Tuesday, October 19, 2021

The fraud case of Theranos CEO Elizabeth Holmes in California features separate trials, while the same right was unlawfully denied to David Roberson in Alabama

Elizabeth Holmes (Associated Press)

The biggest court story in the country right now is the criminal fraud trial in San Jose, CA, of Theranos Inc. founder and CEO Elizabeth Holmes. In conjunction with Theranos President Ramesh "Sunny" Balwani, Holmes is accused of conducting a massive fraud at the blood-testing company, which once was a hot Silicon Valley startup. Company executives claimed to be able to test for a wide range of health conditions using just a few drops of blood from a finger prick. In reality, as The Wall Street Journal (WSJ) first reported in 2015, Theranos’ proprietary technology was unreliable and the company ran many of its tests on commercial analyzers, including some that it modified to work with smaller blood samples.

The defendants now are charged with wire fraud and conspiracy to commit wire fraud. No verdict has been reached, so we don't know what the fallout might be. But the Theranos case already has taught an important legal lesson, one that was ignored in a high-profile Alabama case, causing a man who likely would have been acquitted to be found guilty -- and he is set to report to federal prison by late October.

We are talking about the North Birmingham Superfund case and former Drummond Company executive David Roberson. As we have shown in a previous post, Roberson -- due to the possibility of prejudice and his likely inability to bring a full advice-of-counsel defense -- should have been tried separately from Balch & Bingham attorney Joel Gilbert, the very lawyer who advised Roberson that his actions in the Superfund case were lawful. U.S. District Judge Abdul Kallon ordered a joint trial, and Roberson essentially was found guilty by association -- exactly the kind of prejudice the law is designed to prevent. The U.S. Eleventh Circuit Court of Appeals, which seemingly never met a wrongful conviction it didn't like, upheld the conviction -- rubber stamping one of the most gross injustices we've seen in a criminal matter since the Don Siegelman case.

That, however, will not happen in the Theranos case. Only Elizebeth Holmes is being tried now, with Balwani set for trial early next year. Here's how WSJ reported on the handling of the Theranos trial:

Ms. Holmes met Mr. Balwani, a veteran tech executive about 20 years her senior, when she was a student at Stanford University, and he later joined her at Theranos as its president and chief operating officer. The pair kept their romantic relationship secret from investors, board members and company employees for years, according to depositions of former directors and staff members taken in civil cases brought by disgruntled investors and reviewed by the Journal.

Mr. Balwani used his personal wealth, gained from his work at an earlier tech startup, to help prop up Theranos, including putting his own money up as collateral for a loan in 2009 and later investing in the company, according to the deposition of Theranos’s former corporate controller.

Ms. Holmes and Mr. Balwani worked closely together until he departed in 2016 as the company faced a raft of regulatory, legal and public relations challenges.

The newly public court documents include filings by Ms. Holmes indicating she could bring a mental-health or mental-defect defense, based on what she called the psychological impact of the relationship with Mr. Balwani and abusive tactics that allowed him to exert control over her.

This line of defense could also include testimony that Ms. Holmes suffers from post-traumatic stress disorder, the filings show, from the relationship with Mr. Balwani and a second event that remains redacted in the court record.

The filings show Ms. Holmes could argue that "she lacked the intent to deceive because, as a result of her deference to Mr. Balwani, she believed that various representations were true. . . ."

Also unsealed were motions made by Mr. Balwani and Ms. Holmes asking the court to separate their trials, citing her allegations against him.placeholder

Mr. Balwani requested a separate trial from Ms. Holmes in December 2019, arguing that there would be "devastating prejudice" if she raised her allegations against him at a joint trial. "In the minds of nearly any potential juror this Court finds, this case will be against a sexual predator," rather than a tech executive, Mr. Coopersmith argued in a motion.

Judge Davila scheduled Mr. Balwani’s trial second when granting the motion to split the proceedings in March 2020. It is expected to begin early next year.

In Ms. Holmes’s request for separate trials, her lawyers argued that the physical presence of Mr. Balwani in the same courtroom could be an emotional and psychological trigger that could make it hard for her to concentrate during her case.

One of Ms. Holmes’s lawyers told the judge it "was highly likely Holmes would testify" about Mr. Balwani’s abuse, an unsealed court order shows, shedding light on the question of whether jurors would hear from her directly.

Of all the ugly truths in our "justice system," this is one of the ugliest: In California, a defendant can lawfully receive a separate trial and possibly achieve justice, while in Alabama, a separate trial is denied, resulting in gross injustice. In other words, the system not only is filled with crookedness and incompetence, it also is wildly inconsistent.


Anonymous said...

I don't see any reason for anyone to be tried jointly. The possibility of a flawed verdict is obvious.

Anonymous said...

The two defendants in the Theranos case clearly did not want any part of a joint trial.