What John Carreyrou Expects at the Trial of Elizabeth Holmes

The federal trial of Elizabeth Holmes, the founder and former C.E.O. of the now defunct medical-testing tech startup Theranos, began on August 31st, three years after Holmes’s indictment on numerous counts of fraud and conspiracy to commit wire fraud. Theranos was once valued at more than nine billion dollars. It employed upward of seven hundred people and had a board of directors stacked with the likes of Henry Kissinger and James Mattis. Then, six years ago, the company collapsed like a soufflé, following a Wall Street Journal exposé by the reporter John Carreyrou, who wrote that the company’s supposedly revolutionary technology—a proprietary lab machine that could run hundreds of medical tests using mere drops of blood drawn from a finger prick—was not at all what Theranos claimed it to be.

Carreyrou’s explosive reporting became the basis for a 2018 book, “Bad Blood,” which tracks the rise and fall of Theranos, from Holmes’s founding of the company as a nineteen-year-old Stanford dropout through her fall from grace. He is currently hosting “Bad Blood: The Final Chapter,” a podcast that covers the trial and delves into some of the astonishing evidence the prosecution is likely to introduce in the coming months—the trial, now entering its third week, is expected to last until mid-December, or longer. If Holmes, who has pleaded not guilty, is convicted, she faces up to twenty years in prison, plus fines and restitution. (She and her legal team have accused Carreyrou of advocacy journalism in bringing about Theranos’s collapse.) Holmes’s former boyfriend Ramesh (Sunny) Balwani, who was Theranos’s president and C.O.O., and has also pleaded not guilty, will be tried separately next year. I recently spoke with Carreyrou. In our conversation, which has been edited for length and clarity, we discussed the likelihood that he’ll be called as a witness, the defense’s likely attempt to pin the blame on Balwani, and ​​the danger of Silicon Valley’s fake-it-till-you-make-it ethos.

Are you at the trial in San Jose now, or are you back in New York?

I’m back in New York. I was there for about eleven days for jury selection and then opening arguments. I’m planning to go back, at the very least, for the end of the trial and the verdict, but it’s possible—even likely—that I will have to go back before then, because I’m No. 6 on the defense’s witness list. So I would anticipate that at some point they’re going to subpoena me and call me to the stand. I’ve been watching my in-box, expecting a subpoena to drop any day.

It must be interesting for you—the person who knows this story better than almost anybody on earth—to hear it told again, through this trial, to a jury that has never heard of Theranos or Elizabeth Holmes.

Presumably, they do now have twelve people who are coming at this as clean slates. There has been one change in the jury’s composition in the past couple of days—a young woman got dismissed for financial hardship, and was replaced with an alternate. So now the composition of the jury is, I believe, eight men and four women. And, of the eight men, five of them appear to be older white men.

That’s a demographic Holmes was good at playing to—her investors, her board.

It was hard to read those jurors as they were listening to opening arguments. I thought the prosecution did a decent job with its opening argument: they kept it pretty simple and to the point. I also found the defense’s opening argument impressive. They hit the points that I expected them to: they tried to humanize Holmes as much as they could, and make the argument that, you know, she was an entrepreneur who failed, but not necessarily a crook. And they teased their potential Svengali defense, which would be to lay a lot of the blame on Sunny, and to allege that he abused Elizabeth and was controlling her.

I don’t know what to expect. I think the odds are still probably in favor of a conviction, just because of the numbers. The last year for which I found data was 2018, when eighty-three per cent of federal criminal defendants who chose to take their cases to trial ended up being convicted.

But all those other defendants aren’t Elizabeth Holmes. She’s a chameleon. She’s got incredible charisma. I think she’s a great actress. If she goes on the stand to elaborate on this Svengali defense, then I expect her to come off as, like, this naïve young woman. I think she’s going to sell that image hard to the jury. I’m certainly not a hundred-per-cent confident that it’s going to result in a conviction.

I wonder whether it would be difficult for Holmes to embody that character of the naïve young woman who had the wool pulled over her eyes. It’s antithetical to the persona that she spent so long cultivating: someone focussed, in control, smarter than thou. A person who’s here to change the world.

