What to expect as Elizabeth Holmes takes the stand in her trial

The former biotech executive, Elizabeth Holmes, faces an array of criminal charges over her role as the CEO of Theranos, including allegations that she defrauded investors of billions. Andrew George, partner at Baker Botts, explains what could come next, alongside Yahoo! Finance's Alexis Keenan.

Video transcript

JARED BLIKRE: Theranos CEO Elizabeth Holmes is taking the stand again today defending herself against claims she defrauded investors out of hundreds of millions of dollars. Here to break down all the trial action is Andrew George. He is a partner at the law firm of Baker and Botts, as well as Alexis Keenan of Yahoo Finance.

And, Andrew, I want to begin with you here. What are we to make of this trial here? It has been one of the most high profile white collar crime trials in some time.

ANDREW GEORGE: Yeah, really interesting. And it's been going for quite some time as well. So today was the first day of cross-examination for Miss Holmes-- certainly a make or break moment for the defense in this case. This is her opportunity to try to address head-on the most difficult questions that the government can throw at her.

And they definitely threw some difficult ones at her. So critical day for the defense. And you know, we'll see what's to come. But they're hitting her with some of the most difficult things in terms of efforts to suppress some critics like the "Wall Street Journal" and employees of Theranos who are raising questions. And those are some of the toughest facts to deal with. And I expect she'll have to answer more about some of the alleged falsehoods that were told to investors in this case as well.

ALEXIS KEENAN: Andrew, this Alexis Keenan here. I want to ask you about the bottom line really here with Elizabeth Holmes on the stand, probably facing the toughest day of her trial yet in this very long and protracted trial that she's having. Basically, the prosecution, what it needs to show is that she lied and that she had intent to defraud with those lies. So has the prosecution gotten there today with this testimony?

ANDREW GEORGE: I think today's testimony was very damaging. It was very difficult-- not so much the testimony per se, but just the facts themselves. This is basically an intent defense in this case. And they began-- the prosecution, I think, wisely began with the efforts to suppress critics, like the "Wall Street Journal," like Tyler Schultz.

Those are some very tough facts. It's a smart way to counteract what was done over the past few days, which was to humanize Miss Holmes. And by showing the approach that was taken to critics, and there was a pretty rough approach that was taken to critics, it actually helps to humanize the people who are trying to tell the story and to get the jury angry with Miss Holmes, which will be important as the government moves to close its case.

Legally, it's also very significant because it's used to paint a picture of a person with guilty knowledge-- a person who thinks that there is a problem here that they need to hide or to cover up. And it is very damaging. Aside from that, you know, it's unclear whether or not some of these themes that the defense has used are resonating, whether or not the jury is latching on to some of the stuff about Mr Balwani and his influence over her. I think that the government did an effective job, it seems, today of counteracting some of that through the text messages, as expected. And but at the end of the day, I mean, this case is about whether or not she knowingly lied to investors, as you said.

That's what this is all about. And she's going to have to tie all of the things that she said in her direct, all the explanations that she's giving. She's going to have to use those and her defense team is going to have to use them to explain the actual false things that were told to investors in terms of Pfizer and Schering-Plow, in terms of military deployment, those types of things. How do these defense facts help to explain those things that were told to investors?

ALEXIS KEENAN: Andrew, I also want to ask you about one of the things you mentioned there. Holmes' own attorneys, they preemptively asked her about her former romantic partner and former CEO, Ramesh "Sunny" Balwani, who helped her run the company. Now, it was a big question whether she was going to talk about also abuse allegations that she has waged, and she did bring those up on her direct examination.

Though when the prosecutors went back and asked her on cross-examination whether Balwani forced her to make statements, whether to investors, to journalists, whether he controlled what she said to Walgreens, Safeway, who were prospective partners at one time, whether he controlled what she said and how she interacted with the board-- all of those things to which she said, no, that he did not have that level of control. So how is that going to matter here?

ANDREW GEORGE: Right. That's exactly the point is, can the defense come up with a way to carry the thread from the nature of their relationship, Mr Balwani's alleged influence over her, to what was actually-- what's at issue in this case, which is what was said to investors, right? How does your relationship with Mr Balwani explain what you told investors?

It's not going to make false things true. It can potentially be argued to explain what her mindset was when she made whatever statements she made and why she didn't think she was saying something false or why she thought it was OK. But at the end of the day, that's what she's going to have to do, what her defense is going to have to do to tie this thing together. Because as of right now, you're right.

She has already said-- and I think it would have been hard to say otherwise-- that at the end of the day, she was a free actor. She was making her own decisions, right? And so it's just a question of, OK, so what was the point of all of that stuff that we just heard about Mr Balwani? What are we supposed to take away from that if, ultimately, you were the one deciding to say what you said?

ADAM SHAPIRO: And we appreciate your being here with that update, both Andrew George, partner at Baker Botts, as well as Alexis Keenan.