Former CEO also testified that she believed company’s proprietary blood-testing technology could perform ‘any’ clinical laboratory blood test
One relevant question in the federal fraud trial of ex-Theranos CEO Elizabeth Holmes was whether she would testify on her own behalf. That question was answered shortly after the government rested its criminal fraud case against the former Silicon Valley clinical laboratory testing company founder. Holmes took the stand in her own defense, a risk her defense team hopes will pay off in her favor.
During her first three days of testimony leading up to the Thanksgiving holiday break, Holmes—who faces 11 counts of fraud and conspiracy related to her tenure as founder and CEO of Theranos—made headlines by admitting she did personally put the logos of pharmaceutical giants Pfizer and Schering-Plough on reports she sent to Theranos investors and executives at Walgreens and Safeway. She expressed regret for doing so to the jury, but claimed her intent was not to deceive but to give credit to others.
“This work was done in partnership with these companies, and I was trying to convey that,” she testified, according to a trial coverage from Ars Technica.
When asked if she realized that others would assume the pharmaceutical companies—not Theranos—were the authors of the report, Holmes replied, “I’ve heard that testimony in this case, and I wish I’d done it differently.”
If found guilty, Holmes—who once claimed Theranos’ Edison proprietary blood-testing technology would to be able to complete as many as 200 clinical laboratory tests using a single finger-stick of blood—could face maximum penalties of 20 years in prison, a $2.75 million fine, and possible restitution.
The illustration above depicts ex-Theranos CEO Elizabeth Holmes testifying on her own behalf. Former Santa Clara County prosecutor Steven Clark, JD, told The Mercury News, “(T)he best person to say what Elizabeth Holmes’ intent was is Elizabeth Holmes, and that’s why I think she’s taking the stand. … I think the jury will like her.” That remains to be seen. But there’s no doubt that Clinical Laboratory Directors should take a strong interest in the outcome of this trail. (Graphic copyright: Vicki Behringer/Reuters.)
Holmes Testifies She Believed the Edison Device Could Perform “Any” Blood Test
In its trail coverage, NPR described Holmes’ first three days of testimony “as having involved deflecting responsibility, pointing to the expertise of the Theranos board of directors, lab staff, and other company employees whom Holmes has suggested were close to how [Theranos’] blood analyzers worked.”
According to Reuters, Holmes’ defense team is arguing that Holmes’ always-rosy forecasts about her company’s technology and finances were based on her belief the proprietary Edison device worked as advertised, which, in turn, was based on feedback from pharmaceutical companies, her own employees, and the military.
During her testimony, Holmes compared a traditional blood-testing device to Theranos’ “3.0” device, which she said would reduce the human-error rate that can occur during blood sampling.
“If we had the ability to automate much of that process, we could reduce the error associated with traditional lab testing,” she told the court.
Reuters reported that Holmes told jurors her confidence in the Theranos device was in part due to how well the unit had performed in studies completed in 2008 and 2009, including those run by drug companies such as Novartis.
The Mercury News described Holmes as speaking with “confidence—and frequently a small smile”—during her opening day of testimony.
Asked by one of her lawyers, “Did you believe that Theranos had developed technology that was capable of performing any blood test?” Holmes responded, “I did.”
Holmes Testifies about Military’s Alleged Use of Edison Device
Prosecutors maintain that Holmes knew Theranos’ proprietary blood-testing technology had serious accuracy issues yet lied about its capabilities and use to lure investors. One of those false claims included allegedly stating the US military was using the Edison device on the battlefield. Earlier in the trial, CNBC reported, prosecution witness Brian Grossman, Chief Investment Officer at PFM Health Sciences, which invested $96 million into Theranos, testified he was told in a 2013 meeting with Holmes and Balwani that Theranos technology was being used in medical-evacuation helicopters.
However, on the witness stand, Holmes described Theranos’ projects with the US military as much more limited in scope than the descriptions outlined by investors testifying for the prosecution.
According to The Wall Street Journal (WSJ), Holmes told jurors a 2010 partnership between Theranos and a US Army Institute of Surgical Research doctor in Texas looked into using the Theranos device to measure blood markers to detect kidney performance. A second project involved the military’s Africa Command, which was determining whether the device could withstand high temperatures. Holmes testified the devices used in Africa “held up well,” though some modifications were needed, and some issues were revealed with the touchscreen.
