Former Theranos CEO Holmes may call on 'mental disease' defence in criminal fraud trial

Elizabeth Holmes's trial was postponed amid the coronavirus pandemic and is now scheduled to start in March.
Elizabeth Holmes's trial was postponed amid the coronavirus pandemic and is now scheduled to start in March.PHOTO: HBO

NEW YORK (BLOOMBERG) - Former Theranos chief executive officer Elizabeth Holmes is exploring a "mental disease" defence for her criminal fraud trial, in one of Silicon Valley's most closely watched cases.

That possibility was revealed on Wednesday (Sept 9) when the judge overseeing the case ruled that government prosecutors can examine Holmes. The ruling was in response to the failed blood-testing start-up founder's plan to introduce evidence of "mental disease or defect" or other mental condition "bearing on the issue of guilt," according to the filing.

Holmes may be seeking to introduce the evidence to challenge the requirement that prosecutors prove her intent to do something wrong or illegal.

Holmes and her former boyfriend, ex-Theranos president Ramesh "Sunny" Balwani, are accused of falsely claiming that the company's devices could perform myriad tests with a single drop of blood and of duping investors and defrauding doctors and patients who trusted the results. Theranos, which attracted the backing of high-profile investors and leading venture capital firms, was valued at US$9 billion (S$12.3 billion) before unraveling over the alleged fraud.

Holmes intends to use testimony from Mindy Mechanic, a clinical psychologist at California State University at Fullerton, according to the filing. Mechanic is an expert on the psychosocial consequences of trauma, with a focus on violence against women, and often provides expert testimony in cases involving "interpersonal violence," according to her faculty profile on the school's website.

In his ruling, US District Judge Edward J. Davila rejected Holmes's argument that she shouldn't have to submit to a psychological examination by government experts. The judge ruled that such an examination is fair given Holmes's intent to use testimony from Mechanic.

"The court agrees with the government that its experts must be permitted to conduct their own examination of defendant Holmes in order to mount an effective rebuttal," Davila wrote.

Davila also ruled, over Holmes's objections, that the examination of the former CEO will be videotaped. Holmes's lawyers argued the recording would "negatively affect the tenor or the interview," according to the ruling.

The arguments over Holmes's mental state have been argued earlier but behind closed doors and in sealed documents. Davila heard arguments at a closed-door July 8 hearing, disclosed publicly for the first time in Wednesday's filing.

 
 

Holmes's trial was postponed amid the coronavirus pandemic and is now scheduled to start in March. Balwani's trial will follow. Davila decided in March that Holmes and Balwani, who were charged together, should face separate trials.