Regulatory

Elizabeth Holmes Blames Journalist for Theranos Troubles

By Joel Rosenblatt / June 28, 2019

To defend against criminal fraud charges, Theranos Inc. founder Elizabeth Holmes is trying to put investigative journalism on trial.

Holmes contends Wall Street Journal reporter John Carreyrou had an undue influence on federal regulators who concluded her blood-testing startup’s technology was a threat to patient health and forced the company to shut its labs.

As she prepares for a trial set for July 28, 2020, Holmes is trying to retrace the steps the reporter took to publish his 2015 scoop and subsequent stories that unraveled Theranos, ultimately leading to the collapse of a company once valued at $9 billion and to her indictment almost exactly a year ago.

The charges portray a scheme by Holmes and former company president Ramesh “Sunny” Balwani, her boyfriend at the time, to lie about the startup’s technology and dupe investors out of hundreds of millions of dollars — while also misleading doctors and patients into thinking Theranos provided accurate, fast and cheap blood tests.

Through pretrial information sharing with prosecutors, Holmes has unearthed Carreyrou’s early contacts with New York state regulators and various federal agencies, as well as his interactions and emails with a doctor in Arizona.

Holmes is pushing prosecutors to turn over every such communication they’re aware of because Carreyrou “went beyond reporting the Theranos story,” her lawyers said in a court filing. He prodded sources to lodge complaints about the company with regulators, and then lobbied agencies to pursue the complaints, according to the filing.

“The jury should be aware that an outside actor, eager to break a story, and portray the story as a work of investigative journalism, was exerting influence on the regulatory process in a way that appears to have warped the agencies’ focus on the company and possibly biased the agencies’ findings against it,” her attorneys wrote. “The agencies’ interactions with Carreyrou thus go to the heart of the government’s case.”

The Wall Street Journal said Friday it stands behind Carreyrou’s reporting, which won multiple journalism prizes.

“We are confident Mr. Carreyrou acted responsibly, and his reporting throughout has been fair and accurate,” Steve Severinghaus, a spokesman for the newspaper, said in an email.

Legal experts said the strategy that lawyers for Holmes and Balwani are testing probably reflects the strength of the government’s case and evidence weighing against them. Even so, a criminal conviction requires a unanimous jury and experts said the defense team may be searching for a single juror sympathetic to the idea that government agencies were in cahoots with Carreyrou and overzealous in their pursuit.

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Josh Sandberg

Josh Sandberg is the President of Ortho Spine Partners and Partner for The De Angelis Group. He also serves as Co-Founder and Editor of OrthoSpineNews.

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