Should Holmes Have Testified on Her Own Behalf?
Trial experts maintain Holmes’ decision to testify in her own defense could backfire.
“It’s always a risk to put your client on because if they make a mistake they can sink the whole case,” former Santa Clara County prosecutor Steven Clark, JD, told The Mercury News. He added, “what’s at issue here is Elizabeth Holmes’ intent. And the best person to say what Elizabeth Holmes’ intent was is Elizabeth Holmes, and that’s why I think she’s taking the stand. She’s very charismatic. She’s really good on her feet. And I think the jury will like her.
“This is the pitch meeting of her life,” Clark added. “She’s going to be explaining herself to 12 people as to what was in her mind.”
Judge Drops One Count Due to Prosecution Error, Government Rests Its Case
Holmes is now charged with nine counts of wire fraud and two counts of conspiracy to commit wire fraud after the government dropped one count of fraud from the indictment. According to WSJ coverage of the trial, US District Judge Edward Davila blocked a patient named in the indictment as “B.B.” from testifying because of a filing error by the prosecution. The judge’s decision resulted in the government dropping one count.
The government rested its case against Holmes on November 19 following testimony from independent journalist Roger Parloff, who wrote a flattering 2014 Fortune magazine story on Holmes. He later redacted his earlier writing in another Fortune article, titled, “How Theranos Misled Me.”
The government alleged Holmes used media publicity as part of her scheme to defraud investors, patients, and physicians. All totaled, 29 witnesses appeared for the prosecution, the WSJ reported.
Former Theranos Chief Operating Officer Ramesh “Sunny” Balwani—Holmes’ one-time boyfriend—faces similar charges of defrauding patients, investors, and physicians. His trial is expected to begin in January 2022.
Clinical laboratory managers and pathologists who have watched the federal court proceedings with keen interest should expect the trial to wrap up at the conclusion of Holmes’ testimony, just in time for the Balwani fraud trial to begin.
Pathologist Kingshuk Das, MD, tells jurors he voided 50,000 to 60,000 blood-tests from a two-year period due to unreliable results
As the prosecution in the criminal fraud trial of ex-CEO Elizabeth Holmes closes in on resting its case, a fourth and final former Theranos laboratory director took the stand to describe the problems he encountered when overseeing the startup’s medical laboratory operations.
Los Angeles, Calif., board-certified clinical pathologist Kingshuk Das, MD, testified that he reported directly to Holmes and repeatedly warned her about problems and errors with the company’s Edison blood-testing technology, CNBC reported. While describing the proprietary technology’s reliability issues, Das spoke of one conversation with Holmes in which he pointed out that female patients were receiving test results showing abnormal levels of prostate-specific antigen, or PSA, which typically is associated with the male prostate gland.
“Females should generally not have PSA detectable,” Das said during testimony. He “recalled that Holmes offered an alternate explanation, citing ‘an article or two’ claiming rare breast cancers might cause PSA results in women,” CNBC reported.
Assistant US Attorney Robert Leach, JD then asked Das, “Was that explanation satisfying to you?”
“It seemed implausible,” Das replied.
According to CNBC, Das—who worked at Theranos from March 2016 until June 2018—testified that he “voided every test on the Edison devices from 2014 and 2015” and that he had “explained to Holmes that ‘these instruments were not performing from the very beginning.’
During his testimony, Das explained, “I tried to present it in a more understandable format. I recall [Holmes] offering an alternative explanation,” CNBC reported.
Das testified that “Holmes told him it wasn’t an instrument failure but rather a quality control and quality assurance issue,” CNBC reported.
According to The Wall Street Journal (WSJ), corrected reports were issued to doctors for an estimated 50,000 to 60,000 voided results.
CMS Audit: Theranos Lab Posed ‘Immediate Jeopardy to Patient Health and Safety’
The CMS report stated, “As a result of the survey, it was determined that your facility is not in compliance with all of the conditions required for certification in the CLIA program. … The deficient practices of the laboratory pose immediate jeopardy to patient health and safety,” CNBC reported.
Former Theranos Laboratory Director pathologist Kingshuk Das, MD, testified in the Elizabeth Holmes fraud trial that, when he was hired, he was not told the laboratory had previously been inspected by the Centers for Medicare and Medicaid Services and found deficient. He testified in federal court that he ultimately voided an estimated 50,000 to 60,000 clinical laboratory test results due to the unreliability of the proprietary Edison blood-testing devices. (Photo copyright: LinkedIn.)
