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How Elizabeth Holmes’ Abuse Allegations Could Affect Her Fraud Trial

12 minute read

Elizabeth Holmes, the onetime Silicon Valley superstar on trial for conspiracy and fraud, plans to argue that she was a victim of abuse. In newly unsealed court documents, Holmes’ lawyers say the CEO and founder of blood-testing startup Theranos acted at the behest of her business partner and then-boyfriend, Ramesh Balwani. It’s a complicated defense in the #MeToo era, especially for Holmes, who is best known for claims that she invented a technology that never existed. She now stands accused of 12 counts of fraud and conspiracy to commit wire fraud.

A jury will have to determine whether she is telling the truth about intimate partner abuse, something that women, statistically speaking, don’t lie about. (Studies show only 2-6% of rape allegations are false.) And if it is true that she was controlled and manipulated, a jury will further have to decide whether that abuse excuses Holmes from defrauding investors and patients.

Elizabeth Holmes’ defense strategy

Holmes dropped out of Stanford in 2003 as a 19-year-old to start Theranos. She claimed she had invented a technology that could test people’s blood for hundreds of ailments instantly with one tiny prick. In practice, though, the tests were unreliable and slow—people who were given false results about pregnancies, miscarriages and AIDS status will testify at the trial. Still, Holmes raised $700 million from a group of A-list investors that included former Secretaries of State George Shultz and Henry Kissinger and was dubbed the world’s youngest billionaire when Theranos was valued at $9 billion. However, a Wall Street Journal investigation found that Holmes was misleading investors and patients about what her blood testing technology could do.

Holmes embodied the problematic “fake it ‘til you make it” Silicon Valley mentality and has become the subject of a book, several podcasts, a documentary and upcoming TV shows and films. She was indicted in 2018 alongside Theranos’ president and chief operating officer from 2009 to 2016, Ramesh Balwani, known as Sunny. The two dated for many years but ended their relationship in 2016. (Holmes has since married hotel heir Billy Evans.) The two Theranos executives were set to be tried together, both having been accused of lying about the capabilities of the company’s devices in order to garner millions in investment dollars from some of the most prominent players in both Silicon Valley and Washington, D.C.

Read More: Theranos Founder Elizabeth Holmes Faces Trial for Fraud. Here’s What to Know About the Case

But the trial was delayed several times, including once due to Holmes’ pregnancy and the birth of her child with Evans. In 2020, the judge separated the cases, an unusual move according to legal experts. Over the weekend, we learned why: Newly released 2020 filings show that Holmes accused Balwani of a “pattern of abuse and coercive control.” Her lawyers said that just being near Balwani could induce “debilitating PTSD symptoms” in Holmes, and they plan to argue that Balwani was the real mastermind behind the alleged Theranos scam.

Court filings suggest they will say that Holmes exaggerated the effectiveness of Theranos’ blood testing machines but did so only as the optimistic face of the company who believed the technology would eventually work. Holmes’ lawyers plan to call a forensic psychologist who examined Holmes to testify that the Theranos founder and former CEO suffered physical and emotional abuse at the hands of Balwani.

Out of hundreds of securities fraud cases, I have never seen this defense.

In the court filings, Holmes’ legal team paints a picture in which Balwani controlled Holmes’ every move and psychologically manipulated her over the course of their 10-year relationship. The two met when Holmes was just 18 and Balwani was 37, and Balwani went on to become Theranos’ president. She claims in the court filings that he controlled what she ate, how she dressed, how much she could sleep, how much money she could spend and who she could spend time with and where. And that he monitored her phone calls, texts and emails. She accuses him of verbally disparaging her and physically abusing her, allegedly throwing “hard, sharp objects” at her.

Balwani’s lawyers have denied accusations of abuse and called the allegations “salacious and inflammatory” in court filings. His trial will begin early next year. Like Holmes, he has pleaded not guilty.

The so-called battered women’s defense is uncommon, but not unprecedented, in cases of white collar crime

Theranos Founder Elizabeth Holmes Appears In Court For Status Hearing
Former Theranos COO Ramesh Balwani appears in federal court for a status hearing on July 17, 2019 in San Jose, California.Kimberly White—Getty Images

Legal experts say Holmes’ legal strategy appears to be a variation on what is commonly referred to as the battered woman’s defense, though defense lawyers have not used that term in their court filings. Forensic psychologists who spoke to TIME said the defense is most frequently argued in murder cases, sex and drug trafficking cases and cases of domestic abuse, making its use in this trial unusual. Still, Lenore Walker, the psychologist who coined the term “battered woman syndrome” and wrote a book titled The Battered Woman argues that every person who claims they suffered from abuse deserves evaluation. “I think we underestimate the negative impact of people affected by abuse, and what they will do,” she says.

The cases of Francine Hughes—who lit her house on fire with her abusive husband inside in 1977—and Lorena Bobbitt—who cut off her husband’s penis in 1993 after what she described as years of abuse and rape—have drawn tabloid attention to the defense strategy. Both were found not guilty due to “temporary insanity.” Just two years ago, on the heels of the #MeToo movement, New York state passed a law that allows women who have committed crimes and are also victims of abuse to petition the court for a reduction in their sentences.

Read More: Elizabeth Holmes Got Where She Was Through Privilege. A New Documentary About Her Doesn’t See That

But the legal tactic is rare in the world of Silicon Valley. “Out of hundreds of securities fraud cases, I have never seen this defense,” says John C. Coffee Jr., a professor at Columbia Law School and an expert on Silicon Valley fraud cases who is not involved in the Holmes trial. Coffee says that may be because there have been so few ultra-successful female entrepreneurs in Silicon Valley due to rampant sexism in the tech industry.

