Category: Elizabeth Holmes trial

• Theranos founder Elizabeth Holmes finished seven days of testimony this week in her fraud trial.
• She said she wasn’t told the lab posed “immediate jeopardy” to patients.
• She recalled trying not to “ignite” Ramesh Balwani, whom she says showed up at her church after they split.

Lab trouble

Holmes testified this week that she knew around September 2015 that Theranos’ inspection by the Centers for Medicare & Medicaid Services was going poorly. She said she didn’t recall being told the lab posed “immediate jeopardy” to patient health, according to The Verge.

Holmes said she had believed Theranos’ lab was “excellent,” and Ramesh “Sunny” Balwani, who is her ex-boyfriend and Theranos’ former president and COO, had told her it was world-class. She said Theranos disclosed its use of modified third-party devices to its board of directors, the FDA, and the CMS.

Holmes denied acting to hide Theranos’ use of venous draws from potential investors. However, an email sent in preparation for potential investors showed her brother, Christian, who worked in product management at Theranos, writing, “Assumptions here from EAH [Elizabeth Anne Holmes] that we must not do venous draws, and we cannot tell them their order prompts venous if it does.”

Theranos’ use of third-party devices

Holmes testified that she knew between 2010 and 2014 Theranos had purchased third-party analyzers and was using them for tests; the goal was to only use Theranos’ miniLab exclusively even though that hadn’t yet happened by 2014, she said.

Holmes said the HIV test that previous witness and Theranos patient Erin Tompkins took, for which she received a false positive result, had run on a commercial device, not a proprietary Theranos one, according to The Wall Street Journal.

Holmes admitted she never told journalist Roger Parloff, who wrote a glowing Fortune article on Theranos, that the company was using third-party devices.

“I think I could have handled the communications differently,” she said. Holmes pointed out several inaccuracies in the piece, including reporting that Theranos didn’t use third-party analyzers and that it offered more than 200 tests without the need for a syringe.

Trade secrets

Jurors heard Theranos’ trade secret policy, which Holmes has frequently leaned on while testifying as rationale for some of her actions.

“We had a huge amount of invention that was happening in our laboratories,” Holmes said. “We had teams of scientists and engineers that were working really hard on coming up with new ideas for patents and trade secrets, and we needed to figure out how to protect them.”

Holmes has said she didn’t tell Walgreens about Theranos’ use of third-party machines because the modifications the company made to such machines were trade secrets, according to CNN. Prosecutors got her to acknowledge that, despite such trade secret concerns, Theranos sent devices to Walgreens to review, trusting the company not to reverse-engineer them.

Holmes tried not to “ignite” Balwani

The prosecution brought up Holmes’ texts with Balwani, including the fact that she often seemed to repeat messages he sent. Holmes said she did this because Balwani often vented over text and she tried “not to ignite him” by repeating things he said to be supportive and show she was listening, according to CNBC. Balwani took a more active role in the lab around November 2014, when former lab director Adam Rosendorff left Theranos. Holmes said Balwani was the most important advisor to her as CEO and that after their break-up, which she called “a process,” he’d show up at her church and a place she frequently went running. 

Holmes pitched what Theranos could be

“There were people that were long-term investors and I wanted to talk about what this company could do a year from now, five years from now, 10 years from now,” Holmes testified, according to NBC News.

Jurors saw slides prepared by late Theranos employee Ian Gibbons that Holmes has said influenced her understanding of Theranos’ testing abilities. Holmes acknowledged, as prosecutors elicited, that the company only had prototypes of its 4.0 series by that point and that Gibbons’ presentation spoke to what Theranos might one day achieve, not what it could do at the time.

Holmes acknowledged she knew investors lost money but said she didn’t mislead them about Theranos.

Shortly after, the defense rested its case. Closing arguments begin Thursday.

• Theranos founder Elizabeth Holmes took the stand again in her federal fraud trial this week.
• Holmes testified that her ex and former COO, Ramesh “Sunny” Balwani, abused her. 
• She described trying to kill an exposé and said she wished she’d listened to a whistleblower.

Holmes says Balwani abused her

Holmes testified Monday that Ramesh “Sunny” Balwani, her ex-boyfriend and Theranos’ former president and COO, physically and emotionally abused her. The two met during a trip to China when Holmes was 18 years old and Balwani was 37. Holmes said, after being raped while a student at Stanford University, she decided to drop out to build Theranos. She told Balwani she had been raped, and “he said that I was safe now that I had met him,” Holmes testified.

