News, Analysis, Trends, Management Innovations for
Clinical Laboratories and Pathology Groups

Hosted by Robert Michel

News, Analysis, Trends, Management Innovations for
Clinical Laboratories and Pathology Groups

Hosted by Robert Michel
Sign In

Former Theranos Lab Director and Staff Testify in Ongoing Elizabeth Holmes Fraud Trial That They Voiced Concerns about Reliability and Accuracy of Edison Blood-Testing Device

Four-star general Jim Mattis testified that he eventually “didn’t know what to believe about Theranos anymore,” The Wall Street Journal reported

Former-Theranos CEO Elizabeth Holmes was known for her obsession with Steve Jobs, imitating not only the late Apple CEO’s well-known management style, but also his wardrobe choices. However, clinical laboratory managers and pathologists will not be surprised to learn that—in testimony during Holmes’ federal fraud trial—Theranos’ former laboratory director told jurors Holmes’ “confident demeanor” disappeared when she was told her revolutionary blood-testing technology “didn’t work,” KPIX5 TV reported.

During two days of testimony in San Jose, Calif., pathologist Adam Rosendorff, MD, told jurors that in the days leading up to the 2013 launch of the Edison blood-testing device he warned Holmes in emails and in person that the product wasn’t ready to be deployed commercially.

“I told her that the potassium was unreliable, the sodium was unreliable, the glucose was unreliable, [and] explained why,” testified the clinical pathologist. “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,” he added.

KPIX5 TV reported that Holmes had told Rosendorff the laboratory could substitute conventional federal Food and Drug Administration (FDA)-approved devices as needed.

Rosendorff left his position with Theranos in November 2014. According to KPIX5, he told jurors, “I felt pressured to vouch for [medical laboratory] tests that I did not have confidence in. I came to believe that the company believed more about PR and fundraising than about patient care. The platform was not allowing me to function effectively as a lab director.”

Adam Rosendorff, MD

Former Theranos Laboratory Director Adam Rosendorff, MD (above), testified in the federal fraud trial of Theranos founder and ex-CEO Elizabeth Holmes that he considered filing a whistleblower lawsuit against his employer because of his concerns about the Edison blood-testing device’s lack of reliability and accuracy of test results. “I wanted to get the word out about what was happening at Theranos,” the clinical pathologist told jurors, the Wall Street Journal reported. (Photo copyright: LinkedIn.)

In continuing testimony, Rosendorff acknowledged that tension increased between himself and Holmes and Theranos’ Chief Operating Officer Ramesh “Sunny” Balwani over Rosendorff’s concerns about the reliability and accuracy of the lab’s test results. At one point, he asked Balwani in an email if his name could be removed from the Theranos CLIA lab license so he would not be legally responsible for the lab’s problems.

Balwani’s own fraud trial begins in January 2022.

Former Theranos Lab Director Considered Filing a Qui Tam Lawsuit

According to the Wall Street Journal (WSJ), Rosendorff testified he forwarded work emails to his personal email account to protect himself in case the federal government investigated Theranos. He also considered filing a whistleblower lawsuit against the company.

“I wanted to get the word out about what was happening at Theranos,” he testified, the Wall Street Journal reported.

The government’s first witnesses were former Theranos employees:

Gangakehedkar testified that Holmes knew about reliability issues with the Edison blood-testing device, yet pressured staff to move forward with the Walgreens roll out.

Theranos’ partnership with Walgreens ended in 2016, after Theranos voided years of test results performed on its machines.

In “Former Theranos Chemist Says Elizabeth Holmes Was Aware of Testing Failures,” the WSJ reported that Gangakhedkar resigned from Theranos in September 2013, taking with her Theranos documents and copies of emails in which she expressed her concerns to Holmes and others about continuing problems with Theranos’ lab tests.

“I was scared that things would not go well,” Gangakhedkar testified, her voice breaking at one point. “I was afraid I would be blamed.”

As foreshadowed during the trial’s opening statements, Holmes’ defense team plans to argue that their client did not intend to defraud investors but believed her blood-testing technology—portrayed as capable of running more than 200 tests using a finger-stick sample of blood—would revolutionize the healthcare industry.