Still, it’s not unprecedented for a prominent woman in the business world to argue she committed fraud as a result of coercion. Sarma Melngailis, the owner of the celebrity favorite restaurant Pure Food and Wine in New York City, was dubbed the “vegan Bernie Madoff” by the tabloids when she and her then-boyfriend Anthony Strangis allegedly drained the business of nearly $2 million and went on the lam. In a Vanity Fair article, Melngailis’ attorneys said they were considering a coercive control defense, arguing that Strangis had manipulated Melngailis through abuse, though Melngailis ultimately took a plea deal. (Strangis denied the allegations of abuse.)

How Holmes will try to convince the jury she was a victim of abuse

In Holmes’ case, a forensic psychologist was called in to examine the defendant and will likely testify for the defense. Such experts tend to look for a pattern of manipulation and fear of coercive control in an intimate partner relationship, says Dawn Hughes, a forensic psychologist who specializes in interpersonal violence. Hughes is not involved in the Holmes case but has been asked to examine defendants and testify in similar trials. The patterns can consist of sexual abuse, threats, control of finances and stalking. The threats are not always physical. “Once an abuser has established there are credible consequences to non-compliance, you can continue to threaten someone without the threat of actual violence,” she says.

We know very little at this point about Holmes’ accusations against Balwani. The court documents released Saturday that pertain to her claims have been heavily redacted. But Hughes points to the age difference between the two as a typical signal of an unequal relationship. Balwani was more than twice Holmes’ age when the two met. “I think there’s certainly a vulnerability factor,” says Hughes. “You have someone who’s 18 and someone in their 30s who has much more experience in the business world. That certainly has the potential to create a relationship imbalance from the get-go.”

Hughes anticipates that Holmes’ educational background may work against her with a jury that might think she was too smart to be caught up in such a relationship, and she says Holmes’ legal team will need to make clear that anyone can become the victim of abuse. “She was a very forceful, intelligent woman,” she says, “and it’s important to know that these types of situations aren’t mediated by intelligence, they’re mediated by emotional function. I’ve evaluated judges and doctors and lawyers—abuse and violence cuts across all barriers.”

Holmes faces an uphill battle when it comes to earning sympathy from the jury

Courtesy of HBO

Holmes’ argument might seem a timely one in the #MeToo era, as society still reckons with how frequently women are abused in intimate relationships. And yet Hughes says juries can still have a hard time comprehending why a woman would stay in an abusive relationship and commit illegal acts over a long period of time. “It’s a lot easier to understand if somebody could be under constrained circumstances one time, like, ‘He had a gun to my head and told me to do this,'” she says. “But when it happens over and over again, a jury might be thinking, ‘You’ve had more opportunities to not engage in unlawful behavior.’ “

In fact, psychologists say it becomes harder to leave an abusive relationship the longer it lasts. “There is more trauma there,” says Hughes. “The calculus in the victim’s mind changes. ‘What do I have to do to not have them hit me? To not have them take something away?’ becomes the organizing principle by which to stay safe, and the easier it becomes to commit those unlawful acts. But that’s harder to understand. As humans, we don’t think, ‘There but for the grace of God, go I.’ We tend to think, ‘I would never do that.'”

Still, plenty of people who have followed Holmes’ case are skeptical that she can strike a sympathetic figure. “There is a timing problem in her story,” says Coffee. “She was an extraordinary success on her own without Sunny,” he says, noting that Holmes was getting financing from major venture capital firms based on lies about her machines before she and Balwani teamed up. Among other things, Holmes told investors the blood-testing devices were being tested on battlefields in war zones. “So those are misrepresentations before the 2009 point where Sunny comes in as the Chief Operating Officer.”

As humans, we don't think, 'There but for the grace of God go I.' We tend to think, 'I would never do that.'

John Carreyrou, the Wall Street Journal journalist who broke the story that Holmes was lying about Theranos’ technology and whose book, Bad Blood, documents his investigation and delves into Holmes’ behavior, said in a recent episode of his new podcast, Bad Blood: The Final Chapter, that he and legal experts suspected Holmes became pregnant and gave birth before the trial to garner sympathy from jurors. (Carreyrou admitted on the podcast that he sounded “cynical and mean,” but he said his reporting on Holmes convinced him that she was capable of such deception in the courtroom.) He also recently tweeted that he will present evidence on his next episode of the podcast that contradicts the notion that Balwani was the main force behind the Theranos deception.

Coffee agrees that the baby will likely play a role in the trial. “Jurors are going to sit there and say, ‘Why do I want to send this sweet young mother to prison?'” he says. “So they build sympathy that way. There may be sympathy on the grounds that she’s been battered and abused. I could certainly imagine that he abused her. But her ability for broad overstatement has been proven many times.”

Given that reputation, her legal team is sure to serve up as many texts, emails and other physical evidence as possible in an effort to prove she was the victim of coercion.

“Both can be true—that she lied and that she was abused—but the jury’s going to have to sift through all that,” says Hughes. She says that written evidence or physical evidence that Holmes was a survivor of abuse will be crucial to convincing a jury. “If there’s no external data to give credence to what she says, I think that’s going to be difficult.”

Holmes faces 20 years in prison if convicted. The forensic psychologists TIME spoke to said that the argument she was coerced, particularly in the context of a white-collar crime, was more likely to mitigate sentencing than to get Holmes off scot-free.

Still, Holmes was able to convince some of the world’s most powerful investors that her startup was a unicorn—she may be able to convince jurors that she truly believed in Theranos and was not out to deceive anyone.

“Attorneys were very skeptical about Lorena Bobbitt,” says Walker. “They all said it would never work as a defense. And it worked. I wouldn’t underestimate the defense.”

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Write to Eliana Dockterman at eliana.dockterman@time.com