Yeah, it’s the opposite of the image that she portrayed for years, before the scandal erupted. And I expect the government to rebut whatever—well, I guess it’s harsh to call it an act, but—whatever image she portrays on the stand, and I do expect it to be a much softer image. I do expect her to bring up her abuse allegations, if she goes on the stand. I think that will be the primary reason she testifies, to throw Sunny under the bus, and I would expect the prosecution to counter that with videos of her at the height of her fame, when she’s addressing audiences and looking incredibly self-assured, confident, and in control. It will be hard, I think, for the jury to reconcile the two.

Your initial reporting on Theranos was in 2015, and your book came out in 2018. Has the story changed in the years since?

The story hasn’t changed materially since my book came out. I’ve since gotten my hands on a lot of the S.E.C. case documents [from S.E.C. fraud charges brought against Theranos, Holmes, and Balwani; both Theranos and Holmes settled in 2018]. There’s a whole series of text messages, spanning five years, between Elizabeth and Sunny. Some are redacted, at least in the version that I have, but a lot are not. If you read these texts, it’s hard to believe that Sunny was the puppeteer and she was the puppet. They really give you the impression of two people who were romantically involved, and whose lives were intertwined, and who consulted each other all the time. It gives you a sense that this was a partnership of equals. In some of those texts, Sunny is even the one who voices words of caution, or expresses misgivings, whereas Elizabeth never seems to. The prosecutors have signalled that they’re going to use some of these texts, and, again, I think [these messages] are hard to reconcile with what I’m calling the Svengali defense.

Another document I’ve received was a series of notes that Elizabeth had written to herself—she had typed them on her computer. One of them was the focus of Episode 4 of my podcast. Tell me if I’m telling you stuff you already know—have you listened to the podcast?

I have!

O.K., so you know about the “Mado” note.

Which is extraordinary. [The note reads, “Really smart people picked off mado / Not you,” which, Carreyrou suggests, is Holmes comparing herself to Bernie Madoff.]

Right. So that was new for me, and certainly I found that titillating when I first discovered it. There were also internal e-mails in which Holmes was alerted to problems with erroneous results that patients were receiving. One that comes to mind is about a patient who received a false result suggesting that she was not pregnant, which led her doctors to discontinue her medication, when in fact she turned out to be pregnant. Holmes is in the e-mail string, and she says, “How did that happen?” There are e-mails from her brother, Christian Holmes, telling her about problems with the tests and suggesting that they halt reporting certain test results. I certainly wish I’d had these materials when I wrote the book, but they don’t materially change the arc of the story.

Holmes’s team definitely seems to be setting up the, as you say, Svengali defense, but they’re also setting up a narrative of, like, “She’s a visionary, and what’s so wrong with that?” This feels like a very Silicon Valley take on things.

When I say the Svengali defense, they treaded lightly with that argument. They didn’t even make it explicit. They dropped a few hints during the opening statement. But it’s not the only line of defense. Another line, like you said, is to say that she was this really intense entrepreneur, who really believed in her vision, who worked long hours and tried to make it come to fruition, but unfortunately failed, and failure is not a crime. Another line of defense is going to be that she wasn’t the one overseeing the lab, that Sunny was the one who had oversight over the lab, and that Holmes thought the lab directors had the proper certifications and that they knew what they were doing. Yet another line of defense is going to be that she never sold any of her shares, and so, you know, how could she be a crook if she didn’t profit?

And then, there’s the line of defense that I think will explain why I’m on the witness list for the defense: I think they may try to argue that this was a witch hunt by the press and by the government. A bunch of the prosecutors are also on the defense’s witness list, as well as F.D.A. and C.M.S. [Centers for Medicare and Medicaid Services] officials.

Is that common in trials like these?

It’s not unheard of, in a criminal trial, for the defense to try to put the prosecution on trial. It’s a way of deflecting from the real issues and distracting the jury. But I think that if they call me to the stand, it’s probably going to be to try to make the case that I was this rabid reporter who had it in for Elizabeth Holmes, that I was biased, and that I communicated with regulatory officials—that I colored their stance toward Theranos and that they intervened more quickly and more harshly than they otherwise might have.

