Elizabeth Holmes smiles in the stands as her trial draws to a close

I expected more fireworks from a cross-examination of former Theranos boss Elizabeth Holmes. Instead, today was an incoherent day with questions without a clear narrative review. I do not know why the government chose to send a hitman who did not know when to turn the knife.

The Armed Forces presented a strong story in its direct investigation. Holmes was a young CEO who believed in Theranos’ technology and had some very skilled advisers who made her believe it was real. It was real intellectual work. Holmes never sold her shares. And even though she had done nothing wrong, she was also abused by her boyfriend, Theranos̵[ads1]7; president Sunny Balwani, and perhaps that made her judgment hazy. (Balwani is Holmes’ co-defendant, but he is tried separately.)

To counteract this, the prosecution had to show Holmes full control. She faces 11 cases of wire fraud and conspiracy to commit wire fraud – central to proving that the charge shows that she deliberately lied. On the first day of direct testimony, prosecutor Robert Leach drove control of her home: Holmes owned most of the company. She could have fired anyone there, including both Balwani and her entire board. Balwani had not kept any secrets from her about what was going on in the laboratory.

The day today was more scattered. Leach scored some points, but he did not lead through the narrative thread about Holme’s control. Here is a brief overview of the cross-examination:

• Holmes admitted that Theranos units were not on medevac helicopters, as several investors claimed Holmes told them
• Holmes knew it would be wrong to tell an investor that Theranos did not use third-party machines
• Holmes acknowledged that various financial estimates were given to investors and people who calculated Theranos’ stock option values
• Holmes knew there were a bunch of things wrong in a big one Fortune article, but promoted it nonetheless
• Emails showed that Theranos made special preparations for demo tests and that they did not report results they had problems with
• A slide show from 2010 from a Theranos researcher, which Holmes quoted as part of his belief in technology, was future-oriented and contained more ambitions than facts
• Patents are not the same as working units
• The published journal articles, which Holmes also cited as part of her belief in Theranos technology, were after the period in which the alleged fraud took place.
• Holmes knew that the CMS inspection in 2015 went badly

If it was a theme, it was that Holmes did not remember many incidents. But given how the defense delayed the trial, it seems possible – after all, much of this was more than five years ago, and some of the testimonies concerned things from 10 years ago. It’s easier to say “I do not remember” about events that happened 10 years ago than it is to say it about something that happened yesterday.

Personally, I was annoyed because a promised discussion about “trade secrets”, which Holmes had offered as a reason why she did not tell people about Theranos’ use of modified third-party machines, barely came up. (Leach said we were going to trade secrets last week, when Holmes used the term extensively in her responses.) Some companies misuse trade secrets to protect information that has no competitive use – mainly to keep consumers in the dark. Theranos’ use of trade secrets can undoubtedly fall into this category! But I guess we do not find out, because Leach did not come up with this argument.

Helicopters and other military toys

Several investors – Lisa Peterson, Brian Grossman and Bryan Tolbert – told the court that Holmes said the Theranos units were used by the military, either at medevacs or in theaters in places like Afghanistan. Their testimony was repeated by Steven Burd, CEO of Safeway, one of Theranos’ business partners, and by Roger Parloff, the journalist who wrote a Fortune article that has been heavily cited in the trial.

Holmes testified that Theranos units were not used by the military, except in a small fire investigation. She agreed that it would be wrong to tell people something else. And she said she never told anyone that Theranos’ units were used on military helicopters. “I do not think I said that,” she said.

She also testified that it would be wrong to tell a potential investor that Theranos did not buy any third-party devices. But we did not delve into why Holmes practically omitted the Theranos spring use of third-party devices; Holme’s apology was a trade secret, and the prosecution did not respond convincingly. It may have been useful to suggest that it was a sin of omission here – that Holmes had functionally lied by withholding information.

Nor did the prosecution.

Weird income forecasts

The first witness in the trial, Danise Yam, had testified that she received income forecasts from Holmes to send to an analysis company that priced Theranos’ stock options. These figures were remarkably smaller than what Holmes showed investors: showing a forecast of around $ 53 million in revenue in 2015 and $ 153 million in 2016. In documents received by investors, 2015 revenue was estimated at $ 140 million and 2016 revenue was expected to be 990 million dollars. These are extremely different numbers!

Holmes had no good explanation for why these figures were so radically different, suggesting that there might be something to do with a pharmaceutical contract. Leach knocked it down.

It does not look good that those who priced the options received lower estimates than potential investors – either the options were underpriced or the investors were misled. This is where I expected Leach to ask more questions: Why were the models different? If it was because of different methods, why were they chosen? Who chose them? Why did Holmes allow this?

