Elizabeth Holmes dodges questions about unpaid legal bills

Wealth


Elizabeth Holmes exits federal court in San Jose with attorney Kevin Downey on Nov. 4, 2019.

Yasmin Khorram | CNBC

Elizabeth Holmes, decked out for court in high heels and a suit, brushed aside questions on Monday about legal fees her civil attorneys say she hasn’t paid.

“Any response to claims that your attorney’s haven’t been paid?” CNBC asked Holmes as she arrived at the San Jose Federal Courthouse for a hearing in her criminal case, in which she and co-defendant Ramesh “Sunny” Balwani are charged with nine counts of wire fraud and two counts of conspiracy to commit wire fraud.

They each face up to 20 years in prison if convicted.

As per her usual demeanor, she smiled and kept walking without saying a word.

The flap over paying her legal bills is connected to a separate class-action civil lawsuit filed in U.S. District Court in Phoenix.

Attorneys with the law firm Cooley LLP filed a motion last month requesting to withdraw as counsel for Holmes, alleging that “Ms. Holmes has not paid Cooley for any of its work as her counsel of record in this action for more than a year,” adding, “given Ms. Holmes’s current financial situation Cooley has no expectation that Ms. Holmes will ever pay it for its services as her counsel.”

In the San Jose criminal case hearing, attorneys for Holmes and Balwani argued with the government over access to documents from regulators they say is key to their defense.

Holmes’ counsel said the Food and Drug Administration admits that it only can produce partial emails from Alberto Gutierrez, former director of the FDA’s diagnostics regulatory division.

“Not having the content of emails from the most important witness in this case suggests material evidence has been destroyed,” said Lance Wade, an attorney for Holmes.

Counsel for the FDA admit they had a faulty email storage system but there’s no evidence Gutierrez destroyed the emails.

“We have no reason to believe that any of these emails were destroyed intentionally,” said Jackie Martínez Resly, associate chief counsel for the FDA.

“It’s not every day I hear an admission of a corrupt email system from the most significant custodian in this case,” Wade said.

Assistant U.S. Attorney John Bostick downplayed the defense’s claims.

“The indictment shows a wide range of misrepresentation made by the defendants – misrepresentations concerned with the FDA is only one category among several,” Bostick said.

After two hours Holmes left the courthouse with her lawyers, getting into a black SUV.



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