After Theranos founder Elizabeth Holmes’ emotional turns on the witness stand last week, the prosecution on Tuesday worked to turn the proceedings back to the most damning evidence against her.
Prosecutor Robert Leach, cross-examining Holmes at her criminal fraud trial in U.S. District Court in San Jose, showed jurors an email Holmes’ brother Christian, a product manager at the now-defunct Palo Alto blood-testing startup, sent to Holmes and former company president and chief operating officer Sunny Balwani. Holmes’ brother described an “action plan” to hide from a group of visiting potential investors that Theranos could not always use its much-hyped finger-stick method of blood collection, instead needing to draw blood from veins with a needle.
Holmes last week became emotional on the witness stand when she described alleged forced sex by Balwani, her former lover, whom she accused of controlling her life and work. A lawyer for Balwani has declined to comment on Holmes’ claims. Legal experts said Leach erred when he made Holmes read texts between her and Balwani, when she again became emotional, turning the focus of the proceedings away from earlier testimony unfavorable to Holmes.
Leach on Tuesday also went after Holmes over her pilfering of pharmaceutical company logos that she put on glowing Theranos reports, and showed the jury that Theranos sent the doctored reports, in a file titled “Exemplary Reports from Pharmaceutical Partners,” to an investor whom coding on the pages suggested was media titan Rupert Murdoch, who invested $125 million in Theranos. Leach also sought to strengthen connections between Holmes and problematic behavior by Theranos, for example by forcing her to admit that she knew the reports with the logos stolen from Pfizer and Schering-Plough were being sent to investors.
Leach further hammered on Theranos’ apparent concealment of its use of third-party machines for tests it could not run on its own analyzers. He also highlighted internal communications that showed Holmes, who has tried to distance herself from blood-testing errors and other problems in the Theranos lab, was kept informed about lab operations and problems, including a lab chief’s emailed lament to her in 2014 that he was “feeling pressured” to vouch for dubious test results.
Holmes, a Stanford University dropout who founded Theranos at age 19 in 2003, is charged with allegedly bilking investors out of hundreds of millions of dollars, and defrauding patients with false claims that the company’s machines could conduct a full range of tests using just a few drops of blood. She and her co-accused, Balwani, have denied the allegations. Balwani is to be tried next year.
Holmes was also forced to acknowledge that the head financial officer at Theranos gave her regular financial updates. Leach highlighted huge revenue projections provided to investors that the company slashed significantly a short time later, and got Holmes to admit that she had ultimate responsibility for the sharing of those projections. She testified later Tuesday that Balwani was responsible for Theranos’ financial modeling.
A 2013 internal email displayed to the jury showed that Theranos, offering testing at Walgreens drug stores during a short-lived partnership, had removed from patients’ test reports the results for four test types. Holmes acknowledged Theranos never told Walgreens there were problems with those tests.
After Leach finished cross-examination, Holmes lawyer Kevin Downey asked Holmes about her ‘Edison’ analyzer, the only Theranos machine used for clinical patient testing. Holmes testified that she was never informed about “systemic” problems with the analyzer, and did not find out about them until after a 2015 lab inspection by a federal regulator. The jury heard earlier that after the inspection, Theranos’ lab director voided all the patient results — more than 50,000 — from Edison machines. Holmes last week pointed to a team of experts she brought on after the inspection, arguing that she was seeking to fix the problems. On Tuesday, she said she also hired lawyers to review the Theranos website because, “I wanted to make sure that what we were putting up was right.”
Holmes also told jurors that Balwani ran lab operations, and lab directors were responsible for approving tests offered in the lab.
Downey also elicited from Holmes that although Theranos could only do 13 or 15 small-sample tests on is own machines, the use of modified third-party analyzers allowed Theranos to offer dozens more, covering many of the most-requested test types. Downey asked Holmes if patients would see which type of analyzer was in use. “They do not,” Holmes said.
Downey sought to cut the damage from the stolen-logos evidence, getting Holmes to testify that pharma giant GSK did not object to her putting the Theranos logo on a GSK report about Theranos, and that GSK also did not push back when she sent it a Theranos report saying GSK had “completed a comprehensive validation” of Theranos’ technology in 2008.
Holmes, responding to a question from Downey, said she had never kept secret from investors that Theranos had to avoid disclosing some information that involved trade secrets, which she said were a matter of survival for her company in the face of competition. She did not tell the author of a high-profile magazine article, or an investor, about her company’s use of modified third-party machines because “It would’ve been a violation of our own trade secret policy,” she testified.
Addressing the “action plan” to hide from the potential investors’ group — getting tested at Walgreens — the necessity for drawing blood from veins at times, Holmes said information was available in the public domain that Theranos was sometimes using venous draws.
Jurors also saw a 2015 email from an assistant to Holmes giving her two options to fly on a Florida trip via a chartered Gulfstream private jet, with one costing $71,700 and the other $85,500. Holmes fought successfully to keep from the jury certain evidence about her former high-flying lifestyle, such as luxury-brand names, but Judge Edward Davila has allowed prosecutors to present such evidence that is typical of a high-powered CEO.
Holmes faces up to 20 years in prison if convicted, plus possible restitution, the Department of Justice has said.
Source: www.mercurynews.com