The Theranos founder said Balwani also sexually abused her, though. “He would force me to have sex with him when I didn’t want to because he would say that he wanted me to know he still loved me,” Holmes said, according to The New York Times.

Jurors saw notes Holmes wrote on her phone after the alleged assault.

“Don’t enjoy literally anything about it or who I am if I did it. Hurts so much. So so much. Can’t focus on anything except why? Why hurting myself? Can’t even move let alone do sit-ups or actually sit up. Lying swollen. Literally,” the notes read, according to The Verge.

“He told me I didn’t know what I was doing in business, that my convictions were wrong, that he was astonished at my mediocrity, that if I followed my instincts I was going to fail and that I needed to kill the person I was to become what he called a new Elizabeth that could be a successful entrepreneur,” Holmes said, according to CNBC.

Holmes said Balwani was behind a series of guidelines for her behavior and instructions for her that outlined “the pursuit of success in business.” More texts between Holmes and Balwani were also recently made public as submitted evidence; they reveal some tensions between the two of them.

Balwani’s lawyers have previously denied Holmes’ abuse allegations.

Holmes said Balwani didn’t control her statements to investors, board members, business partners, and journalists despite the abuse she alleges.

Holmes tried to quash bombshell investigation

Holmes said she was “very worried” about The Wall Street Journal’s Theranos investigation and the possibility it would expose trade secrets. She emailed the Journal’s owner, Rupert Murdoch, who had also invested $125 million in Theranos, hoping to kill the story.

Holmes called her handling of the story “a disaster,” adding, “We totally messed it up.”

Holmes: Others were in charge

Holmes testified that Balwani managed the lab’s operations, and the lab’s directors and other leaders made the calls when it came to clinical and scientific decisions. Pressed by prosecutors, Holmes admitted she ultimately had the authority to fire anyone as CEO. When asked if the buck stopped with her, she testified, “I felt that,” according to The Verge.

Theranos’ handling of whistleblowers

An email from 2014 with concerns raised by whistleblower Tyler Shultz was presented in court with Holmes’ response: “Tyler these are very, very serious comments and allegations you’re making. I am going to have the teams go through this line by line so it will take some time before I get back to you on this.”

Holmes said she relayed Shultz’s message to Theranos’ then-senior scientist, Daniel Young, and felt confident he assuaged his concerns. She also said she regretted Theranos’ treatment of another whistleblower, Erika Cheung, and admitted Cheung was right in hindsight, according to NBC News.

 “I sure as hell wish we treated her differently and listened to her,” Holmes said.

Holmes denied prosecutors’ claims that Theranos tried to intimidate or retaliate against Shultz and Cheung. 

• Elizabeth Holmes has said Ramesh Balwani, her ex and Theranos’ former president and COO, abused her.
• Text evidence in Holmes’ fraud trial shows proclamations of love but also tensions between the two.
• A text in one exchange says, “Don’t try to engage with me next time. Seems Like it won’t work.”

Another batch of texts between Elizabeth Holmes and her ex-boyfriend has been submitted as evidence in her criminal fraud trial, offering a window into their past romantic relationship as the Theranos founder testifies he abused her.

Holmes testified earlier this week that Ramesh “Sunny” Balwani, Theranos’ former president and COO, emotionally and sexually abused her during their relationship.

Holmes has said Balwani was the force behind a series of behavioral guidelines and instructions for managing people and time for her to follow; both of these documents were also submitted into evidence this week.

Holmes’ attorneys have indicated they may argue she wasn’t acting of her own will — but rather was following Balwani’s instructions — at the time the government alleges she acted to defraud investors, doctors, and patients. (Balwani also was charged with fraud; his trial is scheduled to begin in January).

