Prosecutors from the US Department of Justice and California Attorney General’s Office have called on Elizabeth Holmes of Theranos to take responsibility for fraud. Speaking at a hearing on Monday, prosecutors outlined their case against Holmes, and stressed that they want her to confess her wrongdoing. The prosecution is seeking to revoke Holmes’s probation as a result.
Holmes has not been charged with a crime, but has been accused of lying about the validity of Theranos’s blood-testing kit, which claimed to work 90% faster than other testing methods. On Monday, prosecutors detailed their own and the Department of Justice’s case against Holmes, characterizing her as an unscrupulous CEO who attempted to make a fast buck off Theranos’s technology.
“Elizabeth Holmes lied to investors, employees, and the public about the success of Theranos,” said Joon Kim, acting US attorney for the Northern District of California. “Holmes faked machine sales, exaggerated the results of Theranos’s blood tests, and falsified process design documents.”
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Prosecutors also said that it was also possible that other people may have knowingly participated in or benefited from Holmes’s fraud. They allege that Holmes “provided lie after lie to the public and investors”, urging false statements that led to a rally in Theranos stock price before its value imploded.
Holmes also failed to disclose that she was purchasing a home near Theranos’s main lab for $3.7m. Prosecutors said that the purchase would have made it impossible for Holmes to show that her relationship with Theranos had not become too close. The $3.7m is in addition to the $100m in other compensation, stocks and personal expenses that she has sought to secure over the past several years. In August, prosecutors demanded that Holmes’s fraud case be consolidated with the case of Theranos’s former chief operating officer, Ramesh Balwani.
Attorneys for Holmes have accused prosecutors of overreaching and trying to make an example of their client. Speaking on Monday, she’s said that she has “let down a lot of people” and “deeply regrets my lack of candor”. They also have called upon the court to allow Holmes to see her attorneys in person at the sentencing hearing, as she can’t afford to hire an attorney.
Holmes is also facing a class action lawsuit brought by investors. The shareholders are suing her for fraud and their attorneys have called upon the court to disqualify the DOJ from representing them, pointing out that their standard of care has been breached and that the Justice Department has already failed to follow court rules.
The court will consider the possible revocation of Holmes’s probation at a sentencing hearing in January.