In his opening remarks to the jury, Lance Wade, JD, a member of the Holmes defense team from Williams and Connolly LLP, told jurors that evidence will show Theranos investors were “incredibly sophisticated and knew the risks” and were actually pushing to invest in Theranos. The reality of the case, he said, is “far more human and real, and oftentimes, I hate to say it, technical and complicated and boring” than what the federal government has suggested, Forbes reported.

Four-star General Jim Mattis (ret.) Testifies

According to the Wall Street Journal, former Defense Secretary Jim Mattis testified he joined the Theranos board in the summer of 2013, at which time he invested $85,000 in the company. He said he had first met Holmes in San Francisco in 2011. At the time, Mattis, a Marine Corps four-star general, was leading the US military’s Central Command (CENTCOM) and that, according to testimony, he recognized the Edison device’s potential for use on the battlefield.

Mattis testified he and other Theranos board members were surprised to learn in 2015 that Theranos was using blooding testing equipment from competing companies.

“There came a time when I didn’t know what to believe about Theranos anymore,” he told jurors, according to the WSJ. Mattis resigned from the board in 2016, after learning he would be nominated as Secretary of Defense in the Trump administration.

Courtroom sketch

The courtroom sketch above shows former Defense Secretary four-star general Jim Mattis testifying Wednesday at the criminal trial of Theranos founder Elizabeth Holmes in San Jose, Calif. (Graphic copyright: Vicki Behringer.)

Theranos Investors

Theranos, which reached a peak valuation of $9 billion, received nearly $1 billion in funding from private investors, including from some well-known people. In “Theranos Trial Jurors to Weigh Whether Investors Were Dupes or Savvy Speculators,” according to the WSJ, the startup’s top investors included:

  • The Walton family—$150 million—heirs to the Walmart fortune;
  • Fox News Corp Executive Chairman Rupert Murdoch—$125 million—who sold his shares back to the company in 2017 for $1;
  • Former Education Secretary Betsy DeVos and her family—$100 million;
  • The Cox family, owner of Atlanta-based media and automotive company Cox Enterprises—$100 million;
  • Media investor Carlos Slim—$30 million;
  • Greek shipping magnate Andreas Dracopoulos—$25 million;
  • The Oppenheimer family—$20 million;
  • Riley Bechtel, former Chairman of Bechtel Corp.—$6 million;
  • Estate attorney Daniel L. Mosley—$6 million; and
  • New England Patriots owner Robert Kraft—$1 million.

As Holmes’ fraud trial heats up, Dark Daily will continue its coverage. In “Text Messages Between Theranos Founder Elizabeth Holmes and Ex-Boyfriend Ramesh “Sunny” Balwani Grab Headlines in Early Days of Fraud Trial,” we reported that Holmes’ defense team revealed plans to claim “intimate partner abuse” by Holmes’ then boyfriend, Theranos Chief Operating Officer Ramesh “Sunny” Balwani.

And in “On-demand Video Service Hulu Gets Underway on TV Miniseries Documenting Rise and Fall of Former Theranos CEO Elizabeth Holmes,” we covered Hulu’s plan to produce the “The Dropout,” a limited series chronicling Holmes’ rise and fall from Founder and CEO of $9 billion tech company Theranos to criminal defendant.

The trial is expected to last until mid-December, with jurors hearing testimony on Tuesdays, Wednesdays, and Fridays. For clinical laboratory scientists, each day of testimony should bring a new round of surprises so stay tuned.

