Theranos: The key moments from Elizabeth Holme’s trial

Holmes, the former CEO and founder of the failed startup of blood tests Theranos, was found guilty of three counts of wire fraud and one count of conspiracy to commit wire fraud. She was found not guilty of three additional charges of wire fraud and one count of conspiracy to commit wire fraud. The jury did not rule on three cases of fraud.

A total of 32 witnesses were called to testify within 15 weeks, culminating in a lengthy testimony from Holmes himself. Federal prosecutors tried to deliberately mislead investors, doctors and patients about the potential of the company’s blood test technology for financial gain. Holmes’ defense, on the other hand, tried to undermine it by testifying that she was a true believer in technology, acted in good faith, relied on the expertise of others, and lacked the intention to deceive.

Holmes faces up to 20 years in prison and a fine of $ 250,000 plus redress for each count of wire fraud and conspiracy.

Holmes testifies to his own defense

One of the biggest unknowns on the way into the trial was whether Holmes would take a stand on his own defense. In November, the Theranos founder did just that, testifying for almost 24 hours over seven court days.
She faced questions from her own lawyers and state attorneys about the company’s journey from boom to crisis, her statements to investors and the board, and her role in the alleged fraud, and constantly presented herself as having acted in good faith to protect her company.

While Holmes was mostly calm and direct on the stand, even smiling as she answered some questions, she became emotional on several points as she talked about her ex-boyfriend and Theranos’ former president and COO, Ramesh “Sunny” Balwani.

Holmes and Balwani are facing the same fraud charges, and the latter's trial will take place next year.
In a tearful testimony, Holmes claimed that she was the victim of a decade-long violent relationship with Balwani, 20 years older than her, whom she met before starting with Theranos. She testified that he tried to control almost every aspect of her life, disciplining her eating, her voice, and her appearance. (Balwani has denied the charges in the court archives. He faces the same charges as Holmes and will be brought to court early next year. He has not pleaded guilty.)

She pointed to Balwani as being responsible for parts of Theranos that are relevant to the allegations, including overseeing the clinical laboratory and the company’s financial estimates. Holmes also said that she considered him the most important advisor to her at Theranos.

“He influenced everything about who I was and I do not quite understand it,” she said.

Holmes admits to having added pharmaceutical logos to Theranos reports

Among the many internal documents used by the prosecution to base its case against Holmes, two received particular attention: a couple of reports sent to Theranos’ investors with the logos of the pharmaceutical companies Pfizer and Schering-Plow prominent at the top. . While their location gave some witnesses the impression that these companies had prepared or at least sanctioned the reports, the prosecution determined that the reports were in fact made by Theranos.

In this courtroom sketch, Holmes is seen answering questions from defense attorney Kevin Downey.

In a striking moment, Holmes testified that she herself added pharmaceutical company logos in reports shared with investors “because this work was done in collaboration with these companies and I tried to convey it.” But Holmes also noted that she heard testimonies from witnesses who said they believed the reports indicated an endorsement of Theranos’ technology by the companies. She said she wished she had “done it differently.”

A former defense minister testified

Apart from Holmes, the most high-profile witness was James Mattis, a retired four-star general who served as Secretary of Defense in the Trump administration. Mattis was a member of Theranos’ famous board from 2013 to 2016 – as prosecutors said in their closing remarks, one of the ways Holmes relied on “borrowed credibility” to perpetuate his alleged fraud.

Mattis said he was interested in the unit’s possible military uses because he thought it could perform the range of blood tests the company claimed it could. “I would not be interested in it if it were not,” he said.

Former United States Secretary of Defense James Mattis leaves the federal court in San Jose, California, USA, on Wednesday, September 22, 2021.
But Theranos never deployed his blood tests on the battlefield, despite the fact that many government witnesses testified that they had been told by Holmes that the devices were used in Afghanistan or in military emergency services. Holmes acknowledged that the devices were never distributed in such a way, despite the effort to get to that point one day, but she denied allegations that she had told people anything else.

Mattis testified that at some point, after increasing scrutiny of the company’s test properties, “I no longer knew what to think of Theranos.”

Former Theranos lab directors take the stand

The witness who spent the most time on the stand, apart from Holmes, was Theranos’ former laboratory director Adam Rosendorff.
Rosendorff, revealed as the first and most important source for the former Wall Street Journal reporter John Carreyrou’s 2015 investigation that led to Theranos’ investigation, spent about six days at the booth in early October.

After leading Theranos’ laboratory from April 2013 to November 2014, Rosendorff said he left the company and felt “very skeptical” about the accuracy and reliability of the tests. He testified that he felt it “was a matter of my integrity as a doctor” not to stay in the company and continue to approve test results he “did not believe in.” He said he “came to believe that the company believed more in PR and fundraising than in patient care.”

Former Theranos lab director 'grilled' during six days in the trial against Elizabeth Holmes

In one of the foreign testimonies from the trial, jurors also heard from Rosendorff’s short successor as laboratory director, Sunil Dhawan.

Dhawan, a dermatologist, testified that Balwani – who had been a patient with him for about 15 years – asked him if he would take on the role of Theranos. According to an email exchange, Balwani told Dhawan “the time commitment is very minimal,” noting that it “would mostly be a guard consultant role.”

Dhawan said he worked only “five or 10” hours at Theranos between November 2014 and early summer 2015. He did not interact with any patients, doctors or Theranos staff during that time, he testified and visited Theranos only a few times. “I think I went, and then I went again. And that was about it,” he said.

Lynette Sawyer, another laboratory director who served after Rosendorff left, testified that she never set foot in Theranos’ laboratory, visited the company, saw any of the unit’s units or tests from units, and was only required to sign reports she received via e post, which she could not edit and which appeared to be from standard FDA-approved devices instead of Theranos’ proprietary devices. (During cross-examination by Holmes’ lawyer, Sawyer admitted that her job did not require her to join Theranos, nor did she ask for it.) Like Dhawan, she worked for Theranos for less than a year.

In his closing arguments, prosecutor Jeffrey Schenk returned to the testimony of the laboratory directors. “Dr. Rosendorff complains about accuracy, and asks them to do more skill testing. They replace him with are Sunny Balwani’s dermatologist who works five hours over six or seven months, and Lynette Sawyer, who works less.”

Billionaire families and conspicuous absences

Theranos’ list of major investors was a who’s who of corporate America – the billionaire family of former education secretary Betsy DeVos, the family behind the Cox Enterprises conglomerate and the Walton family to Walmart fame. Each was said to have invested $ 100 million or more in the startup.

While members of these families did not testify directly, jurors heard from Lisa Peterson, CEO of the DeVos Family Investment Fund, and Daniel Mosley, a real estate lawyer who introduced several of what he called “high-quality families” to Theranos and whose clients included Secretary of State Henry Kissinger.

Kissinger, who was one of Holmes ‘most vocal supporters and sat on Theranos’ board, was on the government’s list of possible witnesses, but ultimately did not take a stand. Another major Holmes supporter whose name was on the witness list, billionaire media mogul Rupert Murdoch, did not testify either.

But Murdoch’s name came up in the trial, when Holmes admitted in the stands that she wrote to him to try to kill Carreyrou’s Wall Street Journal exposure. (Murdoch is the CEO of News Corp, which owns The Wall Street Journal.)

Holmes expressed regret for the way she handled the situation. “I could not say more strongly, the way we handled the Wall Street Journal process was a disaster,” she testified. “We totally messed it up.”

Sara Ashley O’Brien contributed to this report.

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