San Jose, California – For four days, Elizabeth Holmes took the stand to blame others for the alleged fraud at his blood testing start-up Theranos. On the fifth day, prosecutors tried to make one thing clear: She knew.
During the cross-examination that lasted more than five hours on Tuesday, Robert Leach, the assistant US attorney and the case’s chief prosecutor, pointed to text messages, notes and emails with Holmes – and with her business partner and ex-boyfriend, Ramesh Balwani — to discuss the problems with Theranos business and technology. Mr. Leach had one thing in common: no one hid anything from Ms. Holmes. As chief executive of Theranos, he argued, he was to blame.
“Whatever happens in the company was your responsibility at the end of the day?” Mr. Leach asked.
“That’s what I felt,” said Ms. Holmes.
It was the culmination of three months of testimony and nearly four years of waiting. Ms. Holmes was charged In 2018 on charges of wire fraud and conspiracy to commit wire fraud. Prosecutors have given jurors evidence of counterfeit product demonstrations, forged documents and communications to show that Ms. Holmes deliberately misled investors, doctors, patients and the world about Theranos.
The outcome of his case has consequences for the tech industry at a time when there are booming start-ups. Gathering wealth, power and cultural cachet, Some start-up founders have been prosecuted for misleading investors as they attempt to bring their long-standing business ideas into existence. If convicted, Ms Holmes, 37, who has pleaded not guilty, faces up to 20 years in prison.
Theranos’ valuation reached $9 billion in 2015, with $945 million raised on Ms. Holmes’ promise that its blood testing machines could quickly and inexpensively perform hundreds of tests using a few drops of blood. He started the company in 2003 after leaving Stanford University.
But in reality, prosecutors have argued, Theranos’ machines could only perform a dozen tests, and they were unreliable. Instead, he secretly used commercially available Siemens machines. After that and other misrepresentations were exposed, Theranos quashed the results of two years of blood tests. It also settled lawsuits with investors and the Securities and Exchange Commission, eventually dissolved in 2018,
In her initial testimony, Ms. Holmes attempted to dismiss the allegations of fraud as too simplistic and a misunderstanding of her statements. He expressed ignorance of many of Theranos’ problems, stressing his lack of experience and qualifications to run a scientific laboratory.
Under cross-examination on Tuesday, Ms Holmes admitted to having made a mistake. “There are so many things that I wish I had done differently,” she said.
Theranos 2015. handled incorrectly Expose in the Wall Street Journal About problems with the company’s technology, she said.
“We totally messed it up,” said Ms. Holmes. He also admitted to reaching out to Rupert Murdoch, the owner of The Journal, who invested in Theranos, to quash the story.
Ms Holmes said she was also sorry for the way Theranos treated employee Erica Cheung raised concerns About the company’s laboratory practices. After Ms. Cheung left the company, Theranos hired a private investigator to trace her and serve her with legal threats.
“I bet as hell we treated her differently and listened to her,” said Ms. Holmes.
The testimony followed dramatic revelations about Ms. Holmes’ relationship with Mr. Balwani. On Monday, she said through tears that she was raped as a student at Stanford and that Mr Balwani had emotionally and physically abused her in the wake of that experience.
She accused Mr. Balwani, who is 20 years her senior, of controlling what she ate, how she presented herself and how much time she spent with her family. He said that he forced her to have sex with him against his will and told her that he had to “kill himself” in order to be reincarnated as a successful entrepreneur.
It was the first time that Ms. Holmes told her side of the story of Theranos’ rise and fall, which has been featured in podcasts, documentaries and screenplay series. The story of Silicon Valley’s arrogance and coming, Her testimony complicated that narrative, shedding new light on the behind-the-scenes relationship between herself and Mr. Balwani, which she had kept secret as her profile rose.
Ms Holmes tried to link her relationship with Mr Balwani to the fraud allegations, saying they affected “everything about who I was”, including Theranos. She said he kicked her out of the company and broke up with her when she learned that Theranos’ lab, which Mr. Balwani had visited, had major issues.
“There was no way I could have saved our company if it was there,” she said Tuesday.
Mr Balwani has denied the allegations of the attack. He was charged with fraud with Ms Holmes and will be tried separately next year. He has also pleaded not guilty.
During a long and elaborate day of testimony, Mr. Leach persisted in the relationship, using text messages between Mrs. Holmes and Mr. Balwani as evidence. He asked Ms. Holmes to read the text message, which showed him exchanging warm comments with Mr. Balwani. The pair called each other “tigers” and “tigresses” in the midst of a conversation about the creation of Theranos.
“No one can run this business except you and me,” Mr. Balwani wrote in an exchange.
After each, Mr. Leach asked Ms. Holmes to verify that he had just read an example of Mr. Balwani acting affectionately towards her. Reading the messages, Ms. Holmes cried a second time on the stand.
University of Minnesota Law School professor Jill Hussday, who has written a book on intimate partner violence and the law, said prosecution tactics may serve to undermine Holmes’s previous testimony, which builds on the jury’s understanding of abuse. depends.
“My gut is, it can be effective, because people have a lot of misconceptions about intimate partner violence, it’s constant, among other things,” Ms Hasday said.
The trial, which is due to end in December, will resume next week.
Erin Wu Contributed to reporting.