United States v. Holmes

Topics

Practice areas

Questions Presented

1. Whether former Theranos employees improperly offered expert opinions while testifying as lay witnesses.
2. Whether the CMS report was relevant and sufficiently probative under Federal Rules of Evidence 401 and 403.
3. Whether evidence that Theranos voided patient test results was inadmissible subsequent-remedial-measure evidence under Rule 407.
4. Whether limiting Holmes's cross-examination of Rosendorff violated the Sixth Amendment Confrontation Clause.
5. Whether excerpts of Balwani's SEC deposition testimony were admissible as statements against interest under Rule 804(b)(3).
6. Whether evidence concerning tests run on conventional technology constructively amended Balwani's indictment in violation of the Fifth Amendment.
7. Whether the government violated Napue v. Illinois by failing to correct allegedly false investor testimony.
8. Whether the district court properly used the preponderance-of-the-evidence standard for sentencing loss findings.
9. Whether the district court clearly erred in findings concerning loss causation and the number of victims.
10. Whether restitution under the Mandatory Victims Restitution Act should have been based on the diminution in value of Theranos shares rather than the investors' total investments, and whether residual share value required a credit.

Holdings

1. A witness may not evade Federal Rule of Evidence 702 by being labeled a percipient or lay witness when the opinion is based on specialized knowledge, experience, training, or education. Conversely, testimony is not automatically expert testimony merely because it concerns scientific matters or draws on the witness's personal workplace experience. Some challenged testimony by Das, Rosendorff, and Pandori was expert testimony, but any admission error was harmless; Cheung's challenged testimony was permissible lay opinion.
2. The district court did not abuse its discretion by admitting the CMS report as relevant to Holmes's knowledge, intent, and state of mind, or by finding that its probative value was not substantially outweighed by the risk of unfair prejudice.
3. The district court did not abuse its discretion by admitting evidence that Theranos voided patient tests run on the Edison because the court reasonably found that the decision was not voluntary and that the evidence was probative of Holmes's knowledge and state of mind.
4. The district court did not violate the Confrontation Clause by limiting cross-examination concerning Rosendorff's post-Theranos employment because Holmes was permitted to explore his potential bias and had otherwise extensively challenged his competence.
5. The district court did not abuse its discretion by excluding Balwani's SEC deposition statements under Rule 804(b)(3) because the statements did not solidly inculpate Balwani.
6. The government's presentation of evidence concerning tests run on conventional technology did not constructively amend the indictment because the indictment fairly and objectively charged Balwani with misrepresenting the accuracy of Theranos's patient-testing services, including tests run on third-party devices.
7. Balwani's Napue claim failed under plain-error review because the challenged testimony was not shown to be clearly or obviously false in most respects, and any inaccurate testimony did not affect his substantial rights.
8. The district court properly applied the preponderance-of-the-evidence standard to factual findings concerning sentencing loss and victim numbers; clear and convincing evidence was not required.
9. The district court correctly identified the investors' money as the property lost under the MVRA and should have considered credits for any residual value of the Theranos shares, but any error was harmless because the victims could not liquidate the shares and therefore their actual losses equaled their total investments.

Key quotations

Factual background

Holmes founded Theranos and served as its chief executive officer, while Balwani served as president and chief operating officer. Theranos represented to investors and patients that its proprietary blood-testing technology could provide accurate testing from small blood samples, but evidence showed that the Edison device frequently failed quality-control checks, Theranos used conventional third-party machines, its partnerships and financial condition were materially less favorable than represented, and patients received inaccurate results. Investors purchased Theranos shares based on alleged misrepresentations concerning the technology, finances, business relationships, military work, and pharmaceutical validation.

Procedural history

A grand jury returned a third superseding indictment charging Holmes and Balwani with conspiracies and substantive counts of wire fraud involving Theranos investors and patients. The district court severed the trials; Holmes was convicted on the investor-related conspiracy and three investor wire-fraud counts, while Balwani was convicted on all charged counts. The district court sentenced Holmes to 135 months and Balwani to 155 months and ordered them jointly and severally to pay $452 million in restitution. The Ninth Circuit affirmed the convictions, sentences, and restitution order, and later denied rehearing and rehearing en banc; the opinion was amended on December 22, 2025.