Here are some key texts from the latest round of messages: 

• “When your family is here I feel lonely bcz u spend a total of 10 seconds with me a day,” Balwani messaged Holmes in November 2013. “I tried so hard to engage you. You had no interest,” Holmes said later that day. “Don’t try to engage with me next time. Seems Like it won’t work,” Balwani responded.
• “My new life as of this night and forever more: total confidence in myself best business person of the year, focus, details excellent, don’t give what anyone thinks, engage employees in meetings by stories and making it about them (ie prepare well),” Holmes texted Balwani in 2014. She then texts “no response?” 10 minutes later. “Awesome. U r listening and paying attention,” Balwani replied. 
• “I’m sorry I wasn’t stronger for you this morning. That is my responsibility and my role. I will never let that happen again,” Holmes said in a February 2015 message. “I am strong enough for me and u and then some. I don’t need u to be strong for me,” Balwani replied. Holmes said in response, “I have the privilege of being able to calm you as a mother energy” and later on, “my job is to love you when you’re stressed.”
• “You are speaking with everyone in your giddy voice – excessive use of ‘awesome,'” Balwani told Holmes in April 2015. “Thank you thank you,” Holmes sent back.
• “I have molded you,” Balwani said in May 2015.
• “U r rambling now. Let’s stay focused,” Balwani said in June 2015.
• “I am sorry for last night. I will get better,” Balwani texted Holmes in August 2015. “I love you,” Holmes responded. “Ok. Entire flight was feeling really bad and sad for last night. I am really sorry,” Balwani replied, followed by a second text, “I need to change my life and I will.”

“I think this is weak tea for building a case of emotional abuse that would make someone not responsible for their behavior,” forensic psychiatrist Dr. Ziv Cohen told Insider. “You would need to see much stronger evidence of emotional abuse to be confident that it was present. And if it was present, you’d need further really specific examples to show how it prevented a person from following the requirements of the law.”

Having Holmes testify is a “clever” defense strategy because she’s a charismatic, persuasive communicator but also because her allegations against Balwani are “pushing a lot of buttons in us, the viewers who care about issues like intimate partner violence and abuse of women,” Cohen says.

“It could be a very good distraction for the jury to move their eye from looking at fraudulent behavior, looking at misleading statements, looking at all the evidence the government has presented and making it more of a trial about whether or not she had an abusive relationship with Sunny Balwani,” he added.

You can find all of the texts here.

• The fraud trial of Theranos founder Elizabeth Holmes has run through its 11th week.
• In a surprise move from the defense, Holmes took the stand late Friday afternoon.
• Here’s everything that happened in the trial in its eleventh week.

The prosecution rests

Prosecutors rested their case Friday after nearly three months of testimony from 29 witnesses, including doctors, patients, investors, and ex-employees.

Holmes takes the stand

In a surprise move late Friday, the defense called Holmes to testify. Holmes recalled her early vision for Theranos’ technology to be a pill, and then a patch, that could administer medicine; the idea changed to machines when she learned “people were interested in a benchtop or tabletop device.”

“We worked for years with teams of scientists and engineers to miniaturize all the technologies in the laboratory,” she testified.

Holmes said she met venture capitalist Donald Lucas during Theranos’ Series B round through someone who went to college with her father; she also described meeting subsequent investors Chris Lucas and Oracle founder Larry Ellison.

Donald Lucas “began a very comprehensive diligence process,” she said, according to CNBC. “He hired a law firm to review our patents. He asked us to get an audit of our financials. He wanted copies of our contracts.”

Holmes said she offered to put investors in touch with pharmaceutical companies that Theranos was working with and that Theranos had been in talks with Bristol Myers Squibb, Novartis, GlaxoSmithKline and Pfizer, signing contracts with the latter two in 2006. Holmes said she told investors about these contracts. 

Investor: Theranos “forced us to rely on the representations they made”

Prosecution witness Brian Grossman, of hedge fund PFM Health Sciences LP, which invested $96 million in Theranos, recalled meeting Holmes in 2013 and being told the company’s technology was being used by the military and major pharmaceutical companies, according to The Verge. He also said he took a Theranos test at a Walgreens and asked former COO and president Ramesh “Sunny” Balwani why it wasn’t a finger-stick test and why it took longer than advertised, according to The Wall Street Journal.

“He told me one of the tests my physician had ordered was a highly unusual test,” Grossman testified.

Grossman said Balwani denied his requests to speak with representatives from Walgreens and UnitedHealthcare, with which Theranos claimed to have a partnership. Grossman says Balwani’s refusals “forced us to rely on the representations they made to us,” The Verge reports.