Andrea Downing Peck

Related Information

Elizabeth Holmes Trial: Live Updates

Theranos Trial Jurors to Weigh If Investors Were Dupes or Savvy Speculators

Elizabeth Holmes’ Lawyer Says She Made ‘Mistakes,’ But ‘Failure Is Not a Crime’

Former Theranos Chemist Says Holmes Was Aware of Testing Failures

Elizabeth Holmes Confident Demeanor Vanished When Told Tests Didn’t Work, Former Lab Director Tells Jury

Elizabeth Holmes Trial: Jim Mattis Tells Jury He Came to Doubt Theranos Technology

Text Messages Between Theranos Founder Elizabeth Holmes and Ex-Boyfriend Ramesh “Sunny” Balwani Grab Headlines in Early Days of Fraud Trial

On-demand Video Service Hulu Gets Underway on TV Miniseries Documenting Rise and Fall of Former Theranos CEO Elizabeth Holmes

Text Messages Between Theranos Founder Elizabeth Holmes and Ex-Boyfriend Ramesh “Sunny” Balwani Grab Headlines in Early Days of Fraud Trial

Romantic musings between the now-defunct Theranos’ CEO and COO may be introduced to undercut Holmes’ claims of ‘intimate partner abuse’

Medical laboratory professionals did not have to wait long for the first prosecution bombshell to explode during the opening week of the federal criminal fraud trial of former Theranos CEO Elizabeth Holmes.

In court filings leading up to the September 8 trial in San Jose, Calif., Holmes’ defense team revealed plans to claim “intimate partner abuse” by Holmes’ then boyfriend, Theranos Chief Operating Officer Ramesh “Sunny” Balwani. The plan was for Holmes to testify that Balwani threw “sharp” objects at her and controlled how she ate and dressed, impacting her “state of mind” at the time of the alleged crimes.

But prosecutors countered that claim by releasing six pages of text messages between the former couple, which took place between May 2015 and July 2015, as Theranos became the target of whistleblower accusations and a company employee who began secretly speaking to the Wall Street Journal (WSJ). Later that year, the WSJ published an investigative report that brought to light questions about Theranos’ blood-testing technology and the faulty clinical laboratory test results it reported to physicians and patients.

Holmes and Balwani kept their relationship hidden from the public, but their private text messages reveal intimate exchanges that likely will be introduced by prosecutors to undercut Holmes’ claims of abuse.

Within the 164 text messages were these exchanges:

  • “You are breeze in desert for me” [Holmes]
  • “My water” [Holmes]
  • “And ocean” [Holmes]
  • “Meant to be only together tiger” [Holmes]
  • “Madly in love with you and your strength” [Holmes later that day]

The following day:

  • “On route to dinner. Missing you” [Holmes]
  • “Missing you too” [Balwani]
  • “You more” [Holmes]

Balwani then turned his attention to the whistleblower within Theranos:

  • “I’m narrowing this down in CLIA. Down to 5 people. Will nail this mother [explicative omitted]” [Balwani]
  •  “Who do u think” [Holmes]
  • “Now we have legal grounds” [Holmes]
  • “Yes” [Balwani]

Later Holmes texted:

  • “Feel like the luckiest person in the world BC I have you” [Holmes]
  • “We will come up with good responses to the questions and we will turn this around” [Balwani]
  • “Love” [Balwani]
  • “Transcend” [Holmes]
  • “We will” [Balwani]

The following month:

  • “Onboard. Love.” [Balwani]
  • “Taking off baby” [Balwani]
  •  “Missing you” [Holmes]
  • “Missing you too baby. Just arrived at the office. Will prepare” [Balwani]
  • “Xxx” [Holmes]
Elizabeth Holmes and Ramesh Balwani

Prosecutors in the federal fraud trial of former Theranos CEO Elizabeth Holmes (above, left) have included in a court filing 180 text messages sent between Holmes and former Theranos COO Ramesh “Sunny” Balwani (above, right) that reveal their romantic involvement and efforts to unearth the whistleblower within the failed blood-testing company. (Photo copyright: Yichuan Cao/NurPhoto via Getty Images [Holmes], Justin Sullivan/Getty Images [Balwani].
) 

Does Affection Rule Out Abuse?

In San Francisco, KPIX 5 television reported that legal experts predict the texts may not have the impact in the trial that outside observers expect, since, they said, expressions of affection do not rule out the possibility of an abusive relationship, which is expected to be one aspect of Holmes’ defense strategy.

