In 1941, Louis Buchalter, the underworld boss of Murder, Inc., the Mafia’s enforcement wing, stood trial for murder. The case was unusual in that a boss had almost never faced a capital charge. Well educated as he was in risk avoidance, such people build layers of bureaucracy between themselves and the violence that makes them rich and powerful.
Plausible deniability is the order of the day. That’s why the feds had to get Al Capone on tax evasion. That’s why Vincent Gigante was known as “the Chin.” His name was never spoken by underlings. If the order came from the top, you were to point at your chin. But Buchalter, who had a big ego and a bad temper, let his name be spoken and his picture be taken, and followed the whims of his psychosis, and so he remains the only Mob boss ever executed by the federal government. When he was electrocuted, at Sing Sing prison on January 21, 1944, house lights flickered in the Hudson Valley.
A similar fate, metaphorically speaking, is in the process of befalling Elizabeth Holmes, former C.E.O. of defunct Silicon Valley start-up Theranos, and for the same reason. Holmes, who founded Theranos in 2003, the year she dropped out of Stanford—the company promised, with its black box, to screen for a number of medical conditions via a single finger prick of blood—let herself be turned into the face of the project, its public champion, and thus the culprit when the promises proved empty.
Theranos, once valued at $9 billion, is currently worth nothing.
Buchalter’s downfall seemingly began not with his first murder but with his first appearance in the tabloids. Holmes’s downfall began not with John Carreyrou’s muckraking Wall Street Journal exposés but perhaps with her appearance on the covers of Forbes and Fortune a year earlier, followed by a 2014 New Yorker piece—“Blood, Simpler”—which gave her the full-body Swedish.
Big-time C.E.O.’s hardly ever stand trial for the sort of crimes normally committed by the sales force—because of all those bureaucratic layers, because of all that plausible deniability—but Holmes, who has an ego just like Buchalter’s, let herself become the face of the organization. An omelet-maker in the midst of breaking some eggs—that’s what they say, right, you’ve got to break some eggs?—can stand or even benefit from a little attention, but this was too much. Way too much.
Holmes, confident to the point of arrogance, let herself become the product, and when that happens …
As the immortal J. J. Hunsecker put it: “You’re dead, son. Get yourself buried.”
Theranos, once valued at $9 billion, is currently worth nothing.
And so we come to the dénouement, the con artist, grifter, or true believer—it depends on your point of view—walking up the courthouse steps, pushing past reporters, photographers, and experience collectors. Holmes has changed her look since Theranos.
Her blond hair, which often appeared as if just ironed, is now loose and shaggy. The black turtleneck is gone, replaced by a blazer and slacks. A new costume for a new role, a new turn at center stage. God, don’t you wish this were a musical? She wore a face mask on her way into court but will take it off before the jury, a right her lawyers fought for. The prosecution wanted masks, either because they fear the Delta variant or because they know how hard it is to humanize a person whose face is hidden. The defense wanted no masks. Either because they have confidence in the vaccine or because they know that few people have ever been able to resist the fully exposed Elizabeth Holmes.
Judge Edward Davila, an Obama appointee, is presiding. The prosecution is represented by a team from the U.S. Attorney’s Office of the Northern District of California. Read: Silicon Valley. Assistant U.S. Attorney Robert Leach stood for the people on Wednesday morning. More than merely prove Holmes committed fraud, he must show that she did so knowingly, that she lied and knew she was lying, that she had intent.
In his opening statement, highlights of which were reported around the world—people have become fixated on this case because it dramatizes the sins of the era—Leach argued that intent to obfuscate could be recognized not merely in what Holmes said but in the way she acted. In 2009 and 2013, when Theranos was running out of cash and its machines didn’t work—the company was allegedly burning through $1 million to $2 million a week—she went before potential investors and said whatever needed to be said, regardless of the truth, according to Leach.
“Out of time, out of money, Elizabeth Holmes decided to lie,” Leach told the jury.
He said she lied about what her machines could and could not do, about how blood was being handled in her lab, about the accuracy of her results.
Holmes is represented by Williams & Connolly, the big D.C. firm. Lance Wade, a leader of the defense, reportedly did not get into the specifics of pitch meetings but instead ran through a handful of reasons why the jury—who will need to find her guilty beyond a reasonable doubt; this is a criminal trial—should find it impossible to convict.
The black turtleneck is gone, replaced by a blazer and slacks. A new costume for a new role, a new turn at center stage. God, don’t you wish this were a musical?
