Elizabeth Holmes Seeks New Trial by Challenging Key Testimony

Attorneys for convicted Theranos Inc. founder Elizabeth Holmes asked a federal appeals court for a new trial in the yearslong Silicon Valley fraud saga, calling into question the prosecution’s key witness testimony from a former lab director.

Amy Saharia of Williams & Connolly LLP told the three-judge panel for the US Court of Appeals for the Ninth Circuit at a Tuesday hearing that trial testimony from Theranos’ last lab director Kingshuk Das was “infected with error.”

“The government cannot show the errors were harmless,” Saharia said. “The case was close. This was the most powerful evidence on the central issue in the case.”

She argued that Das, who testified during the four month trial that Theranos’ blood testing device Edison had major problems, was providing opinions as an expert witness, but was never properly vetted by the judge before trial.

Holmes, who is serving an 11-year sentence in a minimum security prison in Texas, was indicted in 2018 for defrauding investors and patients by intentionally lying about the viability of Theranos’ blood testing business. The project took Silicon Valley by storm with a multibillion dollar valuation and prolific media attention.

She was convicted in the US District Court for the Northern District of California on four counts of wire fraud in January 2022, but was found not guilty on counts relating to patient fraud.

Possibly Swayed

At the Tuesday hearing, Judge Ryan D. Nelson at first appeared skeptical of Saharia’s claim that the case was close. “I didn’t come away reading all of this with the same impression,” he told Saharia. “There was it seemed to me pretty overwhelming evidence” outside of the potentially problems with Das’ testimony.

But he later seemed more amenable to the argument that prosecutors improperly used Das for expert testimony about the scientific viability of the Edison machine even though he was a lay witness.

The prosecution originally sought to use blood testing expert Stephen Master during trial as an expert witness, and he would have been vetted by the judge in a pretrial processes called a Daubert hearing. But Masters ultimately didn’t testify, and prosecutors used Das’ testimony even though he never went through the Daubert process, Holmes’ attorneys argue.

“I got to say, I have some problems with how this happened,” Nelson told Justice Department attorney Kelly Volkar. “You put in an expert, then you didn’t use that expert, and then you used a lay witness to get in some of that same testimony. There’s a pretty good story here for Ms. Holmes.”

Evidence Not Challenged

Volkar responded that Das wasn’t being used to testify about the same scientific issues as Masters, but rather about “what he observed in real time in 2016" at Theranos, “and most importantly what he told Holmes.”

Volkar also argued that even if the Holmes wins her arguments about the Das’ testimony or other issues relating to the accuracy or reliability of the Edison test, that evidence was mainly used for prosecuting the patient fraud counts on which she was acquitted.

Holmes hasn’t challenged the key evidence in her investor fraud conviction, including her misrepresentations about Theranos’ financial health, work with the military, and relationship to pharmacy Walgreens Co.

At the same Tuesday hearing, the judges also heard a conviction appeal from Holmes’ ex-partner and former Theranos President Ramesh “Sunny” Balwani, who was convicted separately and is serving a 13-year sentence.

His attorney Jeffrey Coopersmith of Corr Cronin LLP argued that prosecutors improperly amended their indictment by introducing evidence about the accuracy of Theranos’ conventional testing technology even though the indictment only involved Theranos’ proprietary technology.

Judges Jacqueline Nguyen and Mary M. Schroeder also served on the panel.

The cases are USA v. Holmes, 9th Cir., No. 22-10312, 6/11/24.