Elizabeth Holmes Trial: Roger Parloff Fortune Story May Sink Some Investor Counts

In June 2014, Roger Parloff, a journalist, wrote a glowing cover story in Fortune praising Elizabeth Holmes and her blood-testing company Theranos. The Fortune cover story and potentially Parloff’s testimony may be a problem for the prosecution in the US v. Elizabeth Holmes felony wire fraud trial currently underway in San Jose California.


Well, if the jury finds that an investor relied upon representations made by others regarding Theranos, namely, the statements and representations made by Roger Parloff in the Fortune cover story, prior to the investor’s investment in Theranos, then, the jury may find reasonable doubt as to some of the investor fraud counts.

Another words, it could be argued that the investors relied upon and decided to invest in Theranos because of the now allegedly “materially false and fraudulent representations” made by Parloff‘s story not by Holmes. Or, in the alternative, it was the “representations” of both Holmes and Parloff’s story that induced or caused the investors to invest in Theranos. Given the testimony of investors David Mosley and Lisa Peterson who both testified that they relied upon the Fortune cover story, in addition to the claims made by Holmes, prior to investing in Theranos, counts 1, 7 and 8 of the Holmes indictment may be in jeopardy, specifically, the conspiracy to defraud investors, the $99,999,984 investment from the De Voss family per Lisa Peterson, and the $5,999,997 investment from Mosley into Theranos in October 2014, respectively.

Interestingly, it does not appear that either Mosley or Peterson sued Fortune, Parloff or Holmes for the alleged fraudulent representations. However, Parloff and Fortune, did publish a retraction to the Holmes cover story, “How Theranos Misled Me” in 2015. Prior to Parloff’s journalist career, he was a criminal litigator in Manhattan.

BTW, Parloff’s upcoming testimony in the Holmes trial may be limited subject to this Monday’s motion in limine hearing at 10 am. For example, the Fortune story, parts thereof, or Parloff’s opinion/findings may be excluded from his testimony. The Court may also revisit Magistrate Cousins ruling denying the defense’s request to release of Parloff’s notes for his cover story, presumably sought, to uncover, the exact words or statements made or not made by Holmes.

Simply my opinion, what say you?

BTW, I am providing legal analysis on the Holmes trial. Here are my interviews on CBS 5 KPIX San Francisco and CBS 5.

Elizabeth Holmes Trial: John Carreyrou an Expert or Fact Witness?

Today, Magistrate Cousins of the United States District Court in San Jose California granted WSJ reporter John Carreyrou’s first amendment right to cover the Elizabeth Holmes federal wire fraud trial. Cousins found Carreyrou to be an expert witness instead of a fact witness. If he had been deemed a fact witness, Carreyrou would have been prevented from covering or attending the trial as his name appears on the defenses witness list, and witnesses are typically excluded from court. Interestingly, he has not yet been subpoened to testify.

Expert witnesses are allowed to attend trial and hear the testimony of other witnesses to render an opinion when they testify. Think of a coroner giving an opinion as to the cause of death or an accident reconstructionist listening to the testimony of a police officer. Mr. Carreyrou wrote a 2015 WSJ article that blew the whistle and penned a best selling book, Bad Blood, based on his investigation into Theranos and Holmes.

Curious, will the Holmes defense appeal Magistrate Cousins decision finding Carreyrou an expert witness? Or, object when Carreyrou testifies or offers an opinion?

Does Carreyrou qualify as an expert witness?

Federal Rule of Evidence 702 allows for expert testimony if it will ‘assist the trier of fact to understand the evidence or to determine a fact in issue’ by providing opinions on ‘scientific, technical, or other specialized knowledge’.(See jury instruction 2.13 here)

Even if Carreyrou is found to have scientific, technical or specialized knowledge, could his “findings” (investigative info) be considered too prejudicial and excluded (or limited), like the detrimental findings of Centers for Medicare Services after their investigation of Theranos, which the trial judge excluded from testimony today as too prejudicial?

Another words, one could assert, would the Carreyrou testimony be helpful (probative) to the trier of fact (the jury) or would it be too prejudicial to the defense?

And as the jury will be instructed before deliberations,

“Such opinion testimony should be judged like any other testimony. You may accept it or reject it, and give it as much weight as you think it deserves, considering the witness’s education and experience, the reasons given for the opinion, and all the other evidence in the case.” (See jury instruction 2.13).

Keep in mind, it is the jury who decides what the facts are, weighs the credibility of witnesses and determines what weight to give the testimony of a witness, no matter…the bad blood.

Simply my opinion, what say you?

Theranos Trial: Juror Questionnaires Likely Public

Are juror questionnaires public or confidential?

Well, it looks like juror questionnaires are mostly public information with limited redaction, at the court’s discretion, for juror privacy concerns. But, it is up to each juror to raise their objection to the release of their private info.

As reported, a media coalition has filed a motion to obtain the juror questionnaires in the US v. Elizabeth Holmes blood testing wire fraud trial currently underway in San Jose California. The Media Coalition includes ABC, NBC, NY Times, Washington Post, The Daily Mail, Dow Jones, AP, and Bloomberg. They seek the unsealing of the juror questionnaires of the 12 seated jurors and the 5 alternate jurors.

