Former Theranos founder and CEO Elizabeth Holmes leaves the Robert F. Peckham Federal Building with 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 partner Billy Evans.
AMY OSBORNE / AFP via Getty Images
When Elizabeth Holmes and Ramesh “Sunny” Balwani parted ways, her life fell apart.
“Nothing is real anymore,” Holmes told the jury during a federal fraud trial she recalled back in 2016.
Holmes talks about Balwani, the ex-boyfriend and business partner of now-collapsed blood-testing startup Theranos.
“There’s no way I could have saved our company if he were there,” Holmes said Tuesday. “And so that’s it.”
The day before that, Holmes give emotional testimony to the court that Balwani was a manipulative partner who had emotionally and sexually abused her, just as she loved and trusted him.
She said the abuse occurred during a time when prosecutors accused her and Balwani of lying to investors and defrauding patients and doctors about Theranos, which Holmes, now 37, set up when just 19 years old.
The startup was hailed as a biotech breakthrough and made Holmes one of the world’s youngest female billionaires before the company fell apart in a scandal.
On Tuesday, federal prosecutors had their first chance to question Holmes in person and come up with another theory about the case: that Holmes was absorbed in the internal workings of the company as a director. executive when it gets involved in a scam and her relationship with Balwani, who faces a separate trial, is more romantic than Holmes’ portrayal.
Holmes and Balwani both pleaded not guilty.
Intimate texts create uncomfortable moments
In some of the more uncomfortable moments of testimony of the day, Assistant U.S. Attorney Robert Leach made Holmes read copied text messages to Balwani, where she referred to him as “my tiger,” and Balwani wrote. “I adore you.”
Holmes, delighted and sniffled as he reread old texts to her one-time boyfriend, looked annoyed as Leach pressed her into the details of the messages.
“Were you surprised to learn that the word ‘love’ appears in the text 594 times?” Leach asked about the text messages that prosecutors had subpoenaed as part of the investigation.
Cracking a smile at the question, Holmes replied: “No.”
During the interrogation, several members of the jury of seven men and five women looked annoyed, nervously looking at images of intimate messages on the screen in the jury box.
Prosecutors stress Holmes’ authority as CEO
The prosecutor sought to emphasize during day five of Holmes’ testimony that her efforts since the start of the trial to blame Balwani and other Theranos employees were not a defense. full, as she is the chief executive officer of the company.
“After all, all roads lead to the CEO?” Leach asked Holmes, and she agreed.
“The buck stopped with you?” Leach said. Holmes replied, “I thought so.”
Leach has repeatedly noted that she has the right to fire Balwani whenever she wants. Holmes disagreed.
The jury must find a reasonable suspicion that Holmes intentionally misled investors and misled patients in order to convict her. And what shape the jury deliberations take may depend on how trustworthy Holmes is in the witness stand.
Holmes faces up to 20 years in prison if found guilty, but could face much less time if she is found guilty.
Holmes discusses ‘fake’ pharmaceutical company documents
In one of the more surprising statements about the in-person test last week, Holmes admitted that she herself stamped logos of pharmaceutical companies such as Pfizer and Schering-Plough without their permission on materials provided to Walgreens to strengthen corporate interests.
When cross-examined by prosecutors on Tuesday, Holmes’ recollection took a turn for the worse.
Leach asked her if she had gotten permission from Pfizer to put the report on the pharmaceutical giant’s letterhead, and Holmes said, “I don’t know. I don’t remember the process.”
The original test validation report said it was prepared for doctors, but that was removed before being shared with Walgreens. Leach asks if it was deleted by Holmes?
“I think so,” said Holmes.
When pressed into another document from another pharmaceutical company, GlaxoSmithKline, Leach asked Holmes if she had changed the language of the report, and Holmes, again, testified that she did. do not recall.
Government says Holmes retaliates against whistleblowers
The government opened up the cross-examination of Holmes by starting in the months before journalist John Carreyrou, then with The Wall Street Journal, began investigating Theranos for a series of stories that helped spark the regulatory scrutiny that brought into play the company’s downfall.
“We are very concerned about Mr. Carreyrou’s story,” Holmes testified, saying earlier that protecting trade secrets was a primary concern. In a message to Balwani, she wrote that she and Balwani “need to get through it all.”
Leach asked Holmes about trying to bring down Theranos accusers suspected of working with Carreyrou in exposing the company. Prosecutors said Holmes’ response included hiring private investigators to track down former Theranos employee Erika Cheung and attempt to arrest Tyler Shultz, a former Theranos employee. staff for a time and grandson of former Secretary of State George Schulz, to sign an affidavit asserting that he had never spoken to Journal, as well as name every employee he knew who spoke to the newspaper.
From a standstill, Holmes admits that the company’s actions against Cheung and Schultz were a mistake.
“The way we handle it The Wall Street Journal Holmes testified that the process was a disaster.
Leach then displayed an email from September 2016 in which Holmes wrote to Rupert Murdoch, who owns Journal and who invested more than $100 million in Theranos, hoping he would intervene to block Carreyrou’s reporting. Murdoch refused.
The appearance of ‘Mad Money’ in the courtroom
After publishing The story of Carreyrou Questioning the number of tests Theranos can perform and the accuracy of the company’s technology, Holmes appeared on the now-famous challenge on CNBC’s “Mad Money” alongside Jim Cramer.
On Tuesday, from the witness stand as a courtroom avidly watched, a clip of that interview was broadcast to the jury. Holmes stared, expressionless.
One of the statements in Journal reports that of the 240 blood tests Theranos offers, only 15 are processed using the company’s proprietary equipment called the Edison. In a 2015 interview, Holmes told Cramer: “Every test that we provide in our lab can be run on our proprietary devices.”
Holmes was then shown an email from former Wells Fargo CEO Richard Kovacevich, an investor and Theranos board member, asking about exactly how many tests were being done on Edison’s company compared with conventional laboratory equipment.
Leach pointed out how Holmes didn’t mention the use of commercial blood-testing machines in response, asking if Holmes now regrets it.
Holmes told the jury: “There are many things I wish I had done differently.
The prosecution’s cross-examination of Holmes is expected to resume on Tuesday.
