prosecution's case

During its case, the prosecution called 29 witnesses including former Theranos employees, scientists, investors and even a former Secretary of Defense as it sought to illustrate how Theranos' technology fell far short of its claims as well as how it overstated its financials, misled investors about partnerships and leveraged the media to perpetuate its claims, all while pinning Holmes at the center of it all.

"Fraud is sort of like a head start on the truth. For a long time, Holmes and Balwani knew the truth," Schenk said Thursday, referring to Ramesh "Sunny" Balwani, the company's COO and president who was also Holmes' boyfriend at the time of the alleged fraud.

Balwani and Holmes were indicted together but their trials were severed when she indicated she would take the stand to testify that she was a victim of their decade-long abusive relationship. Balwani has denied the abuse allegations in court filings. He is set to be tried early next year and has also pleaded not guilty.

"They knew what Theranos could do and what it couldn't do, and the people that they interacted with, the investors and the patients, did not. And they took advantage of that sort of gap in information," said Schenk. "And for that, they were able to commit fraud, and because of that, you should find Elizabeth Holmes guilty of the charged offenses."

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