Former Theranos CEO Elizabeth Holmes walks outside the courtroom on May 6, 2021, where she is on trial for fraud.

CNBC

Elizabeth Holmes’ lavish lifestyle as CEO of Theranos took center stage on Thursday as her lawyers argued that it was irrelevant to her criminal fraud case.

“What she wore, where she stayed, how she flew and what she ate had nothing to do with this process,” said Holmes’ attorney Kevin Downey, adding that his “inflammatory comment could be very damaging”.

However, the government disagreed, saying Holmes’ opulent way of life was aided by the alleged fraud.

“In addition to her salary, the company took care of her luxury travel by private jets and expensive accommodations,” said John Bostic, US assistant attorney. “The point here is that the so-called Theranos success is entirely due to fraud.”

The judge pushed back the government’s argument, compared her advantages with those of other CEOs, and asked, “What is the value she has at the Four Seasons or a Motel 6?”

Prosecutors cited an email between Holmes and an assistant paid by Theranos talking about having dinner in an expensive restaurant and buying clothes and jewelry.

Defense attorneys argued that Holmes had chosen not to redeem their shares and were not demanding a higher salary. “No question about it, Miss Holmes was almost exclusively on business, which was for the most part not only promoted but arranged by the board of directors.”

Holmes’ stake in Theranos has been estimated at up to $ 4.5 billion. Prosecutors say her spending has more than kept pace and her fame has overtaken her.

Holmes “became a celebrity in Silicon Valley,” said Bostic. “As a result, she met dignitaries, politicians, and other business leaders. These things were really beneficial, intangible, but still beneficial and part of the fraudulent system.”

When she entered the courthouse, Holmes refused to answer questions from CNBC’s Scott Cohn about whether she was concerned about flaunting her wealth.

A former Theranos executive close to Holmes told CNBC the embattled CEO saw nothing wrong with her spending while running the life support company.

“Having three assistants at any given time was not tax-wise,” says the former Theranos manager, who asked not to be named. “It is up to your judgment and your decision to know the financial state of the company.”

Holmes’ meteoric rise was captured in countless high profile media appearances with world leaders, creating her image as a business star.

“She immediately became a favorite for a product that wasn’t even on the market,” said the former CEO. “Elizabeth was being touted as the next Steve Jobs and suddenly invited to sit on stage with Bill Clinton. Part of that was her own business, but when people put you on stage with VIPs it validates your brands.”

Reality collapsed in 2018 when Theranos’ shortcomings and inaccuracies were exposed through an investigation by the Wall Street Journal.

The judge is expected to make decisions that the jury will hear evidence of this week.