First of all, he argued, most of the tests done by the company, even if not processed on Theranos machines, were done accurately; second, Holmes didn’t really know what was going on in the lab; third, her partner and then boyfriend, Ramesh “Sunny” Balwani, who goes on trial immediately after Holmes, was allegedly bullying her and made her say and do what she said and did; fourth, she believed what she said when she said it, and that’s apparently all you need to know to acquit. In this country, said Wade, it’s not a crime to “make a mistake.”
All the while, as he spoke, the defense lawyer was humanizing Holmes, pointing out the family members who’d come to support this 37-year-old woman who made the mistake of believing in a dream. There, in the blue sweater with matching blue face mask and scarf, is Noel Holmes, Elizabeth’s mother, who could tell you how her daughter has always wanted to change the world.
And there, in the dark-blue suit with the royal-blue tie, is Billy Evans, the heir to a hotel-chain company who loved Elizabeth enough to marry her amid the troubles. If Billy seems anxious, it’s probably because he has to get back to Woodside, California—the couple is renting a home at Green Gables, a 74-acre estate currently on the market for $135 million—to change diapers.
That’s right! Diapers! Elizabeth Holmes, whom the government wants to lock up for up to 20 years of school plays, school recitals, and possible school homecoming dances, is a new mom!
As for lying to investors, Wade, who named some of the so-called victims of the fraud—Betsy DeVos, Republican donor, Trump Cabinet member; the Waltons, founders of Walmart; Rupert Murdoch, who gave you Fox News and the New York Post—said, “These were sophisticated people, and they knew what they were buying.” According to reports, there had even been a warning in the agreement that specifically pointed out the speculative nature of investing in experimental technology.
The trial, which is expected to last three to four months—longer than the Broadway run of My Favorite Year (and that was a hit!)—began with a basic staking of positions, an either/or for the jury. Either Elizabeth Holmes is a liar who knowingly defrauded investors and put the lives of customers at risk, or she is an enthusiast, guilty only in the way of visionary car-maker Preston Tucker, guilty of having a dream, and a reach that exceeded her grasp.
Louis Buchalter also had a dream, which is another thing he had in common with Elizabeth Holmes. That and the fact that both bosses—Buchalter and Holmes—seemed to believe that they’d be protected by their relationships, their closeness to what my father calls “key people,” or “inside guys.”
Buchalter had done work for Sidney Hillman, the head of the Amalgamated Clothing Workers of America, and Hillman had marshaled support for Franklin Roosevelt, which is why Buchalter likely believed F.D.R. would save him. When Buchalter finally surrendered to the F.B.I.—he’d spent two years in hiding—he did not surrender to federal agents, as per custom, but to the newspaper columnist Walter Winchell, who personally handed him over to J. Edgar Hoover, who was parked near Madison Square in Manhattan.
Holmes likewise seemed to believe that her relationships—the close connection to key people, inside guys—George Shultz, Henry Kissinger, and James Mattis were reportedly all paid members of the Theranos board—would both grease her way to the big V.C. money and get her out of trouble if the wheels came off. But rather than protect Holmes, these people—not Shultz, he’s dead—appear on a list of potential witnesses for the prosecution. That is, the very people who paved her way may now help pave her under.
The most astonishing name on the witness list is David Boies, chairman and a managing partner of the law firm Boies, Schiller and Flexner. No one appears to have taken a bigger reputational hit over the last few years than David Boies. He was a case study of unorthodox genius in Malcolm Gladwell’s David and Goliath. He was the attorney who represented Al Gore in the case of the hanging chad—he lost that case, a defeat that put us all on the road to hell—and partnered with Ted Olson to represent plaintiffs in a case that led to the legalization of gay marriage.
Boies has now become the attorney who protected Harvey Weinstein, allegedly hired private dicks, and intimidated victims, witnesses, and reporters. It was Boies, then working for Theranos, who apparently tried to scare off the whistleblowers and John Carreyrou and The Wall Street Journal when the whole thing began to unravel.
Boies not only represented Theranos; he served on its board. He was likely billing the company as it came apart. All the millions of dollars investors dumped into the black box that was the company’s signature product—product as metaphor … 11 of those millions reportedly ended up in the accounts of Boies, Schiller and Flexner.
Boies may now finally get his chance to appear in court with Holmes, only not at her side but on the stand, testifying for the people.
But the biggest question remains: Will Holmes take the stand on her own behalf? If the case continues to play out like a movie, she must.
What is a blockbuster without a close-up of the star?
Rich Cohen is a Writer at Large for Air Mail