Speaker 1: This is Bloomberg Law with June Brusso from Bloomberg Radio.
Speaker 1: I'm the founder and CEO of this company. Anything that
Speaker 1: happens in this company is my responsibility at the end
Speaker 1: of the day. That's what Elizabeth Holmes told NBC in
Speaker 1: an interview in But that's not what she'll be telling
Speaker 1: jurors in August when she goes on trial for defrauding
Speaker 1: investors in her blood testing startup Sarahnus, once the world's
Speaker 1: youngest female self made billionaire and the darling of the
Speaker 1: tech and media worlds with her promise to revolutionize blood testing.
Speaker 1: Home spectacular fall from Grace has been recounted in books,
Speaker 1: countless news stories, and an HBO documentary When is Not
Speaker 1: This was real? FLoC I don't have many secrets, and
Speaker 1: whatever secrets she does have may now be heard in
Speaker 1: open court. Joining me is Anne Coughlin, a criminal law
Speaker 1: professor at the University of Virginia Law School, and prosecutors
Speaker 1: want to describe holmes wealth and lavish lifestyle to travel
Speaker 1: on private jets, the stays in luxury hotels and the like,
Speaker 1: and they say it's to show she had a financial
Speaker 1: incentive to commit fraud. But the defense says, it's really
Speaker 1: to prejudice the jury. Well, of course, all evidence of
Speaker 1: guilty is going to make the jury prenjudice in a sense,
Speaker 1: but I mean that's the question that the judge had
Speaker 1: to consider. One issue in the case is what was
Speaker 1: Holmes's motive for doing the fraud? And the government is
Speaker 1: going to show that part of her motive was to
Speaker 1: enrich herself, and one way to do that is to
Speaker 1: show the large sums of money that she was able
Speaker 1: to spend on herself, both in her capacity as the
Speaker 1: CEO of Saranos and then of course just as a
Speaker 1: human being in the world, and so that's relevant to motive.
Speaker 1: At the same time, the concern is that it's going
Speaker 1: to make her look bad in the eyes of the jury,
Speaker 1: and the jury is going to convict her because they
Speaker 1: think she's a and thrift or because there's some kind
Speaker 1: of class by its So the judge was trying to
Speaker 1: balance these two interest the government's interest in this relevant
Speaker 1: evidence and then the worry that the jury would be
Speaker 1: untarily swayed against her. So he splits the difference, if
Speaker 1: you will, and allows the prosecution to admit some evidence
Speaker 1: of her spending spending that's related to her lifestyle as
Speaker 1: the CEO, but not specific purchases she made, designer brands,
Speaker 1: luxury places that she stayed, and so forth. We've heard
Speaker 1: a lot about possible trial strategies, possible defenses she'll put on.
Speaker 1: Do we know yet what her defense will be? You know,
Speaker 1: it's very hard to tell. I've read the judges order
Speaker 1: on the evidentiary emotions, the emotions in limity we call them,
Speaker 1: and of course what we're trying to do is to
Speaker 1: parse the tea leaves, especially with risk, back to what
Speaker 1: homes of strategy is going to be. And it's very
Speaker 1: hard to tell, you know. Obviously, her lawyers have tried
Speaker 1: to keep out a lot of the evidence that the
Speaker 1: government wants to admit, and the judge denied many of
Speaker 1: those emotions. But at the same time, you're reading the
Speaker 1: order trying to figure out what exactly is her theory
Speaker 1: of defense going to be, and it is difficult to say.
Speaker 1: It looks to me as if it's going to come
Speaker 1: down to what we call a mental state argument. In
Speaker 1: other words, to convict her for these forms of fraud,
Speaker 1: the government has to show not nearly that she made
Speaker 1: the false misrepresentations, but that she knew that they were
Speaker 1: false and that she did it for the purpose of
Speaker 1: defrauding investors. And so that's I take it. What we're
Speaker 1: expecting her theories to revolve around is, Yeah, it turns
Speaker 1: out my equipment didn't work. My blood tests were not accurate,
Speaker 1: they were not fast. I couldn't do all of the
Speaker 1: things that I promised, but I thought I thought that
Speaker 1: I could. I thought that that stuff was gonna work.
Speaker 1: I didn't know my motive was not to defraud people.