Testimony of Four Former Theranos Lab Directors
Das is the fourth Theranos laboratory director to take the stand. He joined the startup in 2016 and was laid off in 2018.
Previous reporting in Dark Daily and our sister publication The Dark Report covered court testimony from the three lab directors who preceded Das (click on names to be taken to those stories):
Lynette Sawyer, DPH, who told jurors she never set foot inside Theranos’ lab while serving as co-director;
Sunil Dhawan, MD, who was former Theranos Chief Operating Officer Ramesh “Sunny” Balwani’s personal dermatologist, and who while Theranos’ lab director worked a total of five to 10 hours and only went to the lab twice; and,
Adam Rosendorff, MD, PhD, a board-certified pathologist, who previously testified he quit Theranos because the technology did not work, CNBC reported.
Rosendorff provided some of the trial’s most explosive news when it was revealed that he was the whistleblower behind The Wall Street Journal’s exposé into Theranos that first raised questions about the startup’s technology and operations.
Defense Claims Holmes Did Not Intentionally Mislead Investors
As noted in The Verge, Holmes’ defense strategy centers on convincing jurors she did not intentionally mislead investors, patients, physicians, and clinical laboratories about Theranos’ proprietary technology, but that she simply failed to achieve the goals she set for Theranos.
“Trying your hardest and coming up short is not a crime,” defense lawyer Lance Wade, JD, told jurors in his opening statement, The Verge reported. “And by the time this trial is over, you will see that the villain the government just presented is actually a living, breathing human being who did her very best each and every day. And she is innocent,” Wade added.
While Holmes is not expected to take the stand in her own defense, prosecutors used her own words against her last month when they played audiotapes for the jury of telephone calls Holmes made to investors in 2013. According to KRON4-TV in San Francisco, Holmes told investors Theranos’ revenues would reach $140 million in revenue in 2014, though the company had not recorded any revenue the two prior years.
Legal analyst Michele Hagan, JD, a former San Francisco Assistant District Attorney, told KRON4-TV the audiotapes are likely to impact the jury.
“It’s very powerful testimony when you can use the defendant’s own words, and these audiotapes can incriminate her,” Hagan said.
Holmes, 37, faces maximum penalties of 20 years in prison and a $2.75 million fine if convicted of two counts of conspiracy to commit wire fraud and 10 counts of fraud, plus possible restitution, the Department of Justice has said. Balwani’s criminal fraud trial is scheduled to begin in January 2022.
With the prosecution just inches away from resting its case, clinical laboratory managers and pathologists will not have to wait long to learn if Holmes’ defense team mounts a defense against fraud charges or allows the case to be turned over to the jury.
Federal prosecutors moved past the testimony of the pathologist who served for a time as the CLIA laboratory director at Theranos to provide evidence of a second unauthorized use by Theranos of a pharmaceutical company’s intellectual property
Building their case against former Theranos CEO Elizabeth Holmes, federal prosecutors filled the witness stand in recent days with corporate executives, representatives of powerful government figures, and others who testified they were lured to invest in the startup by false claims and flimsy promises from the now-defunct clinical laboratory company and its founder.
Since the criminal fraud trial against Holmes began 10 weeks ago, prosecutors have alleged Holmes, 37, knowingly mislead investors, clinical laboratories, patients, and healthcare providers about the capabilities of the company’s proprietary Edison blood-testing technology. Her defense team has argued that a failed business venture does not make Holmes a criminal.
Holmes has pleaded not guilty to 10 counts of wire fraud and two counts of conspiracy to commit wire fraud.
Safeway CEO Testifies to Being Misled by Holmes
In testimony for the prosecution, former Safeway CEO Steven Burd told the jury how his company relied on Holmes’ boasts and statements about Theranos’ technology when signing nearly $400 million in contracts with Theranos. These contracts included remodeling 969 stores to create both blood collection sites and mini-clinical laboratories housing Edison blood-testing units.
Today, many of these Safeway grocery stores are leasing those patient service centers to such medical laboratory companies as Labcorp and Quest Diagnostics.