Patient received false positive HIV test

Erin Tompkins testified about taking a Theranos test at an Arizona Walgreens in 2015 that showed she had an HIV antibody. She said she’d never been diagnosed with HIV or AIDS before and tried contacting someone at Theranos’ lab about the result but was never able to speak with a scientist or medical professional there, according to CNBC.

“I was quite emotional at the time,” she said.

A few months later, and again this August, Tompkins took an HIV test elsewhere, testing negative both times.

Reporter recalls interviews with Holmes

Journalist Roger Parloff, whose 2014 Fortune cover story on Theranos helped launch Holmes to prominence, said Holmes told him company machines could perform tests for 1,000 medical codes, according to CNN; Theranos’ website said it could perform 200 tests. According to his testimony, Holmes denied any use of third-party machines. 

After a 2015 Wall Street Journal investigation found Theranos’ testing abilities were very limited, Parloff asked Holmes how many tests Theranos machines could perform as of the date listed in the article. Holmes responded, “50, 60, maybe 70,” which Parloff says was the first time he learned the devices couldn’t do the 200 tests advertised, according to the Journal.

You can catch up on Week 1 here, Week 2 here, Week 3 here, Week 4 here, Week 5 here, Week 6 here, and Week 7 here, Week 9 here, and Week 10 here. You can read how Holmes wound up on trial here and see the list of potential witnesses here. Everything else you need to know about the case is here.

• All four of Theranos’ former lab directors have testified in founder Elizabeth Holmes’ fraud trial.
• They detail voiding up to 60,000 tests, being left in the dark, and how Holmes reacted to concerns.
• Here’s everything we’ve learned so far about Theranos’ issues in the lab, based on their testimony.

Theranos launched despite lacking test validation

Adam Rosendorff, Theranos’ lab director from April 2013 to November 2014, testified he tried to delay the launch of Theranos’ devices for patient use because of inaccurate results, according to The Wall Street Journal. He asked founder Elizabeth Holmes for more time and staff to prepare for the launch, noting that, “She was very nervous. She was not her usual composed self.” Holmes decided to proceed with the launch despite his concerns and the fact that none of Theranos’ tests had been validated, Rosendorff said.

He also said he was responsible for coming up with “reasons other than test performance” to explain unusual test results to doctors and that Theranos had no formal proficiency testing protocol.

In November 2014, Rosendorff emailed Holmes, “I feel really uncomfortable with what is happening right now in this company. I am feeling pressured to vouch for results that I cannot be confident in.”

“How sad and disappointing to see this from you,” Holmes responded, according to The New York Times. “Outside of the fact you’ve never emailed me on any concerns you allude to there before but now email this, you know from every conversation we’ve ever had together how fundamental it is to all of us for you or any other employee never to do anything you’re not completely confident in.”

Co-directors left in the dark about lab employees, including each other

Lynette Sawyer and Sunil Dhawan were lab co-directors in 2014 and 2015 but never met. Dhawan, who was a dermatologist for Theranos’ former president and COO, Ramesh “Sunny” Balwani, said he didn’t know then that he was sharing the role with Sawyer.

Sawyer said she stayed at Theranos longer than her temporary contract stipulated, noting Balwani was “pushy” in asking her to stay longer, according to The Wall Street Journal.

“I was very uncomfortable with the lack of clarity about the lab,” she testified.

Sawyer added that she never visited the lab, met Holmes, or reviewed Theranos machines’ data. Instead, her job involved signing documents concerning tests performed on third-party devices.

Dhawan said he never met lab employees, physicians, or patients and, between November 2014 and the summer of 2015, he only visited the lab twice, working no more than 10 hours, according to CNBC. Dhawan says his work, too, primarily consisted of signing documents.

50,000+ tests were voided because devices “were not performing”

Kingshuk Das was Theranos’ fourth lab director, from 2016 until he was laid off in 2018, just months before the company collapsed. He says when he joined, he wasn’t aware of Theranos using its proprietary machines for any tests, according to The Wall Street Journal.

Theranos voided every test performed on its Edison machines during 2014 and 2015 because “these instruments were not performing from the very beginning,” Das said. This came out to 50,000 to 60,000 tests, he estimated. Patients got corrected reports saying “VOID,” and Theranos never used those machines again.