Speaker 1: And it's kind of hard to see what that case
Speaker 1: is going to look like until we know what her
Speaker 1: story is. Is she going to try to present that
Speaker 1: defense by calling mental health experts, so we believe that
Speaker 1: she is. She indicated in prior filings that that was
Speaker 1: going to be one of her strategies, but of course
Speaker 1: we won't know until we get to the trial that
Speaker 1: in fact that she's going to do that. So it's
Speaker 1: interesting to think about what story can she tell to
Speaker 1: negate the inference that she knew that these statements were
Speaker 1: false and that she put them out there for the
Speaker 1: purpose of defrauding investors and defrauding doctors and patients. What
Speaker 1: story can she tell to suggest that she had an
Speaker 1: innocent mind, if you will, And I mean, there's a
Speaker 1: couple of stories that she can tell. Some of them
Speaker 1: are suggest did by the extensive media coverage, the investigative reporting,
Speaker 1: the documentary that suggests that you know, all along she
Speaker 1: believed in herself and her ability to create this amazing product,
Speaker 1: this blood testing technology that could just take a couple
Speaker 1: of drops and then magically provide accurate results that previously
Speaker 1: we could not do this way, and that she really
Speaker 1: really believed that she was going to be able to
Speaker 1: do that. And you know, on some levels she knew
Speaker 1: that she couldn't do it today, but she was always
Speaker 1: hoping that the breakthrough was just around the corner, right,
Speaker 1: That she believed in herself. Um that it takes time
Speaker 1: to get this kind of technology off the ground, And
Speaker 1: and that would be one potential story is that she
Speaker 1: actually thought that she could do it, even though from
Speaker 1: what we might call an objective perspective, that belief was false.
Speaker 1: Now that's a tough oh, because you know, the fact
Speaker 1: that you think you can do something in the future, um,
Speaker 1: doesn't negate the fact that you're lying about your current
Speaker 1: ability to do it. If you see what I mean.
Speaker 1: But that seemed to be one theory that she was
Speaker 1: floating at one time. It doesn't seem to work as
Speaker 1: a legal matter, but that seemed to be a story
Speaker 1: that's been told, at least in part by the documentary.
Speaker 1: I believe at some point there was a possibility that
Speaker 1: she would point to her former lover and the correct
Speaker 1: as sort of a Sengali. So now that their trials
Speaker 1: are separate, can she just try to blame it on him? Right?
Speaker 1: So that's the other theory. So one theory is I
Speaker 1: actually thought I could do this. You know, I believed
Speaker 1: in myself, and so I actually honestly believed that I
Speaker 1: was telling the truth when I told my investors, trust me,
Speaker 1: we will be able to do this. Um, that's one story.
Speaker 1: The other story is that she made the false statements
Speaker 1: she knew they were false. But the claim would be
Speaker 1: I did this out of fear, out of trauma, out
Speaker 1: of duress. I was under the spell of this powerful man,
Speaker 1: and I was doing it again, not because I wanted
Speaker 1: to defraud people, but because I was terrified of him
Speaker 1: or was unable to resist his power. Those kinds of claims, Now,
Speaker 1: that's a really tricky claim, because the claim would then
Speaker 1: be that she was acting under some kind of psychological duress,
Speaker 1: and those are very tough claims to satisfy. Notice, in effect,
Speaker 1: she would be conceding. Yep. I knew that my lover
Speaker 1: and I were making false statements, and I knew that
Speaker 1: they were being used for the purpose of defrauding folks.
Speaker 1: But I went along with it only because I was
Speaker 1: suffering from the effects of his arrest. And it's just
Speaker 1: a very hard claim to make. But that was the
Speaker 1: suggestion in some of her earlier filings that that was
Speaker 1: going to be her theory. And yes, now that the
Speaker 1: cases are severed, they're being tried separately. I take it
Speaker 1: that each of these characters can point the finger at
Speaker 1: the other. She can say I was doing it under
Speaker 1: his arrest. He could say, I take it. I believe her.
Speaker 1: I believed her when she She was the one who
Speaker 1: came up with this company, she was the one who
Speaker 1: developed the technology, and I believed her representations to be true.
