Elizabeth Holmes’ attorneys ask judge to throw out Theranos fraud case

Elizabeth Holmes’ attorneys ask judge to throw out Theranos fraud case

Theranos CEO Elizabeth Holmes speaking at the 2015 Clinton Global Initiative in New York on Sept. 29, 2015.

Adam Jeffery | CNBC

Lawyers for Theranos founder Elizabeth Holmes are requesting a federal judge to throw out all 11 counts against her and co-defendant Ramesh “Sunny” Balwani, calling the government’s indictment “full of ambiguity and fudging language.”

Holmes’ attorney spelled out three motions to dismiss, arguing federal prosecutors allege “broad” fraud charges and the government cannot prove that people who got inaccurate test results were actually harmed.

“The indictment is full of ambiguity and fudging language, the government is inserting these phrases so they can shift their theory as they go along in the trial,” Amy Saharia, an attorney for Holmes, told the judge.

“What are the alleged misstatements we should prepare for?”

Federal prosecutors fired back, saying the indictment isn’t confusing.

“The defense has been litigating this case for 20 months now. If they truly didn’t understand the nature of the allegations they would have raised this issue earlier,” said Assistant U.S. Attorney John Bostick.

Holmes and Balwani are charged with nine counts of wire fraud and two counts of conspiracy to commit wire fraud with the now-defunct blood-testing company.

They each face up to 20 years in prison if convicted.

Prosecutors said that they have plenty of evidence to prove Holmes knowingly misled investors, who put $700 million in to Theranos, as well as doctors and patients.

“The most important evidence will be statements made by Holmes and Balwani themselves,” Bostick said.

Holmes’ defense team requested prosecutors provide them with a list of investors, doctors and patients who may testify as victims of the alleged fraud.

An attorney for Holmes pointed out that Theranos blood-testing devices conducted over 100 blood tests, however prosecutors only identified eight tests in the indictment that allegedly didn’t work.

U.S. District Judge Edward Davila asked both sides about the “implicit misrepresentations” the company allegedly made to consumers.

Bostick said that despite its accuracy problems, Theranos boasted that its finger prick tests won approval from the U.S. Food and Drug Administration.

“Evidence will show patients went to Theranos to get results that were accurate. And when doctors sent patients to Theranos this was not for fun, this was not something you do on a Saturday afternoon,” Bostick said.

“Theranos partnered with Walgreens. Walgreens is not an entertainment location; it’s a place people go for medical care. They were aware they were misleading people by offering those tests.”

Holmes ran blood-testing startup Theranos, once valued at over $9 billion, until its collapse in 2018.

After nearly 3 hours, Judge Davila took the defense’s request under submission and adjourned.

CNBC spotted Elizabeth Holmes and her attorneys returning to the courthouse at 2pm PT. The hearing, which was closed, was ongoing at 2:30pm PT.

Holmes’ trial is set to begin in August.

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