Holmes, 37, who according to court documents faces 10 counts of wire fraud and two counts of conspiracy to commit wire fraud, is alleged to have misled investors, clinical laboratories, patients, and healthcare providers about Theranos’ proprietary blood-testing technology, which Holmes claimed could perform hundreds of medical laboratory tests using only a finger-prick of blood. If convicted, Holmes could face up to 20 years in prison, fines, and payment of restitution. She has pleaded not guilty.

Testimony of Theranos’ Corporate Controller

The prosecution opened the trial with questioning of Theranos’ longtime corporate controller Danise Spivey Yam. According to The Wall Street Journal, Yam testified she provided revenue projections to a company hired to value Theranos stock that ranged from $50 million in 2013 to nearly $132 million in 2016. Those numbers were much more modest than company projections of $140 million in revenue in 2014 and $990 million in 2015, which were given to investors.

“Do you have any idea where that number came from?” Assistant US Attorney Robert Leach asked Yam.

“No,” Yam replied, adding that she hadn’t helped prepare it.

Former Theranos employee Erika Cheung, who according to court testimony worked in the company’s laboratory testing blood samples, testified that she left Theranos after six months because of concerns over Theranos’ blood-testing practices and data manipulation when machines failed quality tests.

Cheung ultimately alerted federal regulators to the company’s failure to meet industry standards and expressed her concerns about Theranos’ Edison mini-blood-lab machine.

“You’d have about the same luck flipping a coin as to whether your results were right or wrong,” Cheung testified about the accuracy of the Edison, CNBC reported. “It was concerning to see this degree of failure; this was not typical for a normal lab.”

After leaving Theranos, Cheung co-founded the nonprofit Ethics in Entrepreneurship.

During cross examination, CNBC noted that one of Holmes’ defense attorneys highlighted the professional qualifications of Theranos lab directors and other scientists at Theranos, including 52 scientists with PhDs and 10 medical doctors. He also noted that the validation reports for assays that Cheung had testified were problematic had been approved for lab use by a lab director and vice president, not Holmes.

With more than 200 witnesses expected to testify, the ongoing Holmes fraud trial is estimated to last three to six months. Pathologists and clinical laboratory scientists who are following the Theranos fraud trial with keen interest can look forward to more Dark Daily coverage. Click here to read our previous coverage of the Holmes/Theranos medical laboratory fraud saga.

Andrea Downing Peck

Related Information

Case 5:18-cr-00258-EJD Document 1005-4 Filed 09/07/21

United States v. Elizabeth A. Holmes, et al. 18-CR-00258-EJD

Case 5:18-cr-00258-EJD Document 973

Hot Startup Theranos Has Struggled with Its Blood-Test Technology

Texts between Theranos Founder Elizabeth Holmes, Ex-Boyfriend Add New Layer to Fraud Trial

Elizabeth Holmes Trial: Theranos Gave Investors Rosy Picture of Revenue, Witness Says

What Exactly Was the Theranos Edison Machine Supposed to Do?

Theranos Whistleblower Testifies Blood-Test Machines Were about as Accurate as a Coin Toss

Former Theranos Lab Worker Testifies About Data Manipulation

Theranos Founder and Former CEO Elizabeth Holmes’ Federal Criminal Fraud Trial Finally Is Under Way in California

On-demand Video Service Hulu Gets Underway on TV Miniseries Documenting Rise and Fall of Former Theranos CEO Elizabeth Holmes

Federal Prosecutors Signal That Accuracy of Theranos’ Blood Tests Will Be Centerstage in August Fraud Trial

Former Theranos CEO Elizabeth Holmes Is Pregnant, Causing a Further Delay in Her Trial Date

Theranos CEO Elizabeth Holmes Trial Delayed Again, This Time Due to COVID-19 Restrictions, as Lawyers Battle Over Destroyed Clinical Laboratory Test Evidence

Theranos Founder and Former CEO Elizabeth Holmes’ Federal Criminal Fraud Trial Finally Is Under Way in California

Court documents show Holmes’ defense strategy includes accusing ex-boyfriend and former COO Balwani of ‘intimate partner abuse’ that impacted her ‘state of mind’

It has started! The long-awaited criminal trial of former Theranos CEO Elizabeth Holmes is underway in a federal courthouse in Silicon Valley. Across the profession of medical laboratory medicine, there is keen interest in the story of Holmes and her now-defunct clinical laboratory company Theranos.

