Elizabeth Holmes, Too Broke To Pay Her Lawyers, Phones In Her Defense In Fraud Lawsuit

How quickly the tables can turn...

Disgraced former Theranos CEO Elizabeth Holmes literally phoned in her defense in an Arizona fraud lawsuit after her civil lawyers quit due to non-payment. 

Holmes still maintains a team of "high caliber" attorneys for her criminal case in San Jose federal court, according to Bloomberg. But in the concurrent civil suit taking place in Phoenix, Holmes was forced to dial into an audio feed without a lawyer on Thursday, telling the judge she wouldn't make any arguments.

The hearing, which ended without a decision, was to try and determine whether or not the case should advance as a class action. The judge asked Holmes at the beginning of the hearing if she wanted to make any arguments and Holmes said she was relying on the arguments made by attorneys for her co-defendants. 

The lawyers representing her in Arizona quit back in September, claiming Holmes hasn't paid them. As Bloomberg notes, "it’s highly unusual for a defendant of Holmes’s stature in such a suit to not be represented by an attorney, prompting some speculation on her financial situation."

After Theranos collapsed, Holmes agreed to a $500,000 fine to resolve a civil securities fraud case and also settled an investor suit for an undisclosed sum. On top of that, she had to shell out for legal fees.

Bill Portanova, a former prosecutor turned defense lawyer, speculates that Holmes is likely trying to create a warchest of resources for her criminal case, stating: “If there’s only so much money to go around, staying out of prison is always priority number one, period. Lawsuits seek only money, not imprisonment.”

Holmes hasn't let on publicly about any financial hardships. However, her former lawyer in Arizona, John C. Dwyer, said he was concerned about her finances when he withdrew from the case. 

Dwyer wrote in a filing: “Ms. Holmes has not paid Cooley for any of its work as her counsel of record in this action for more than a year. Given Ms. Holmes’s current financial situation, Cooley has no expectation that Ms. Holmes will ever pay it for its services as her counsel.”

Experts suggest Holmes may have had to put down a sizeable down payment to retain a top-flight criminal defense team. 

“It’s possible that she paid Williams & Connolly a large retainer up front that its lawyers are now ‘earning,’” one former federal prosecutor said. 

In San Jose, she is fighting charges that she knew the company's blood tests were inaccurate and unreliable and that she misrepresented the capabilities of the company's testing machines to doctors, patients and investors.

In the Arizona case, customers are claiming that Theranos and one-time partner Walgreens, took samples of their blood when they knew the testing was still in development. As a result, some customers received unnecessary or potentially harmful treatments or didn't see medical help for treatable illnesses. 

Holmes had an estimated net worth of $4.5 billion before the collapse of Theranos.