Das was tasked with addressing concerns raised in a January 2016 report from the Centers for Medicare and Medicaid Services, a federal regulator. Following a November 2015 inspection, the agency found Theranos didn’t comply with federal rules for facilities that test human specimens, according to CNBC. The report also said, “The deficient practices of the laboratory pose immediate jeopardy to patient health and safety.”

Troubling data prompted a lab closure

Das also discussed his decision to close Theranos’ “BUGS lab.” In April 2016, after reviewing data for an HIV test performed on a third-party device, Das believed there were issues with the test and recommended stopping further use of that test and all others carried out in the BUGS lab, according to The Wall Street Journal. Das said Holmes supported the closure.

• Week 10 of Theranos founder Elizabeth Holmes’ fraud trial has concluded.
• Jurors learned a federal regulator said Theranos’ lab posed “immediate jeopardy to patient health.”
• Here’s everything that happened in the trial in its tenth week.

Former lab director unaware of proprietary device

Lynette Sawyer, Theranos’ former lab co-director for roughly six months in 2014 and 2015, continued her testimony, saying she didn’t know what Theranos’ proprietary nanotainer was, according to KTVU. This was a small vial intended to hold the blood samples from Theranos’ finger-stick tests.

Sawyer said she stayed at Theranos longer than her temporary contract stipulated at the request of Theranos’ former president and COO, Ramesh “Sunny” Balwani, even though she wanted to leave after growing “uncomfortable with the lack of clarity.”

Theranos voided as many as 60,000 test results over a 2-year period

Kingshuk Das, who was Theranos’ lab director from 2016 to 2018, told jurors that when he joined Theranos he wasn’t aware of any tests that used its proprietary machines, according to The Wall Street Journal.

Das said he raised questionable test results with Holmes, including tests that showed unusual levels of prostate-specific antigen, or PSA, in women according to CNBC. “Females should generally not have PSA detectable,” he testified. Holmes responded that rare breast cancers could be behind the abnormal results, an explanation Das said “seemed implausible.”

Das also said he decided to void every test Theranos performed on its proprietary Edison devices in 2014 and 2015, totaling anywhere from 50,000 to 60,000 tests. “These instruments were not performing from the very beginning,” he testified, adding that Theranos never resumed testing on those machines.

Jurors also heard about a report sent to Theranos from the Centers for Medicare & Medicaid Services in January 2016 following an inspection of the company’s lab in November 2015. It said that “the deficient practices of the laboratory pose immediate jeopardy to patient health and safety,” according to CNBC.

Das said he didn’t know until after he joined Theranos that it was under investigation by the Centers for Medicare & Medicaid Services.

“Hostile” behavior from Holmes’ ex and former COO

Alan Eisenman, a retired money manager and financial planner, said he first invested in Theranos in 2006 after Holmes told him that Oracle cofounder Larry Ellison was a board member and investor; that Theranos had contracts with major pharmaceutical companies; and that Theranos expected to generate $50 million to $60 million in revenue in 2007 and $200 million in 2008. (Theranos had practically no revenue through at least 2014.)

Eisenman said Holmes initially gave him quarterly updates on the company but later stopped.

“There was no information coming from the company. To me, that’s a sign of trouble,” he said, according to The New York Times. “Management didn’t like the fact that I was trying to communicate and get information.”

Despite these issues, Eisenman invested another $99,990 in Theranos in 2013. His family invested nearly $1.2 million in Theranos over the years.

Eisenman spoke of Balwani being “hostile” and “aggressive” towards him. In response to an email from Eisenman about potentially selling his shares, Balwani wrote, “Your emails are insulting full of inaccurate statements and wasteful of our time. Our next response to this email and all your future emails will come from our counsel.”

At one point, Theranos offered to buy Eisenman out of his investment at five times its value.

An unexpected announcement

Assistant US Attorney Jeffrey Schenk said Wednesday that the prosecution will likely rest its case next week. The government has called 24 witnesses in the 10 weeks of the trial so far. A previous court filing named upwards of 200 potential witnesses who could testify.

You can catch up on Week 1 here, Week 2 here, Week 3 here, Week 4 here, Week 5 here, Week 6 here, and Week 7 here, and Week 9 here. You can read how Holmes wound up on trial here and see the list of potential witnesses here. Everything else you need to know about the case is here.