Jury can hear limited evidence of CEO lifestyle

Jurors in the trial of Elizabeth Holmes will hear evidence about her extravagant lifestyle as Theranos CEO but with some limitations.

That’s the ruling issued by U.S. District Court Judge Edward Davila late Saturday as part of a 100 page response to motions in Holmes’ upcoming criminal trial.

The judge granted in part Holmes’ motion to exclude evidence referencing her extravagant lifestyle outside of her position as chief executive of the blood-testing start-up.

“The Government may introduce evidence that Holmes enjoyed a lifestyle as Theranos CEO that is comparable to those of other tech company CEOs. This includes salary, travel, celebrity, and other perks and benefits commensurate with the position,” Davila wrote in the filing.

However, “references to specific purchases or details reflecting branding of clothing, hotels, or other personal items is not relevant, and the prejudicial effect of that evidence outweighs any probative value,” the judge added.

The ruling is a partial victory for Holmes as prosecutors cannot introduce details about Holmes’ specific purchases and personal items outside of her position as CEO. Holmes lived in an expensive rental home, traveled by private jet, stayed at luxury hotels and employed Theranos-paid assistants to run her lavish shopping sprees.

“Each time Holmes made an extravagant purchase, it is reasonable to infer that she knew her fraudulent activity allowed her to pay for those items,” Davila wrote. “While the benefits of these purchases are not as directly tied to the fraud…it may still be probative of Holmes’ scienter.”

The ruling comes two weeks after Holmes battled it out with prosecutors in court over whether details of her wealth, lifestyle and perks she attained as CEO would be relevant to jurors in her trial.

At the height of Theranos, the start-up was valued at $9 billion and Holmes was touted as the world’s youngest self-made woman billionaire. The company collapsed in 2018 following a Wall Street Journal investigation that revealed failings in the blood-testing technology.

Davila ruled on more than 20 dueling motions on what jurors can hear in her trial, scheduled to begin on Aug. 30.

A motion by the government to admit business-related text messages between Holmes and her co-defendant Ramesh “Sunny” Balwani was denied by Davila.

Prosecutors say the messages show the two top executives knew how much trouble Theranos was in before it collapsed. In a November 2014 text to Holmes, Balwani describes one Theranos lab as a “f*cking disaster zone,” adding he would “work on fixing this.”

Holmes and Balwani have both pled not guilty to a dozen criminal wire fraud charges in connection with deceiving investors, patients and doctors.

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