Prosecutors allege that fraud at Theranos fueled Elizabeth Holmes’ lifestyle

Billionaire Elizabeth Holmes, Theranos Inc. Left, Christian Holmes arrives at a dinner hosted by US President Barack Obama and US First Lady Michelle Obama in honor of Japanese Prime Minister Shinzo Abe at the White House in Washington. DC, USA, Tuesday, April 28, 2015.

Andrew Harrier | Bloomberg | Getty Images

Prosecutors paint a picture of what the public saw: a billionaire businesswoman who wore designer labels in her black turtleneck shirts while rubbing shoulders with world leaders.

But like the Hall of Mirrors at the Carnival, according to the government, it was an illusion.

Elizabeth Holmes had intended to use Theranos “as a tool to improve her personal situation,” as prosecutors wrote in a motion with the court Friday night.

“The causal link between fraud defendant and the benefits involved is strong,” the government said.

Both Holmes and its director of operations, Ramesh “Sunny” Palwani, face dozens of charges of wire fraud, and if found guilty, they could serve up to 20 years in prison.

As CEO of Theranos, prosecutors said Holmes led an extravagant lifestyle, which included “flying in private jets, staying in luxury hotels, and accessing many aides.”

“Although the defendant’s assistant was an employee of the company, it handled a range of non-business tasks for the defendant, including personal clothing, jewelry shopping, home decorating, food and grocery shopping, and other items,” the government said in a statement.

The government proposal was in response to efforts by Holmes’ attorneys to prevent a jury from hearing details about her lifestyle on putting down planes.

The government intends to show evidence that the alleged Theranos fraud was directly related to the money and fame Holmes had achieved as Theranos CEO.

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Prosecutors wrote that Holmes was “admired in the business community both locally and nationally, appearing in numerous publications and on television. She has been associated with influential individuals including politicians and business leaders. Evidence at trial will show that these benefits were meaningful to the defendant, who watched the news.” Everyday closely to fine-tune its image. “

Beloved in Silicon Valley, Holmes attracted more than $ 700 million in investor money.

“In addition to the tangible benefits it has received from the fraud, it has also benefited from a great deal of positive attention from the media, business leaders and VIPs,” prosecutors wrote.

The proposal comes on the same night Holmes’ attorneys claimed that her failed company was no different than any other Silicon Valley startup trying to make a name for itself.

The government is asking for an “order prohibiting defense from” focusing on the culture of startups in Silicon Valley, arguing that founders in this field often use dramatic exaggeration and promises to generate needed interest for their companies and attract capital, Holmes’s lawyers said.

Her attorneys argue that evidence regarding startup culture in Silicon Valley may be relevant to the case: “For example, the government intends to present evidence of certain practices that the government claims have created a culture of ‘secrecy’ in Theranos, and is alleged to show that Mrs. Holmes was concealing the alleged fraud “.

“Although Mrs. Holmes has moved to exclude such evidence, if this is acknowledged, Ms. Holmes can certainly provide evidence that other startups in Silicon Valley used similar practices, and that the people at Theranos were aware of these practices.”

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Holmes will face her fate in July. Appearing on Zoom, she looked sullen at times, in sharp contrast to the image I showed the world before.

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