Holmes trial – a risky defense strategy

The defense team has cross-examined several investors in Theranos. They’ve taken opposite tacks for two of them. At least they’re opposite in one way, although similar in another. The similar part is blame the victim. What I’m more interested in is what they are blaming the victim for.

For some investors the cross-examination has been mostly about the investor’s lack of due diligence. The defense brings out all the things the investor could have done and didn’t before investing, like checking with medical experts, etc. They’re basically setting up the argument that the loss wasn’t due to Holmes but was due to the investors’ failures to take these obvious steps. With a recent witness, Brian Grossman, the prosecutor cleverly brought out a good deal of investigation and due diligence Grossman had done. For example, he had tried to contact people at Walgreen’s and United Health who reportedly had partnered with Theranos. He said that Sunny Balwani had cut him off, telling him that would undermine the reputation or good relationship Theranos had with those companies. He did find some red flags but invested anyway. The defense confronted him with that fact. Grossman’s reply was great: yes, I had to rely solely on the representations by Elizabeth and Sunny. Still the defense may have made some short-term points with the jury by making him and all investors look like greedy rich people who knew the risks.

Where this becomes dangerous for the defense is in final arguments. This leaves an opening for the government to point out that the defense blames the investors whether they try to investigate or don’t. In short, the argument goes, the defense is saying it’s impossible to defraud an investor, no matter what the lies. If the investor is stupid enough to invest in our company, they deserve to lose. It can’t be crime to cheat rich people, in other words. That clearly can’t be the law or common sense. The prosecution can point out that many of these investors were funds with the money of some ordinary people, or were companies whose shares are held in mutual funds invested by pension funds, 401k’s and IRA’s. In other words, the investment victims aren’t all greedy rich people, but ordinary workers.

This idea is important and has been expanded by the prosecution’s next witness: a woman who had no health insurance and used the Theranos test machine at a drug store for her blood test, only to be told, inaccurately, that she was positive for HIV. She’s a victim and definitely not rich. Every juror can sympathize with her.

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