Although the juror questionnaire states that the questionnaire is confidential, (see Holmes juror questionnaire pg. 2 here) most Courts have said otherwise. It seems that the public and the media have a first amendment right to obtain jury selection info which includes written juror questionnaires. Questionnaires are no different than the public information received during the voir dire stage of trial where jurors are asked questions in an open public courtroom. Both of which, become part of the public record for the proceeding.

Why does the public and the media have a right to access juror questionnaires?

The public and media have a right to hold the justice system accountable, to ensure the trustworthiness and integrity of the jury selection process.

However, the judge may redact information from the questionnaires if the jurors privacy concerns outweigh the public interest. For instance, if the info could lead to harassment, intimidation or harm to a juror or was “deeply personal matters” as in the Chandra Levy 2012 DC circuit Appellate Court decision releasing redacted questionnaires. (See other state and circuit decisions here).

My guess, the court will likely release the juror questionnaires subject to limited redaction.

However, keep in mind, juror misconduct, if prejudicial, or improper jury selection process, Holmes. like Scott Peterson or any defendant may have grounds to appeal a conviction.

Simply my opinion, what say you?

Update: 10/13/21 A hearing on the media’s motion to release questionnaires to be heard in 5 weeks, date tbd. The judge requested both sides to file briefs for the judge to consider before he decides whether to release the juror questionnaires.

Update: 11/19/21 Judge decided to keep questionnaires under seal until the verdict and will release questionnaires without jurors names, addresses and things jurors requested to be private.

Elizabeth Holmes Trial: Her Biggest Risk

Elizabeth Holmes, the CEO of Theranos, Inc, a Silicon Valley startup blood testing company previously valued at $9 billion dollars is currently on trial in federal district court in San Jose, California. Ms. Holmes, along with her ex-boyfriend and COO Ramesh “Sunny” Balwani are charged with 10 counts of wire fraud and 2 counts of conspiracy to commit wire fraud with each count carrying a possible sentence of up to 20 years in prison, $250,000 fine, 3 years supervised probation, and victim restitution. The defendants will be tried separately with Balwani’s trial scheduled to begin in January 2022.

In short, the prosecution alleges Holmes and Balwani defrauded investors and patients by misrepresenting that their Theranos blood testing technology and innovative methods for drawing blood, testing blood, and interpreting patient data worked, when it allegedly did not work. As reportedly claimed, with one finger prick of blood, Theranos could run up to 200 blood tests, revolutionizing the blood testing industry and a cost saving for patients. The indictment also alleges that the defendants misrepresented the company’s financial condition, approvals from government agencies to investors, and made false and misleading statements in marketing materials and to the media.

So, is this a “case about fraud, about lying and cheating to get money…out of time, out of money, Elizabeth Holmes decided to lie…”?, as stated by the prosecution in their opening statement. The defendants, reportedly, raised over $400 million from investors of which approximately $155 million is alleged to have been communicated/transmitted electronically (telephone, email, etc.) across state lines (ie. wire fraud).

Or, is this a case about another failed startup where “failure is not a crime”, as stated by the defense in their opening statement.

And…it appears the defense may argue Defendant Holmes, (and maybe her best defense and tragic, if true), was apparently controlled and abused by Defendant Balwani, thus, she lacked the intent to defraud, a required element of each alleged crime.

Yet, putting the defendant Holmes on the stand may be the biggest risk of her life. Her fate will lie in her hands. Holmes will have to convince the jurors (or a juror) that she was controlled by Balwani to the extent that she could not form the requisite intent to defraud. When I was a domestic violence prosecutor, many defendants took the stand to their detriment.

However, Holmes is not your average defendant. She is a charismatic driven committed risk taker who persuaded and convinced many sophisticated high profile tech leaders, venture capitalists, major healthcare corporations, to invest hundreds of millions in her company, and recruited former US defense secretaries, secretary of state, media giants, and politicians to staff her board of directors.

Will she take the risk? She needs one juror to believe her. Criminal cases require unanimous verdicts.

If Holmes doesn’t take the stand, after her attorneys in their opening statement portrayed Balwani as abusive, “had a temper, could lash out”, and “there was another side to it (their relationship) that most people didn’t see”, thus, implying that Holmes was also abused by Balwani, tends to leave the jury wanting to hear from Holmes. However, she has every right not to take the stand under the fifth amendment (right not to incriminate self) and the jury will be instructed not to consider her right remain silent in determining her guilt or innocence. Yet, in my experience, jurors tend to not look kindly on unproven assertions made in opening statement by either party, when they can be proven by evidence other than by the defendant. A doctor’s opinion as to whether Holmes was a victim of abuse may not be enough to convince a jury, especially, if it becomes a battle of the experts.

Ultimately, the jury will decide whether Defendant Holmes, the “girl genius”, as she has been nicknamed and celebrated as the world’s youngest billionaire, is a victim or a con-artist. Meanwhile, while the evidence unfolds, Holmes, like every defendant, is innocent until proven guilty beyond a reasonable doubt.

Simply my opinion, what say you?

Here are some of the text messages between Balwani and Holmes, and my recent interview with San Francisco’s KRON4 news. You decide….

Additional Interviews: NewsNation, KRON4 San Francisco, FOX5 San Diego, KPIX CBS San Francisco, NBC Bay Area News, KRON4 San Francisco, KPIX5 San Francisco, KPIX5 San Francisco. Worth the watch!