CNN reported that Burd acknowledged being impressed by Holmes’ ability to command a room. “There are very few people that I’ve met in business that I would actually say were charismatic,” testified Burd, comparing her favorably to four US presidents he had met. “She was clearly charismatic. She was very smart.”
However,CNBC noted that Burd’s frustration with Holmes and Theranos grew as delays mounted and a trail of clinical laboratory testing using the Edison devices within Safeway’s corporate headquarters proved unsuccessful.
“I think whenever you start something new you’re going to have some rough spots, but we continued to have rough spots,” Burd stated in the CNBC coverage. “We had samples that were lost, we had [clinical laboratory test] results that didn’t make any sense.”
In cross examination, defense attorneys worked to refute allegations the grocery chain was misled prior to partnering with Theranos. Burd acknowledged Safeway did “at least 100” hours of due diligence before executing its 2010 contract with the startup and knew Theranos’ medical laboratory testing technology never had been tested at scale, CNBC reported. Safeway ended its failed partnership with Theranos in 2015.
Former Walgreens CFO also Testifies to being Misled
When former Walgreens Chief Financial Officer Wade Miquelon took the stand, he testified Walgreens also was persuaded by Theranos’ Edison-device claims when partnering with the company in 2013.
According to the WSJ, like Safeway, Walgreens had vetted Theranos without extensively examining or testing the Edison blood-testing device, which Theranos claimed could quickly and accurately run 200 clinical laboratory diagnostic tests using a finger-stick of blood.
Instead, Walgreens had relied on the opinions of staff healthcare experts and outside experts, none of whom fully tested the technology, the WSJ stated.
In recent coverage of the Elizabeth Holmes federal fraud trial, The Wall Street Journal reported retired United States Marine Corps four-star general Jim Mattis (above)—who also was a former Theranos board member and investor—testified that “he and other board members were blindsided to learn in 2015 that the company hadn’t been conducting all of its blood tests using its proprietary technology.” Clinical laboratory leaders who have been following the rise and fall of Theranos know the company claimed its Edison blood testing device could perform as many as 200 tests on a single fingerstick of blood. (Illustration copyright: Vicki Behringer/Reuters.)
Other Investors Testify to Being Dupped by Holmes
Major retailers were not the only ones taken in by the Theranos hype. Jurors also heard testimony from Lisa Peterson, Managing Director, Global Private Equity at Ottawa Avenue Private Capital, a Division of RDV Corp., a holding of the billionaire family of former Education Secretary Betsy DeVos.
After meeting with Holmes, during with which a DeVos family member had her blood tested, RDV doubled the amount of its planned investment from $50 million to $100 million, The Wall Street Journal reported. Peterson testified they were not told there were issues with the Edison device.
According to CNN, Peterson testified that she had trusted the information Theranos and Holmes provided, which included a Theranos-generated report boasting a Pfizer logo that touted the Edison’s “superior performance” and “excellent accuracy.”
However, in earlier court testimony, a Pfizer scientist stated the pharmaceutical giant opted not to partner with Theranos after finding the report’s conclusions “not believable.” He also testified that Holmes did not have permission to use the Pfizer logo.
Another wealthy individual duped by the now defunct blood-testing company was former estate attorney Daniel Mosley, JD, a partner at the law firm Cravath, Swaine and Moore LLP. Mosley testified he invested $6 million in Theranos after being introduced to the startup by ex-Secretary of State Henry Kissinger, a onetime Theranos board member.
According to The Wall Street Journal, Mosley pitched the Theranos venture to several of his clients, including the Walton and DeVos families. Mosley and five of his clients invested a total of $384 million in Theranos, an amount equal to more than half of the company’s $730.1 million 2014 funding round, the WSJ stated.
Mosley told jurors he believed the claims Theranos had told investors. “Did I think I had inaccurate information? No,” he testified.
Second Pharmaceutical Company Claims Unauthorized Use of Intellectual Property
Jurors also learned about a second Theranos-produced investor document that included an unauthorized pharmaceutical company logo. In this instance, Holmes had allegedly attached to a Walgreens email a Theranos report bearing dual Schering-Plough and Theranos logos.
Cullen said Holmes “almost exclusively” answered her questions, but her responses were “cagey.” Cullen testified she had no knowledge that anyone at Schering-Plough had endorsed the report’s conclusion that Theranos’ blood tests provided “accurate and precise results.”
