Discovery Delays Threaten Trial Date for Theranos Founder

Elizabeth Holmes, founder and CEO of Theranos, speaks at 2015 Fortune Global Forum in San Francisco. The Securities and Exchange Commission filed investment-fraud charges in March 2018 against Holmes and her company. (AP Photo/Jeff Chiu, File)

(CN) – Attorneys for Theranos founder Elizabeth Holmes revived accusations in court Wednesday that the federal government is unnecessarily delaying documents necessary for the former health technology magnate’s criminal fraud case.

The two sides returned to U.S. District Court Judge Edward Davila’s courtroom Wednesday in an effort to keep the much-anticipated trial slated for July 2020 on track.

“Those trial dates are tied to prompt compliance with discovery obligations,” said Holmes’ attorney Lance Wade. “If the agencies aren’t able to move with greater dispatch there is a cascading series of events that is in jeopardy.”

Wade and attorneys for Holmes’ former right-hand man Ramesh Balwani asked Davila to order the Justice Department to produce all relevant documents currently held by the Food and Drug Administration and the Center for Medicare and Medicaid Services.

Justice Department attorney John Bostic said the federal government is not in a position to produce documents to which it lacked access.

“We’re doing everything we can,” he said.

The foremost culprit for the delay according to both parties is the FDA, which recently informed the court that due to its obligation to vet all produced documents it would not be able to provide them for six months.

“I’m inclined to order production within 75 days,” Davila said.

The judge further said he would issue a protective order to expedite the matter, particularly as FDA representatives claimed liability issues as one of the salient factors for the delay.

Attorneys for Holmes and Balwani complained giving the order to the agencies rather than the Justice Department creates a lack of accountability.

“The DOJ is the federal government’s law firm,” said Jeffrey Coopersmith, attorney for Balwani. “The DOJ has vast litigation resources.”

Davila denied the defense’s gambit to hang discovery production on the prosecution and decided instead to take the matter up with the agencies themselves.

“If they don’t produce the documents, they will stand here at the lectern and tell me why,” Davila said.

Due to the large number of documents in the case, the discovery dispute has been inordinately sharp and prolonged. If the federal agencies fail to produce documents in a timely manner the trial date could be jeopardized.

Jury selection is slated for July 28, 2020.

Holmes founded Theranos in 2003 and soon attracted a who’s who of investors and backers, including Charles Schultz, Henry Kissinger and Jim Mattis who served on the company’s board. The health technology entreprenuer’s empire began to unravel in 2016 after John Carreyrou of the Wall Street Journal wrote the first of several articles questioning the validity of Theranos’ blood testing technology.

Holmes, Balwani and others associated with the company proclaimed their blood tests could give reliable results to customers with a finger prick. In fact, the test could only produce results related to a narrow range of health metrics and suffered from reliability issues.

When Carryrou wrote his first article in October 2015, Holmes was worth an estimated $4.5 billion. By June of the following year, she was virtually bankrupt. The company has since been liquidated.

Prosecutors say Holmes and Balwani, who were previously in a romantic relationship, spent years lying about the capability of their blood testing technology, defrauding investors, board members and corporate partners like Safeway, Walgreens and the Cleveland Clinic.

Holmes and Balwani charges of conspiracy to commit wire fraud and wire fraud. If convicted, the pair faces a maximum of 20 years in prison and $2.7 million in fines.

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