Speaker 1: She is pregnant, which is one reason that the trial
Speaker 1: was put off. So when she's tried on August thirty one,
Speaker 1: she'll be a new mother. Will that have any effect
Speaker 1: on the jury. Will the jury either glean that or
Speaker 1: will they be told that June. To my eyes, one
Speaker 1: of the most fascinating features of this trial are what
Speaker 1: I would call the gender to ask x um, the
Speaker 1: fact that Elizabeth Holmes is a woman is one of
Speaker 1: the reasons that we, I think, are so fascinated by
Speaker 1: the case. And you know, ultimately these two trials, we
Speaker 1: have this really long history of grister's and swindlers and
Speaker 1: con men, if you will, in this country. But just
Speaker 1: as the phrase con men confidence man suggests, the defendants
Speaker 1: usually are men. And so the fact that Holmes is
Speaker 1: a woman really changes the trajectory, the arc of the
Speaker 1: narratives that we might tell and then might accept when
Speaker 1: thinking about her guilt. So it's just completely fascinating. Yes,
Speaker 1: the idea that she is pregnant, that she is a
Speaker 1: new mother. Somehow she'll you know, she'll have some kind
Speaker 1: of maternal halo around her. People may be inclined to
Speaker 1: be more sympathetic to her, less inclined to see her
Speaker 1: as a villain, you know, less inclined to hear as
Speaker 1: the mastermind of this criminal enterprise. So all of those
Speaker 1: things are going to be on the table in a
Speaker 1: case like this. So, on the one hand, there are
Speaker 1: studies and certainly plenty of anecdotal evidence as well as
Speaker 1: fictional stories that show that juries, courts, law enforcement may
Speaker 1: be inclined to be more lenient when women are involved.
Speaker 1: Women aren't viewed as being as dangerous as men, right.
Speaker 1: But at the same time, we can find that in
Speaker 1: some cases there's a tremendous amount of you know, animosity
Speaker 1: or additional hostility towards female criminals. And it just so
Speaker 1: depends on the kinds of stories that we tell, you know,
Speaker 1: will she emerge from this trial as you know, a
Speaker 1: young woman who fell into the clutches of this older
Speaker 1: lover who you know, had influence on her. Um. She
Speaker 1: was this up and rising star who was trying to make,
Speaker 1: you know, make it good in this dairy masculine world.
Speaker 1: And and somehow we should see her as the innocent
Speaker 1: um who fell into this difficult place and now she's
Speaker 1: a new mother, and how could we punish someone like her?
Speaker 1: Or will we see her as a scheming adventuress. You
Speaker 1: know that that's the other side of the coin, someone
Speaker 1: who was trying to use her femininity to you know,
Speaker 1: forge these relationships with these powerful investors who are men
Speaker 1: um So she's taking advantage of them, not just through
Speaker 1: the lies that she told about Thereinos, but by using
Speaker 1: her femininity as well as a kind of power over them.
Speaker 1: So it's really hard to know how the story is
Speaker 1: going to unfold the trial. But the fact that she's
Speaker 1: a mother, Yes, we revere mothers in this culture, and
Speaker 1: there may well be a feeling that she doesn't deserve
Speaker 1: to be punished as badly because she's a mom. On
Speaker 1: the other hand, people may may turn on her and think, wow,
Speaker 1: you know, you are behaving in a way that contradicts
Speaker 1: the type of behavior that we expect from from women
Speaker 1: and especially from others. So it's really really hard to tell.
Speaker 1: I wonder if she'll take the stand in her own defense.
Speaker 1: So that's the million dollar question that I had as well.
Speaker 1: Thank you so much for raising it. One of the
Speaker 1: things that will be fascinating about this trial is if
Speaker 1: there is a trial. So many of the cases that
Speaker 1: you know go off by plea buggins, and that could
Speaker 1: still happen in this case. But if the case goes
Speaker 1: to trial, it will be it's potentially going to be
Speaker 1: a spectacular one. And the big question is will she
Speaker 1: take the stand? And from where I sit right now,
Speaker 1: it's hard to see how she could imagine that she'd
Speaker 1: prevail without taking the stand. The story that would exonerate her,
Speaker 1: or the story that would create a reasonable doubt about
Speaker 1: her guilt and lead a jury to acquit is going
Speaker 1: to be a story about her mental state, a story
Speaker 1: about what she knew, what she thought, what she intended
Speaker 1: over the course of the years that the government alleges
Speaker 1: that she was scheming and lying and basically stealing people's money,
Speaker 1: What was in her mind. And we draw inferences about
Speaker 1: what's in people's minds from facts, you know, from their conducts,
Speaker 1: from the money they made, from the spending they did,
Speaker 1: for the messages they sent at the time, from the
Speaker 1: meetings they offended. So all of that stuff is going
Speaker 1: to be a piece of it. But it's really hard
Speaker 1: to imagine how the case could be successful without her
Speaker 1: taking the stand. I guess I'm tipping my hand right
Speaker 1: now and saying that from where I sent, the government's
Speaker 1: evidence looks overwhelming. Thanks. And that's Professor and Coughlin of
Speaker 1: the University of Virginia Law School. And that's it for
Speaker 1: this edition of The Bloomberg Law Show. Remember you can
Speaker 1: always at the latest legal news on our Bloomberg Law Podcast.
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Speaker 1: June Grasso. Thanks so much for listening, and please turn
Speaker 1: into The Bloomberg Law Show every week night at ten
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