This next chapter in the drama began on September 8 with opening arguments. Federal prosecutors came out strong, claiming Holmes was “a manipulative fraudster who duped investors and patients alike and knew the whole time that she was hoodwinking them,” according to NPR.

“This is a case about fraud, about lying, and cheating to get money,” said Assistant US Attorney Robert Leach, NPR reported. “It’s a crime on Main Street, and it’s a crime in Silicon Valley,” he added.

Not surprisingly, Holmes’ defense team had a different take, claiming Holmes was simply “a hardworking, young startup executive who believed in the mission of the company, only to see it buckle in the face of business obstacles,” NPR reported. “They argued that she placed blind faith in the No. 2 executive at the company [Balwani] and overly trusted lab directors, who the defense team says were legally responsible for how the labs were run.”

Holmes Claims Abuse at the Hands of Former Theranos COO Balwani

Many pathologists and clinical laboratory managers are ready to watch and learn what unfolds in the opening stages of Holmes’ long-delayed federal criminal fraud trial. During the jury selection process, recently unsealed court documents showed that Holmes’ defense planned to include claims she was abused by her then boyfriend, Theranos Chief Operating Officer Ramesh Balwani.

This surprising development adds yet another twist to the tale of the disgraced Silicon Valley executive and her defunct clinical laboratory testing company.

The hype surrounding the once-high flying startup, which in 2015 reached a peak valuation of $9 billion, began unraveling that same year when a Wall Street Journal (WSJ) investigation exposed the company’s alleged deceptions and questionable practices related to its finger-prick blood-testing technology.

Fast-forward six years—Theranos is now gone but its top executive continues to make headlines, not as a laboratory science wunderkind, but as a criminal defendant.

Holmes, 37, has pleaded not guilty to all charges. Her former consort and ex-Theranos COO Ramesh Balwani also pleaded not guilty to all charges. He will be tried separately from Holmes.

Elizabeth Holmes and her husband William Evans

Elizabeth Holmes, founder and former CEO of defunct clinical laboratory testing company Theranos, is seen leaving the Robert F. Peckham US Courthouse with husband William Evans following opening arguments in her federal trial on September 8. (Photo copyright: Reuters/Peter DaSilva.)

Dozens of Potential Jurors Removed for Alleged Bias

On August 31, in-person questioning of prospective jurors began in Holmes’ federal fraud trial in San Jose, California. The process did not go well. As CNBC reported, dozens of potential jurors were removed from the jury pool due to potential bias in the case.

“Thirty to forty of the remaining jurors have consumed substantial, and I mean lengthy extrajudicial material, about the case and about the defendant,” defense attorney Kevin Downey, JD of Washington, D.C.-based Williams and Connolly, LLP, told Judge Edward Davila, CNBC reported. “We’re very vulnerable to any of the jurors commenting in some ways as either the court or lawyers conduct voir dire about the content of the media they’ve seen.”

Voir dire is the legal term for preliminary examinations of jurors, which in this initial screening was done by reviewing potential juror questionnaires.

Holmes’ defense attorneys, according to CNBC, previously expressed concerns about “inflammatory” media coverage of the case. However, Assistant US Attorney Jeffrey Schenk maintained, “Less than half of the individuals that filled out the questionnaire had prior exposure to Holmes and Balwani. One juror saying something during the voir dire process that could be overheard is a risk in every court case,” CNBC reported.

Holmes Claims ‘Mental Condition Bearing on Guilt’

A report by the Independent notes that newly unsealed court documents which were first reported by NPR reveal that Holmes will mount a defense that includes claims of “intimate partner abuse” by Balwani, 56, during their past relationship.