With the Holmes defense team still awaiting its turn to present evidence in US District Court, trial testimony is expected to continue into December. This means clinical laboratory managers and pathologists will have plenty of informative Dark Daily ebriefings to look forward to on this intriguing fraud trail.
Jury also heard testimony about Holmes’ claims that the Edison device was doing clinical laboratory testing for the military in overseas theaters
During the seventh week of ex-Theranos CEO Elizabeth Holmes’ criminal fraud trial, headline-making testimony continued nearly non-stop. A former Theranos product manager took the stand offering damning testimony that tied Holmes to questionable product demonstrations and exaggerated claims about the military’s use of the Edison blood-testing device. And a Pfizer scientist testified to alleged improper use of the Pfizer logo by Theranos in a report that went to Walgreen executives.
Those claims contributed to the federal Securities and Exchange Commission (SEC) charging Holmes in 2018 with fraud and stripping her of control of Theranos, the SEC stated in a news release.
CNN reported that former Senior Product Manager Daniel Edlin, who worked at Theranos from 2011-2016, acknowledged in court that the Edison device had never been used in a war zone or installed on a medivac helicopter. He also noted that Holmes had final say over his communications with the DOD.
According to CNN, “Edlin said he worked directly with Holmes to support the relationships with the military and Defense Department. He said, ‘the end goal’ for these discussions ‘was to start a research program that would compare Theranos’ testing to the testing available to the military at that time.”
Edlin testified that Holmes was ‘highly involved’ with these communications, CNN reported.
“I’d say any substantive communication I had with the military, I either discussed with her ahead of time … or email drafts were reviewed and approved before I sent them back out,” he testified.
Elizabeth Holmes, ex-CEO of now-defunct blood-testing company Theranos, is seen above leaving a San Jose, Calif., courthouse following a hearing. Holmes faces 10 counts of wire fraud and two counts of conspiracy to commit wire fraud for allegedly misleading investors, clinical laboratories, patients, and healthcare providers about Theranos’ proprietary blood-testing Edison technology. Holmes has pleaded not guilty. (Photo copyright: Reuters.)
During cross examination, Edlin walked back some of his damaging testimony. When asked by defense attorney Kevin Downey, JD, of Williams and Connelly, LLP, if he or anyone else at Theranos was intentionally trying to deceive investors or other visitors during the demonstrations, Edlin responded, “Of course not,” according to Palo Alto Online.
To counter the prosecution’s claims that Theranos’ Edison machines were unsuitable for military use because they could not operate in high temperatures, Downey introduced an email from an Army doctor at the US Command in Africa praising the Edison after examining it in high temperatures. The doctor also, according to court documents, proposed the Army provide more funding to test the Edison’s capabilities, Palo Alto Online reported.
Nevertheless, according to The Wall Street Journal (WSJ), the Edison was never sent to a US military laboratory in Afghanistan for study, nor was it used in Africa to run blood tests.
Former Pfizer Scientist Testifies to Misuse of Intellectual Property
In another broadside to the Holmes defense, former Pfizer scientist Shane Weber, PhD, testified Holmes used the Pfizer logo in investor materials without the company’s permission in order to pass off as credible a study aimed at validating the Edison device.
The WSJ reported Weber told jurors that in 2008 he had reviewed a 15-page Theranos study involving cancer patients, but that he had stated in his own internal report to Pfizer at that time that nine conclusions in the study—including a statement that the “Theranos system performed with superior performance”—were “not believable.” Pfizer eventually heeded Weber’s advice to not enter into a partnership with Theranos.
Prosecutors stated that as part of Theranos’ negotiations with Walgreens, which ultimately invested $140 million in the blood-testing company, Holmes had placed a Pfizer logo on the top of each page of the cancer study report before sending it to Walgreens executives, claiming it was an independent due-diligence report on Theranos technology.
Weber told jurors that he had not known about the altered report until he was shown the document by prosecutors. He stated the logo was added without Pfizer’s permission, the WSJ reported.
Unfortunately for Walgreens, the retail pharmacy chain entered into a business agreement with Theranos without extensively examining or testing the Edison device, which Theranos had claimed could quickly and accurately run 200 diagnostic tests using a finger-stick of blood. Instead, the company relied on the opinions of its own staff healthcare experts and outside experts, none of whom fully tested the technology either, the WSJ stated.
