Analyzing Elizabeth Holmes’ Defense Strategy

Elizabeth Holmes is accused of lying to investors and committing fraud. The state believes that she told investors that her company’s medical device would be able to replace complex labs that perform bloodwork. However, the device did not work as advertised, cost investors millions, and tanked the company for which she was CEO. The state accuses her of knowingly providing investors with false or overstated information and omitting information concerning the results of her company’s product. 

Analyzing her defense strategy

The biggest problem Holmes faces right now is that the prosecution has produced a cavalcade of witnesses who will testify that Holmes made specific statements concerning the quality of the device for the purpose of getting more money for her company. The witnesses will testify that Holmes overstated the efficacy of the device to get more capital for her company. However, the device never worked. 

The prosecution has characterized Holmes as a tyrant who was 100% in control of her company at the time the false statements were made. The defense put Holmes on the stand so that she could address these matters personally. While this is a dangerous strategy, one would expect that a CEO who sweet-talked investors out of millions would be able to handle hardball questions on the stand. Nonetheless, Holmes was asked to explain why she used Pfizer logos on reports to make it look like pharmaceutical companies had signed off on the device. She also had to explain why the company used third-party machines to produce results. While this may appear damning on the surface, Holmes’s entire strategy is to plead ignorance. She claims she had limited knowledge that the device was defective, and never made specific claims that were fraudulent in nature. In other words, she claims she made mistakes that were nonetheless not crimes.

While on the stand, Holmes dropped a bombshell that she was sexually abused and controlled by the former president of the company. She alleged that they had a secret intimate affair for over a decade and that he would force sex on her when she displeased him. The former president is also facing fraud and conspiracy charges but has not responded to allegations made by Holmes. 

The prosecution focused on text messages sent between the two that in their interpretation, appeared as a loving relationship. However, there is one text message in which Holmes is asking the former president for permission to see her friends. Further, there is an indication that the former president told Holmes about problems with the device. Holmes’s defense team is attempting to characterize her as an abuse victim who was acting under the former president’s control—and not her own. Nonetheless, Holmes fired the former president in 2016, which indicates she did have some power over him after all. 

The two will likely point the finger at each other in their separate trials. However, there is enough proof of fraud for a jury to convict Holmes on these charges. The case, however, could turn on whether or not the jury believes the abuse allegations.

Talk to a Chicago Criminal Defense Attorney

David Freidberg represents the interests of those charged with white-collar crimes in Chicago. Call today at (312) 560-7100 to schedule an appointment and we can begin strategizing your defense immediately.

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