Nancy Holmes case at court: Nancy Holmes and the origins of Theranos

Essentially a trial about truth The prosecution and defense have each delivered five days of testimony on three main fronts during the present trial: a case of a felony misappropriation of public funds, with…

Nancy Holmes case at court: Nancy Holmes and the origins of Theranos

Essentially a trial about truth

The prosecution and defense have each delivered five days of testimony on three main fronts during the present trial: a case of a felony misappropriation of public funds, with charges for money he raised and spent on his company, Holmes & Cupps; a story of theft and embezzlement by Holmes of funds designed to support patients with her company, which is essentially a clinic for transgender individuals; and a perjury case over a deposition in which she repeatedly insisted she did not receive and pay back loans for more than two years after acknowledging she had. One might even say that the trial has been largely about truth.

The prosecution will run its case on Monday and Tuesday; the defense on Wednesday and Thursday. Of these three, the fraudulent transfer counts most closely relate to the other charges. If that’s so, the party doing best at the moment is likely the defense. Because several issues have gotten their day in the sun over the past two weeks, they deserve ample analysis. First, the defense will likely have a difficult time rebutting testimony that goes beyond the allegations of the charges, but does not involve a theft of money, to which these non-felony counts address.

Given the issues that have generated ample attention, let’s focus for a moment on two of them:

Holmes’ testimony about her early career

First, the crown jewel of the defense is the testimony of its lead attorney, Charles Harder, which has been consistent over two weeks. Holmes, who was 19 when she filed the complaint with the Securities and Exchange Commission, is under oath and at the defense table during her testimony. The defense has generally been willing to put forth her career in a positive light, without focusing on specific charges. Indeed, a defense attorney recently walked into the courtroom, leaving Holmes standing, to emphasize to the jury the key attributes of Holmes.

This defense has continued throughout the trial. Holmes testified, for example, that when she was hired in September 2012, she was hired as a sales director for a company called Theranos, and was soon thereafter promoted to vice president of operations. She testified that after her successful hire, she met with Cupps’ general counsel and board members about how to run the business. She testified that there was no time limit on the contract. When asked if she had ever met Philip Anschutz, chairman of Cupps, or Sima Nanjiani, Cupps’ CEO, she replied “Yes.” She testified that when Cupps issued the shares of stock under the contract that were to be converted to common stock from convertible notes, the contract stated that she was given first right of refusal to all shares. She also testified that she, as vice president of operations, is responsible for the medical tests, and the collection of the data, during her two years at Theranos. None of these were events on which the prosecution has sustained evidence for an embezzlement charge.

Therefore, it is reasonable to conclude that the defense has primarily focused on her statements in support of fraud, rather than on any misappropriation of funds or fraud itself. The jury is likely to conclude that this is the case, and perhaps even that she is viewed to be being vindicated in this regard.

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