Testimony in the Elizabeth Holmes fraud trial is expected to continue through December. Therefore, clinical laboratory managers and pathologists should expect headline-making news to continue as well. Dark Daily will continue its coverage as the trial moves forward.
WSJ reporter affirms that the pathologist was his “first and most important source” in confirming the problems at the now-defunct medical lab testing company
During the federal fraud trial of Theranos Founder and former-CEO Elizabeth Holmes, no one has spent more days on the witness stand than ex-Theranos Laboratory Director Adam Rosendorff, MD, the pathologist who testified for the prosecution that he repeatedly warned Holmes about problems with Theranos’ flawed Edison blood-testing device.
Dark Daily’s previous ebrief on the ongoing Holmes’ fraud trial reported that Rosendorff, who is board certified in clinical pathology, had testified, “I told her that the potassium was unreliable, the sodium was unreliable, the glucose was unreliable, [and] explained why. She was very nervous. She was not her usual composed self. She was trembling a bit, her knee was tapping, her voice was breaking up. She was clearly upset.”
It should come as no surprise that in response Holmes’ lawyers attempted to paint Rosendorff as an “incompetent” lab director with a resume littered with failures at other biotech companies. According to court documents, Holmes faces 10 counts of wire fraud and two counts of conspiracy to commit wire fraud for allegedly misleading investors, clinical laboratories, patients, and healthcare providers about Theranos’ proprietary blood-testing technology.
But the many clinical laboratory professionals closely watching the Holmes trial will be equally interested to learn that outside of the courtroom former Wall Street Journal (WSJ) reporter John Carreyrou confirmed on Twitter that Rosendorff was the main source for his 2015 investigative reporting—which first called into question Theranos’ claim that it could run more than 200 blood tests using a finger-prick of blood—as well as for his subsequent book, “Bad Blood: Secrets and Lies in a Silicon Valley Startup.”
Carreyrou Declares Ex-Theranos Lab Director Adam Rosendorff a Hero
“So, I’ve been fielding queries from reporters asking me to confirm that former Theranos lab director Adam Rosendorff, who is currently testifying at Elizabeth Holmes’ trial, was my source. I can now confirm it. Alan Beam = Adam Rosendorff,” Carreyrou tweeted.
“I’ll add this: Adam was my first and most important source. Without him, I wouldn’t have been able to break the Theranos story. Hats off to his courage and integrity. He’s one of the real heroes of this story,” Carreyrou added in a subsequent Tweet.
Inside the San Jose, Calif., courtroom, pathologist Rosendorff took centerstage, completing six days on the witness stand as Holmes’ defense attorney Lance Wade, JD, sought to undermine Rosendorff’s earlier testimony for the prosecution and question his competence as a laboratory leader.
Former Wall Street Journal reporter John Carreyrou (above) has revealed via Twitter that ex-Theranos laboratory director Adam Rosendorff, MD, was the “first and most important source” for his 2015 investigative reporting on Theranos. “Hats off to his courage and integrity,” Carreyrou tweeted. “He’s one of the real heroes of this story,” (Photo copyright: Penguin Random House Speakers Bureau.)
Rosendorff Testifies About Another CMS Investigation at Lab Where He is Medical Director
Rosendorff acknowledged during cross examination that he risked losing his license as a lab director after the CMS inspectors uncovered testing deficiencies at PerkinElmer’s Valencia (California) Branch Laboratory as well, where Rosendorff currently serves as Laboratory and Medical Director.
According to the WSJ, Rosendorff testified that most of the CMS inspection involved reviewing documents. During cross examination, it was revealed that the same CMS inspectors who investigated Theranos also conducted the PerkinElmer lab investigation.
Defense attorneys also had hoped to question Rosendorff about his previous work at uBiome Inc., a startup that was the target of a 2019 federal probe into its lab test billing practices, CNBC reported.
The Mercury News reported that during an October 5 hearing to determine the extent to which Holmes’ legal team could cross examine Rosendorff about his past employment, Wade told US District Judge Edward Davila that Rosendorff had a failed record as a lab leader. The Holmes defense lawyer alleged a link between “unreliable test results” at the biotechnology company Rosendorff went to after leaving Theranos and claimed that Rosendorff’s work at PerkinElmer resulted in the CMS notice of “serious deficiencies” at the lab.