 “The documents show that Ms. Holmes will describe how Mr. Balwani controlled what she ate and drank, how she dressed, and who she spoke to, while also alleging he threw ‘sharp’ objects at her,” the Independent reported.

NPR reported that court documents indicate Holmes is likely to take the stand and testify at her trial. She will not be presenting an insanity defense but will put forth a “defense of a mental condition bearing on guilt” that was the result of partner abuse and that impacted her “state of mind” at the time of the alleged crimes.

Court documents filed by Balwani’s defense attorneys label Holmes’ allegations as “salacious and inflammatory.”

“In truth, Ms. Holmes’ allegations are deeply offensive to Mr. Balwani, devastating personally to him and highly and unfairly prejudicial to his defense of this case,” defense attorney Jeffrey Coopersmith, JD, Principle and founder of Coopersmith Law and Strategy, wrote in the filing.

The Theranos Saga Continues …

In “Former Theranos CEO Elizabeth Holmes Is Pregnant, Causing a Further Delay in Her Trial Date,” Dark Daily reported that Holmes’ trial had been delayed multiple times since she was first was indicted on 11 counts of wire fraud and conspiracy to commit wire fraud in 2018. The COVID-19 pandemic, and more recently Holmes’ pregnancy, delayed the start of her trial until August.

CNBC reported that Holmes gave birth on July 10, 2021, in Redwood, California. The baby’s father is William Evans, heir to the Evans Hotels chain in California, The Sun reported.

Balwani’s criminal fraud trial is scheduled to begin with jury selection on January 11, 2022. Both Holmes and Balwani face maximum penalties of 20 years in jail and a nearly $3 million fine, plus possible restitution if found guilty on all counts.

It is a rare thing for owners of a clinical laboratory company accused of fraud to come to trial and receive so much media attention. In the weeks leading up to the trial, medical laboratory managers and pathologists could read a wide variety of news stories about the impending trial and the legal strategies expected by the attorneys for both the plaintiffs and the defendants.

Thus, everyone interested in this trial and its outcome will likely have the equivalent of a front row seat because so many journalists are covering this trial.

Andrea Downing Peck

Related Information

Hot Startup Theranos Has Struggled with Its Blood-Testing Technology

Dozens of Potential Jurors in Elizabeth Holmes Trial Cut for Potential Bias

Case 5:18-cr-00258-EJD Document 973

Case 5:18-cr-00258-EJD Document 976

Elizabeth Holmes Claims Abuse by Ex-Boyfriend Who Controlled What She Ate in Theranos Fraud Trial Defense

Elizabeth Holmes Plans to Accuse Ex-Boyfriend of Abuse at Theranos Fraud Trial

Elizabeth Holmes Gives Birth as Fraud Theranos Fraud Trial Nears

Former Theranos CEO Elizabeth Holmes Is Pregnant, Causing a Further Delay in Her Trial Date

On-demand Video Service Hulu Gets Underway on TV Miniseries Documenting Rise and Fall of Former Theranos CEO Elizabeth Holmes

Six-episode show is based on popular ABC Radio podcast “The Dropout,” which focused on the three-year investigation that brought down clinical laboratory test developer Theranos

While former Theranos CEO Elizabeth Holmes awaits the start of her August 31 criminal fraud trial in a federal court in Northern California, one streaming video service is lining up a star-studded cast to tell the story of the Silicon Valley executive’s fall from grace and the demise of her clinical laboratory blood-testing company.

This six-part series is being produced by Hulu, an on-demand video streaming service offering live and on-demand content. Back in 2019, it announced that it would produce the “The Dropout,” a limited series chronicling Holmes’ rise and fall from Founder and CEO of $9 billion tech company Theranos to criminal defendant.

Hulu says the series will launch this fall, so pathologists and medical laboratory managers have time to set their recorders to capture what may be a compelling story of hubris that took investors and the news media on a wild ride. The Theranos publicity machine was so effective that many hospital CEOs went to their clinical laboratory administrators and told them to delay equipment purchases because Theranos would be able to do the same medical laboratory tests at just pennies on the existing lab-cost dollar.

