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Prosecutor in Theranos Case Closes by Telling Jury That Elizabeth Holmes ‘Chose Fraud Over Business Failure'

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  • Closing arguments in former Theranos CEO Elizabeth Holmes' criminal fraud trial kicked off on Thursday.
  • "Ms. Holmes made the decision to defraud her investors, and then to defraud patients," said Assistant U.S. Attorney Jeffrey Schenk.
  • Holmes' defense attorney said the entrepreneur was "building a company, not a criminal enterprise."

SAN JOSE, Calif. -- In his last effort to persuade the jury that Elizabeth Holmes is guilty of fraud, Assistant U.S. Attorney Jeffrey Schenk said Theranos' founder chose to deceive investors and patients, a choice that "was not only callous, it was criminal."

Schenk delivered a blistering three-hour closing argument on Thursday, making the case that the decision to convict Holmes should be unambiguous.

"Ms. Holmes made the decision to defraud her investors, and then to defraud patients," Schenk said. "She chose fraud over business failure. She chose to be dishonest with investors and with patients."

Schenk urged the jury to disregard Holmes' claims of abuse by ex-boyfriend Ramesh "Sunny" Balwani, who was her second-in-command at the company, because the "verdict does not validate her claims of abuse." It's a theme that the prosecution returned to repeatedly throughout the three-month trial, arguing that Holmes was in control and was calling the shots.

During Holmes testimony over seven days, the former Theranos CEO at times detailed alleged emotional, physical and sexual abuse from Balwani. She claimed Balwani, in some ways, controlled her, allegations Balwani has vehemently denied.

"You do not need to decide if that abuse happened," Schenk told the jury. "The case is about false statements made to investors, false statements made to patients."

The defense, which began its closing argument on Thursday afternoon, countered the prosecution's assertions by saying it was never Holmes' intent to mislead. She was "was building a company, not a criminal enterprise," her attorney said.

The day began shortly before 2 a.m. PT, with journalists, spectators and members of Holmes' entourage lining up in the rain to get into the courthouse.

Among those in line was Tyler Shultz, who worked at Theranos and became a key whistleblower. Shultz's name appeared on the list of possible witnesses for the government, but he was never called to testify. Shultz, the grandson of former Secretary of State and early Theranos board member George Shultz, declined to comment.

'A different path'

Schenk looked intently at each juror as he delivered his closing argument. He highlighted claims that Holmes made about the company's work with the military and pharmaceutical partnerships, noting that they were all untrue.

"Ms. Holmes knew these honest statements would not have led to any revenue," Schenk said. "She chose a different path."

Schenk ran the jury through the 29 government witnesses, showing a headshot of each with a short summary of their testimony. He showed jurors a slide listing the ways they say that Holmes exercised control at Theranos. The list included public relations, business development, communicating with doctors and investors, pharmaceutical partnerships and financial projections.

"There weren't events at Theranos that occurred without her decision or involvement," Schenk said. Schenk also showed the jury a chart, titled "Knowledge of falsity," which listed her false statements alongside exhibits.

Holmes has pleaded not guilty to 11 charges of wire fraud and conspiracy to commit wire fraud. She could spend up to 20 years in prison if convicted. Balwani faces the same charges in a trial that's expected to begin early next year. He also pleaded not guilty.

Sunny Balwani, former president and chief operating officer of Theranos Inc., leaves federal court in San Jose, California, Oct. 2, 2019.
Michael Short | Bloomberg | Getty Images
Sunny Balwani, former president and chief operating officer of Theranos Inc., leaves federal court in San Jose, California, Oct. 2, 2019.

Kevin Downey, a defense attorney for Holmes, told the jury that the government's case was incomplete.

"The picture can change quite a good deal as a result of waiting for the full story," Downey said, adding that prosecutors withheld important information from the jury. Downey told jurors about 11 successful partnerships Theranos had with drug companies.

Prosecutors also took a shot at the defense's portrayal of Holmes as a young, naive Stanford dropout. By the time investors put money in the company in 2013 and 2014, Holmes was almost 30 and had been CEO for close to a decade, Schenk said.

"Theranos didn't need more experience to avoid fraud," he told the jury.

Throughout the trial, Holmes' defense attorneys said she was a hardworking but young CEO, who was overly trusting of Balwani, the chief operating officer, and her lab directors.

"It wasn't a question of experience," Schenk said. "They needed a CEO and a COO that interacted with people honestly."

Downey closed by asking the jury to consider this question: "If Ms. Holmes were a criminal, what kind of board of directors would she have appointed? Would she appoint cronies?"

"She appointed these people, an incredibly illustrious group of people," Downey said, pointing to a slide that named each director.

The defense is set to conclude its closing arguments on Friday. The jury of eight men and four women will be handed the case following jury instructions. They're expected to deliberate over the holiday week.

"The story of Theranos is in some ways tragic," Schenk told them. "It is also the story of some individuals acting with remarkable integrity."

WATCH: Elizabeth Holmes trial begins final deliberations, closing arguments

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