“[Rosendorff] pointed the finger at many other people, including my client,” Wade told Davila. “He appears to almost never have competently done his job. He was incompetent at Theranos, too, and that is the reason many of the failures happened. He’s the person who’s ultimately responsible in the laboratory,” he added.
Nevertheless, Judge Davila prohibited questions regarding Rosendorff’s employment at uBiome and limited the scope of questions about his current role at PerkinElmer.
The graphic above depicts Holmes’ defense attorney Lance Wade, JD, cross examining former Theranos CLIA laboratory director Adam Rosendorff, MD. During his testimony, Rosendorff claimed he warned Holmes about the unreliability of Theranos’ Edison blood-testing device. Pathologists and clinical laboratory leaders will recall that Walgreens had contracted with Theranos to place testing devices in its in-store pharmacies. (Graphic copyright: The Wall Street Journal/Vicki Behringer.)
Holmes’ Attorneys Challenge Rosendorff’s Testimony During Cross Examination
After leaving Theranos, Rosendorff’s LinkedIn profile shows he served as Laboratory Director at San Francisco-based Invitae from December 2014 to September 2017 before moving to Millennium Health in San Diego as Medical Director from December 2017 to January 2021. He joined PerkinElmer in January.
The WSJ reported that Rosendorff’s ties to uBiome showed up in Theranos court records.
The WSJ also noted that during the multiday cross examination of Rosendorff, the Holmes defense team scored points by “pointing to contradictions in his testimony and challenging his assertions that he wanted to expose Theranos’ testing practices to the government.”
In making his point, Wade read aloud from a deposition Rosendorff gave during a separate case in which he claimed that Theranos did not have a greater number of anomalous test results than other labs where he had previously worked.
“And that’s 180 degrees from what you answered in your direct testimony,” Wade said to Rosendorff during cross examination.
“Yes, it seems to be different,” Rosendorff replied, but also noted that Theranos should have fewer errors than a lab with a much higher volume of tests.
Wade also introduced a November 2014 email in which Rosendorff told a colleague he knew of only one time when Theranos provided to a patient an obviously incorrect test result. Rosendorff had previously testified that he alerted Holmes on numerous occasions about his concerns with ongoing testing errors.
Wade also questioned whether Rosendorff had a financial motive for considering a whistleblower lawsuit against Theranos, pointing out that Rosendorff would be entitled to a portion of any damages recovered. Rosendorff responded that he did not have a profit motive in mind when he forwarded more than 150 Theranos emails to his personal account.
Former WSJ Reporter Carreyrou May Be Called to Testify
Clinical laboratory managers and pathologists will be fascinated with another twist that surfaced as this trial continued. Former WSJ reporter Carreyrou became personally intertwined with the Holmes’ trial after it came to light that the investigative reporter—whose podcast “Bad Blood: The Final Chapter” spotlights the ongoing fraud trial—is on Holmes’ potential witness list.
The motion, The Mercury News reported, states that “Placing Carreyrou on the witness list was done in bad faith and was designed to harass him,” and calls his placement on the list “a cynical ruse” that violates Carreyrou’s First Amendment rights.
CNN reported that Carreyrou’s attorneys are asking that the exclusion order (which prevents some witnesses from being inside the courtroom during other witness testimonies) or the gag order (which allows witnesses to discuss their testimonies only with their attorneys) not be applied to Carreyrou.
For clinical laboratory scientists awaiting the next installment in the now six-week-old trial, former Safeway CEO Steven Burd (now founder and CEO of Burd Health) will continue his testimony on the failed partnership between the grocery store chain and Theranos.
The Theranos agreement with Safeway is not as well-known as the Theranos-Walgreens deal. This was another news story written by Carreyrou and published by the WSJ on Nov. 10, 2015, titled, “Safeway, Theranos Split after $350 Million Deal Fizzles.”
As part of that agreement, Safeway spent $350 million to remodel 800 of its grocery stores to have a patient service center (PCS) and laboratory space where the unproven Edison device would be used to perform the clinical laboratory tests.
The testimony in this next phase of trial about the Safeway agreement with Theranos, and Holmes’ role in convincing the Safeway executive team to invest a third of a billion dollars to build 800 PSCs and lab spaces in 800 stores, should be as interesting as the witness testimony given earlier in this trial.