Holmes’ carefully-crafted public image as Theranos’ CEO drew comparisons to the late Apple CEO Steve Jobs, Business Insider noted. This has made her a popular topic not only among clinical laboratory scientists but also Hollywood moviemakers.

“The Dropout” took its inspiration from the ABC Audio podcast of the same name, hosted by ABC Chief Business, Technology and Economics correspondent Rebecca Jarvis. The ABC Audio podcast’s description provides a glimpse into the direction the miniseries will take.

“Money. Romance. Tragedy. Deception. The story of Elizabeth Holmes and Theranos is an unbelievable tale of ambition and fame gone terribly wrong. How did the world’s youngest self-made female billionaire lose it all in the blink of an eye? How did the woman once heralded as ‘the next Steve Jobs’ find herself facing criminal charges—to which she pleaded not guilty—and up to 20 years in jail? How did her technology, meant to revolutionize healthcare, potentially put millions of patients at risk? And how did so many smart people get it so wrong along the way?” the ABC Audio website states.

The Hulu series originally was to star “Saturday Night Live” cast member Kate McKinnon as Holmes but was recast with Amanda Seyfried in the starring role. According to Variety, the series will include a notable lineup of guest stars including:

Naveen Andrews will play former Theranos President and COO Ramesh Balwani, whose own criminal fraud trial is expected to begin early next year.

A release date for the limited series has not yet been announced, Town and Country reported.

Elizabeth Holmes

Elizabeth Holmes (above), former CEO of now defunct company Theranos, faces 11 counts of fraud for alleged false claims that the clinical laboratory testing company had created a revolutionary finger-prick technology capable of performing a wide range of clinical laboratory tests. Among the charges are two counts of conspiracy to commit wire fraud and nine counts of wire fraud, for which Holmes could serve up to 20 years in jail if found guilty of all charges, according to court documents. She has pleaded not guilty. (Photo copyright: The Wall Street Journal.)

The ‘Real World’ Wall Street Journal Investigation of Theranos and Holmes

Dark Daily has reported extensively on the Holmes/Theranos saga, including the recent development that Holmes’ repeatedly-delayed trial would be pushed back from mid-July to August 31 because Holmes is due to give birth in July.

Theranos’ alleged deceptions first were brought to light in a series of 2015 investigative reports in The Wall Street Journal (WSJ). Then-WSJ investigative reporter John Carreyrou alleged Theranos had not disclosed publicly that the vast majority of its tests were not being done with proprietary technology, but instead with traditional machines purchased from Siemens AG and other companies.

Carreyrou’s reporting became the basis for his bestselling book, “Bad Blood: Secrets and Lies in a Silicon Valley Startup,” which led to “The Inventor: Out for Blood in Silicon Valley,” a 2019 HBO documentary film.

And for those looking for even more drama centered around the Theranos saga, a feature film starring Jennifer Lawrence as Elizabeth Holmes, titled, “Bad Blood,” remains “in development” according to People magazine. Though the project was announced in 2016, filming has yet to begin.

Meanwhile, clinical laboratory scientists will soon get to watch the next “real world” chapter in the Holmes’ saga play out in federal court later this summer. They will also have multiple opportunities in the coming years to be “entertained” by the Theranos scandal on big and small screens.

—Andrea Downing Peck

Related Information

‘The Dropout’: William H. Macy, Laurie Metcalf, Elizabeth Marvel, Utkarsh Ambudkar, Kate Burton Among 10 Cast in Hulu Limited Series

Here Are All the Ways Theranos CEO Elizabeth Holmes Has Imitated Steve Jobs Over the Years

Elizabeth Holmes Hulu Series ‘The Dropout’ Adds 10 Guest Stars, including William H. Macy, Laurie Metcalf, Stephen Fry

U.S. v. Elizabeth Holmes, et al.