Instead, he went on to his next topic without further ado.

looking for blood?

Roger Parloff’s article for Fortune had put Theranos on the map for many people. Holmes claimed that she did not send it to shareholders – just before we saw an email from Theranos to shareholders, which linked the article. She also used it in investor presentations, even though she knew there was something wrong with the article. Holmes made no effort to rectify these things.

We went through the article. There was no mention of modified third-party devices; instead, the article claimed Theranos did not purchase third-party analyzers. That was wrong, Holmes admitted. Theranos offered no more than 200 tests, as the article claimed, Holmes said. And it was not true that Theranos’ laboratories took up a fraction of the space of conventional laboratories, Holmes said.

Leach could have lingered on Holmes’ lack of corrections to the article, as her defense team had lingered on how Holmes did not receive negative feedback directly from pharmaceutical companies. He did not.

Demo derby

Leach then tried to show that Holmes had misled investors by checking their experience in product demonstrations. To do so, some test results were suppressed. In other cases, Theranos employees made plans to make sure Potential investors received fingerprints – which Theranos described as its revolutionary technology – instead of conventional venous features.

In an email thread from October 2014, Theranos employees prepared for visits from potential investors. People from BDT Capital Partners should have their blood taken. «Assumptions here from EAH [Elizabeth A Holmes] that we must not make venous drawings, and we can not tell them that their order gives venous if it does, “Christian Holmes wrote in an email.

He then set up scenarios for what to do if venous traits were needed. One possibility was to tell the members of the group that certain tests could not be done. Was it to hide from BDT Capital Partners that Theranos were relying on their ability to counter-attack? No, says Holmes. Ultimately, BDT Capital Partners did not invest.

For a Walgreens demo in 2013, Therano’s top management intervened again. Several results were beaten because “these are all about to become empty, possibly abnormal,” Therano’s VP Daniel Young wrote in an email. Theranos did not tell Walgreens that they took these tests or why, even though Walgreens was a business partner. Leach pointed out that Holmes could instead have chosen to have an honest discussion about some of Theranos’ struggles with the tests. She chose not to.

The believer?

During Holmes ‘direct examination, her defense team drew up a slide show from 2010 as proof that Theranos’ technology was genuine. Leach pointed out that in slide after slide, the scientist wrote in the future tense. It was about technology potential. In the slide show, there was a discussion about “candidate technologies”, with many “TBDs.” That meant “being determined,” Holmes confirmed.

“There was still work to be done,” Holmes admitted.

In the same way, Theranos ‘patents were the subject of much discussion of Holmes’ defense. But patents are not the same as functioning units, Leach pointed out. He then withdrew Holmes’ very first patent. The device it described does not exist. “Not yet,” Holmes said, laughing.

The defense had also pointed out that Theranos had published peer-reviewed work on their systems. Leach responded by asking Holmes to read the dates in the newspapers. All were sent in 2017 – and could therefore not have affected her state of mind during the period the government says that fraud was committed.

End interview

Leach pointed out that Holmes had been kept informed of how badly the regulators ‘inspection of Theranos’ laboratory had gone through Balwani over text. He also showed an email that provided a schedule for Holmes, who had taken a flight to Florida to receive an award on the first day of the inspection. (The schedule noted that Holmes had to be physically present at a lunch to get the award.)

The inspectors conducted an exit interview with Theranos before leaving. Holmes was there. Leach asked if Holmes was told that the laboratory would be found to endanger patients’ health, which Holmes vehemently denied. She was shown a document the rest of the court did not see – and said it did not refresh her memory. Holmes said she thought she talked to inspectors about what Theranos had done properly. It was not entirely clear what the point of this interrogation line was.

And with that, the cross-examination stopped. Holmes seemed entertained in the stands, and often smiled or laughed at Leach. Maybe she sensed that she had the upper hand.

Here’s the thing with stories: people remember them. They form an organizing backbone for facts, making facts more memorable. Holmes’ defense made an emotional case with a narrative consistent line – easy to remember. But Leach’s incompetent response did not give the jury another story to counter, and it certainly did not give the emotional blow to Holmes’ direct testimony. When I left the court, I had a clear feeling that the prosecution had rejected a first-class opportunity.

Holmes’ lawyers will have a chance to ask her more questions tomorrow, and potentially punch more holes in the government’s case and reinforce their own narrative. After she leaves the stands, there is very little left to hear – Holme’s defense has been skeptical as to whether they will call a new witness. They may not have to.