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Elizabeth Holmes grilled by prosecutors at witness stand in her criminal fraud case: NPR




Elizabeth Holmes grilled by prosecutors at witness stand in her criminal fraud case: NPR

Former Theranos founder and CEO Elizabeth Holmes leaves the Robert F. Peckham Federal Building with her partner Billy Evans.

AMY OSBORNE / AFP via Getty Images


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AMY OSBORNE / AFP via Getty Images


Former Theranos founder and CEO Elizabeth Holmes leaves the Robert F. Peckham Federal Building with her partner Billy Evans.

AMY OSBORNE / AFP via Getty Images

When Elizabeth Holmes and Ramesh “Sunny” Balwani separated, her life was shattered.

“Nothing is real anymore,” Holmes told the jury in her federal fraud case she remembered thinking back in 2016.

“My whole foundation, my life, what I believed in, devotion to the company, was based on believing that he was this person,” Holmes said of Balwani, her ex-boyfriend and business partner to the now collapsed blood test startup Theranos.

“There was no way I could save our company if he was there,” Holmes said Tuesday. “And so, that was it.”

A day earlier, Holmes testified emotionally to the court that Balwani was a manipulative partner who emotionally and sexually abused her, just as she adored and instilled faith in him.

She said the abuse took place during the time when the prosecution claims that she and Balwani lied to investors and tricked patients and doctors about Theranos, which Holmes, now 37, founded as a 19-year-old.

The start-up was once celebrated as a biotechnological breakthrough and made Holmes one of the world’s youngest female billionaires before the company disbanded in a scandal.

On Tuesday, federal prosecutors had their first chance to question Holmes directly and offered another theory about the case: that Holmes was engrossed in the company’s internal work as CEO when it was involved in fraud, and that her relationship with Balwani, who faces a separate trial, was more romantic than Holmes’ portrayal.

Holmes and Balwani have both pleaded not guilty.

Intimate texts create unpleasant moments

In some of the more unpleasant moments of today’s testimony, Assistant American lawyer Robert Leach got Holmes to read troublesome text messages with Balwani in which she called him “my tiger” and Balwani wrote “I worship you.”

Holmes, who roared and sniffed as she recited the years-old messages to her ex-boyfriend, looked uneasy when Leach pressed her on the details of the lyrics.

“Would it surprise you to know that the word ‘love’ appears in the texts 594 times?” Leach asked about the amount of reports that the prosecution has convened as part of the investigation.

Holmes smiled at the question and replied, “No.”

During the interrogation, some members of the jury of seven men and five women looked uncomfortable and stared excitedly at pictures of the intimate text messages on the screens in the jury box.

The prosecutor emphasizes Holme’s power as CEO

The prosecution tried to emphasize in Holmes’ fifth testimony that her attempt since the start of the trial to put the blame on Balwani and other Theranos employees is not a sufficient defense, since she was the company’s CEO.

“Ultimately, all roads lead to the CEO?” Leach asked Holmes, and she agreed.

“The buck stops with you?” in Leach. Holmes replied, “I thought so.”

She had the power to kick Balwani whenever she wanted, Leach noted on several occasions. Holmes did not disagree.

The jury must find beyond any reasonable doubt that Holmes has deliberately tricked investors and misled patients into judging her. And the form of the jury’s discussions may depend on how credible Holmes comes across from the witness box.

Holmes faces the highest possible sentence of 20 years in prison, but if convicted, he will likely have far less time.

Holmes discusses “forged” documents from the pharmaceutical company

In one of the more startling statements about direct investigation last week, Holmes admitted that she herself attached the logos to drug companies such as Pfizer and Schering-Plow without their permission on documents given to Walgreens to strengthen the company’s bona fides.

At the cross-examination of the prosecution on Tuesday, Holme’s memory darkened.

Leach asked her if she had Pfizer’s permission to put the report on the drug giant’s letterhead, and Holmes said, “I do not know. I do not remember this process.”

The test validation report originally said that it was prepared for a doctor, but it was deleted before it was shared with Walgreens. Was it removed by Holmes, Leach asked?

“I think so,” Holmes said.

When he was printed on another document from another drug company, GlaxoSmithKline, Leach asked Holmes if she had changed the language of the report, and Holmes, again, testified that she did not remember.

The government says Holmes retaliated

The government opened its cross-examination of Holmes by resetting the months before journalist John Carreyrou, then with Wall Street Journal, began investigating Theranos for a series of stories that helped initiate the regulatory investigation that triggered the company’s death.

“We were very concerned about Mr. Carreyrou’s story,” Holmes testified, saying earlier that the protection of trade secrets was the main concern. In a text to Balwani, she wrote that she and Balwani “must get ahead of it all.”

Leach asked Holmes to try to shake down Theranos whistleblowers suspected of working with Carreyrou to expose the company. Prosecutors said Holmes’ response included hiring private investigators to spy on ex-Theranos employee Erika Cheung and try to get Tyler Shultz, a one-time employee and the grandson of former Secretary of State George Shultz, to sign a statement confirming that he never spoke to Journal, as well as name all the employees he knew who spoke to the newspaper.

From the stands, Holmes acknowledged that the company’s actions against Cheung and Shultz were a mistake.

“The way we handled it Wall Street Journal The process was catastrophic, “Holmes testified.” We totally messed it up. “

Leach then showed an email from September 2016 in which Holmes wrote to Rupert Murdoch, as owner Journal and who invested more than $ 100 million in Theranos, hoping he would intervene to block Carreyrous’ reporting. Murdoch nods.

Carreyrou, who sat at the back of the courtroom, wrote down notes for the podcast series he hosts focused on the trial.

The “Mad Money” performance played in the courtroom

Following the publication of Carreyrou’s story which raised questions about the number of tests Theranos was able to perform and the accuracy of the company’s technology, Holmes made a now famous defiant appearance on CNBC’s “Mad Money” with Jim Cramer.

On Tuesday, a clip from that interview was played for the jury from the witness stand while a delighted courtroom watched. Holmes looked on and stared blankly.

One of the claims in journals The report was that of the 240 blood samples Theranos offered, only 15 were treated with the company’s proprietary unit known as Edison. In the 2015 interview, Holmes told Cramer: “Every test we offer in our lab can be run on our proprietary devices.”

Holmes was then shown an email from former Wells Fargo boss Richard Kovacevich, an investor and board member of Theranos, asking exactly how many tests were performed on the company’s Edison compared to conventional laboratory equipment.

Leach pointed out how Holmes did not mention the use of commercial blood testing machines in response, and asked if Holmes now regrets it.

“There are many things I wish I did differently,” Holmes told the jury.

The prosecution’s cross – examination of Holmes is scheduled to resume on Tuesday.



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