Attorneys for Theranos founder Elizabeth Holmes are asking a federal judge in her fraud case to keep prosecutors from sharing email correspondences between the one-time billionaire and a law firm that had been hired to represent the health care tech startup, according to a recent report.
Holmes’ attorneys argued that prosecutors would be violating attorney-client confidentiality by sharing emails between the firm Boies Schiller Flexner LLP and Theranos employees, according to The Wall Street Journal. But prosecutors say that privilege does not apply in this case because Boies Schiller represented Theranos and not Holmes herself, the report states.
The argument arose during a Wednesday hearing in the case and was regarding 13 emails from between 2013 and 2016. They cover Theranos’ response to the fallout that stemmed from a bombshell Wall Street Journal report that brought to light the company’s allegedly inaccurate technology and Holmes’ allegedly fraudulent claims, the report states.
The emails discussed legal recourse against the Journal and how the company should respond to the press, Holmes’ current attorney, Lance Wade, reportedly said.
Boies Schiller represented Theranos for years until the parties had a falling out in 2016, according to the report.
It’s not the first time Holmes, through attorneys, has requested certain information be withheld. In a November court filing, she argued that introducing evidence of the now-36-year-old's purported wealth when she goes to trial in 2021 “would confuse the issues and would be a momentous waste of time,” court papers show.
“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,” court papers further state.
Despite once being considered the nation’s youngest female billionaire, the motion describes how Holmes – the former CEO of Theranos before the company went under – received only “modest” financial benefits compared to the CEOs at other multibillion-dollar companies, according to the November document.
According to the court papers, “benefits” of Holmes’ job included “company-funded ‘luxury travel and accommodations’ and a ‘substantial salary’ that purportedly enabled Ms. Holmes to lead a ‘luxurious lifestyle,’ including ‘driving a luxury SUV, renting an expensive home, and purchasing expensive merchandise … The government has also alleged that Ms. Holmes ‘had her Theranos-paid assistants run personal errands, perform personal tasks, and purchase luxury goods.’”
Holmes' trial is slated to begin in March 2021 in the Northern District of California. The trial against Theranos' former chief operating officer Ramesh “Sunny” Balwani will follow.
Prosecutors allege that Holmes and Balwani deliberately misled investors, policymakers and the public about the accuracy of Theranos’ blood-testing technologies.
The two 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, a $2.75 million fine and possible restitution, the Department of Justice said.
Holmes, a Stanford University dropout once billed as the “next Steve Jobs,” forfeited control of the blood-testing startup in 2018.
Two years earlier, the SEC, prompted by a Wall Street Journal investigation, began looking into claims Theranos had made about its potentially revolutionary blood-testing technology.
The Journal quoted former employees that suspected the technology was a fraud, and it found 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.
Holmes founded Theranos in Palo Alto, Calif., in 2003, pitching the company’s technology as a cheaper way to run dozens of blood tests. She said she was inspired to start the company in response to her fear of needles.
Theranos raised millions in startup funding by promoting its tests as costing a “fraction” of what other labs charge.
In late 2016, Theranos began shutting down its clinical labs and wellness centers and laid off more than 40% of its full-time employees. The company reportedly ceased operations in September 2018, months after Holmes stepped down as chief executive.
The Associated Press contributed to this report.