FILE – This May 2, 2017, file photo shows Theranos CEO Elizabeth Holmes as she testifies at a House oversight and government reform subcommittee hearing on Capitol Hill in Washington. Holmes was in federal court Monday for a crucial hearing before her expected criminal trial on federal fraud charges, months after she was accused of misleading investors and doctors about the accuracy of the blood-testing company’s devices. (AP Photo/Jacquelyn Martin, File)
Dear Judge Brown,
As you know I consider myself a lawyer with a serious interest in social issues. Over the past few years I have worked with a consulting firm, Edelson PC, on high-profile, consumer class action and public policy litigation with celebrities like Ian McKellen, Ellen Page, Ellen DeGeneres, and more. I also own a law firm of my own, 4th Corner LLC. We were co-counsel in a successful settlement recently against Theranos for $6.7 million, and I have strong ties to the firm founded by my dad.
Unfortunately, the prosecution asserts that my involvement in this case qualifies me as an accessory to the fraudulent misrepresentations of Elizabeth Holmes. In other words, the prosecution claims that because I have a hand in our success, I must have known what was going on, and had an obligation to tell the truth. I reject that notion. After listening to both the prosecution and defense teams, my conclusion is clear. What I witness on the first page of the indictment is that Elizabeth Holmes changed the lives of thousands of people, many of whom are now financial and personal supporters of this company. I do not look at the case through the lens of the noble, idealistic social mission at the core of this case. I look at it with a very skeptical eye. I try not to give over my life’s work to secondary concerns.
After reading the complaint in this case I realize the experience of this case could have been different had the defendants represented themselves properly. During her deposition for the investigation, Elizabeth Holmes admitted that her executives engaged in “lock-and-key” meetings with the SEC and FBI without informing her. They should have recognized that the court does not need to be fully informed of these events. But despite that, they did. They did not adequately explain to her that the penalties for this behavior would be severe. They did not fully explain to her that Aetna was experiencing client pressure from others to cut their relationship with the company. But most importantly, they did not fully explain to her that every conversation was being recorded, and she would be required to return it to the government.
Even when she did learn about what was going on, she did not tell the truth about the company’s results. During the bankruptcy proceedings, she repeatedly testified that Theranos accomplished 100% accuracy and that the number of faulty tests only exceeded 10%. She also failed to disclose that the FBI was conducting a criminal investigation into the conduct of Theranos’ employees. On cross-examination, she even admitted that she misled the government about the company’s data since at least 2013.
The charges against Ms. Holmes and Juleanna Glover (former director of Clinical & Regulatory Affairs) are serious and merit investigation. I know that Theranos and Juleanna Glover may well have done some things that were unconscionable, but it was the products and services that they delivered that were the problem.
The real problem with this prosecution is that it ignores basic principles of compliance. Companies and individuals all need to be aware of what is going on, and take the necessary steps to avoid such situations in the future. They need to be able to openly communicate with regulators and their investors and understand that the penalties for wrongdoing are severe and carry potentially life-changing consequences. Theranos didn’t do that because Elizabeth Holmes alone was not capable of addressing all of those concerns. So it fell to my associates and I to correct the situation for her.
At the end of the day, it is difficult to find fault with consumers, employees, and investors who trusted Theranos for its promises and technology. Yet because Elizabeth Holmes and Juleanna Glover had the misfortune of being caught with their hands in the cookie jar, they have been charged with crimes. Whether or not they do time for their misdeeds is largely irrelevant. I hope that the jury will realize that their prosecution should never have happened.
Yours sincerely,
Andrew Stoltmann
–@AndrewStoltmann