My response to that would be, yes, I did talk to some regulatory officials during my investigation leading up to my first story, and that’s because I was trying to determine whether what I was learning that Theranos was doing was legal or not. As to whether or not I influenced those agencies’ decisions to go in and inspect [Holmes and her company], the fact remains that, once they inspected, they found what they found, you know? I had nothing to do with what they found.

The defense may not be wrong that the government is coming down harder and faster on Theranos than they have on other Silicon Valley cases. But, as Ellen Pao wrote in her Times Op-Ed about the trial, maybe they should be coming down this hard and this quickly more often.

I hear where Ellen Pao is coming from, because I think in many ways Elizabeth followed in the footsteps of the Larry Ellisons of the world—like they did early in their careers, she faked it until she made it. The big difference, though, is that a guy like Larry Ellison—he was running a software company, he was a computer entrepreneur. If you release a computer-software program that is buggy, or faulty, or if you release it before it’s ready, no one’s probably going to get hurt. The big, big, big difference is that she was running a medical-device startup. In 2013, she commercialized a product—i.e., blood tests—that patients and doctors relied on to make really important health decisions. That’s taking the fake-it-till-you-make-it ethos of Silicon Valley way further than anyone else had, in my view. I think that’s why prosecutors said, “This is one case that we just can’t let go.” Real lives were affected. And that’s I think, the point that Ellen Pao misses: all those men who had come before Elizabeth, and whom she was emulating, hadn’t faked it until they made it with medical technology.

There are so many moments in the story of the rise and fall of Theranos, in your book and in your reporting, that have seemed almost too absurd to be real. And that level of absurdity has continued into the trial—with, for example, the father of Holmes’s current partner, Billy Evans, going incognito during jury selection, trying to mingle with the media. Do Holmes and her camp know just how cartoon-villainous all of this seems to other people, or do they really think they’re the good guys here?

It is incredible. I think there’s an entitlement to Elizabeth Holmes and her clan that you can’t underestimate. There’s a combination of self-righteousness and entitlement, and an absolute refusal to concede to mistakes or errors, much less fraud. And out of these things spring what everyone else—and I’m glad to hear you say it—what everyone else thinks are these absurd moments. I mean, the way Theranos’s lawyers went after Tyler Shultz [one of Carreyrou’s sources, a former Theranos employee and the grandson of the late Theranos board member and former Secretary of State George Shultz], to the point of ambushing him at his grandfather’s house, says it all. And then Billy Evans’s father playing the mole during jury selection. These people live in this arrogant bubble. I think that what you point to is a reflection of that.

And on the other side we have the prosecution’s strategy, which is basically just playing it very straight: this company was a house of cards. Holmes was in charge. She lied. Here are all of these examples of these over-the-top things she has done, or her people have done.

I think if they call me to the stand and attempt to pursue the witch hunt argument it’s going to be a continuation of what I just talked about. The reflex, with Elizabeth Holmes, from the moment I started looking into her and investigating Theranos, has been to mount these scorched-earth counterattacks. If they try to make me the villain at the trial, it’s going to be a continuation of that.

Your podcast is called “Bad Blood: The Final Chapter.” Is this necessarily the final chapter for Holmes? If somehow she is acquitted, or if there’s a mistrial, will Silicon Valley welcome her back with open arms?

That’s a good question. I think, if she is acquitted, certainly she can have a second act. I mean, this is the land of second acts—this is the country where Donald Trump became President. I expect her to go right back to once again being a player in the Valley.

And then, in terms of the story not being completely over, there’s also the fact that Sunny is going to go on trial next year. So, even if this trial were to reach its conclusion before Christmas, and Elizabeth were to be convicted, there’s still that part of the story.

It does seem, on a certain level, that this is all of Silicon Valley being put on trial—or, at least, the values of Silicon Valley.

I do think this trial is going to be a referendum on the culture of Silicon Valley. In that sense, the stakes aren’t just what happens to Elizabeth Holmes. They’re also whether or not this jury sends a signal to Silicon Valley that there’s a line not to cross. You can hype and exaggerate up to a point, but if you cross the line into outright lying, if you deceive investors, if you put people in harm’s way, there are consequences. You’ll be held accountable.