Hot Startup Theranos Has Struggled with Its Blood Test Technology

Amanda Seyfried to Play Elizabeth Holmes in Hulu Series ‘The Dropout,’ Taking Over from Kate McKinnon

Former Theranos CEO Elizabeth Holmes Is Pregnant, Causing a Further Delay in Her Trial Date

Federal Prosecutors Signal That Accuracy of Theranos’ Blood Tests Will Be Centerstage in August Fraud Trial

Pregnant former Theranos CEO Elizabeth Holmes makes her first court appearance in 15 months as pre-trial maneuvering continues in court case involving clinical laboratory tests

During pre-trial hearings for the August fraud trial of former Theranos CEO, Elizabeth Holmes, federal prosecutors signaled that the accuracy of Theranos’ blood tests will be center stage in their arguments. This latest installment in the continuing saga of defunct medical laboratory testing company Theranos took place when a now-pregnant Holmes made her first in-person court appearance in 15 months.

Clinical laboratory scientists have watched with interest as the often-delayed fraud trial inched closer to its new August 31 start date. After being delayed multiple times by the COVID-19 pandemic, United States District Court Judge Edward Davila ruled in March that the trial would be postponed from mid-July to late August due to Holmes’ pregnancy. She is due to give birth in July.

Do Prosecutors Lack Proof Theranos’ Blood Testing Technology Is Inaccurate?

As Dark Daily previously reported, Holmes faces 12 counts of wire fraud charges for alleged false claims that Theranos created a revolutionary technology for performing a wide range of clinical laboratory tests using a tiny amount of blood.

In its 2015 investigative report, The Wall Street Journal (WSJ) alleged Theranos had not disclosed publicly that the vast majority of its tests were performed with traditional machines purchased from Siemens AG and other companies, not its so-called breakthrough proprietary technology.

The recent three-day hearing provided Holmes’ attorneys and federal prosecutors with an opportunity to present arguments regarding what evidence can be presented at the upcoming trial.

In a recent article, the WSJ reported that Holmes’ attorneys argued the US Attorney’s Office for the Northern District of California built its case on anecdotal evidence.

According to the WSJ article, Holmes’ defense team is trying to block the government from calling patients and medical professionals to testify about the accuracy of Theranos’ blood test results. At the hearing, attorney Amy Saharia, a Williams and Connolly LLP partner, maintained prosecutors lack scientific proof Theranos tests were inaccurate. She called this lack of scientific evidence a “gigantic hole” in the government’s case.

“This trial is going to be a sprawling mess of irrelevant, prejudicial evidence,” she told the court, the WSJ reported.

Saharia added, “We have all become very familiar with testing this year. Testing involves many different variables,” CNBC reported. “What the government offers is without scientific basis, they have to establish Theranos technology was responsible for erroneous results. Just because it happened doesn’t mean it was because of Theranos technology.”

pregnant-elizabeth-holmes-leaving-courthouse
Pregnant Elizabeth Holmes (above), who is due to give birth in July, is seen entering the courtroom for a pretrial hearing in San Jose, Calif., in the US government’s fraud case against the former Theranos CEO. In the hearing, federal prosecutors indicated the accuracy of Theranos’ clinical laboratory tests will be at the center of their arguments. (Photo copyright: Mercury News.)

Defense Tries to Block Pathologists’ Testimony

During the second day of hearings, federal prosecutors responded to defense attorneys’ efforts to block clinical pathologist Stephen Master, MD, PhD, from testifying. Defense attorneys argued the government is using Master as a “parrot” and argue his views on Theranos’ blood tests are “based on emails and customer complaints” not personal familiarity with the tests, CNBC reported. Master is Division Chief and Director, Metabolic and Advanced Diagnostics at Children’s Hospital of Philadelphia, and an Associate Professor of Pathology and Laboratory at University of Pennsylvania’s Perelman School of Medicine.

Assistant US Attorney Robert Leach, however, said, “Miss Holmes went out, told the world and told investors: we have tests with the highest accuracy rate,” adding that testimony from their expert witness “puts the lie to that,” CNBC reported.

Before Theranos was dissolved in 2018, Holmes rose to rock star status in Silicon Valley. She graced magazine covers, rubbed elbows with VIPs, and became known for her Steve Jobs-like signature black turtleneck.

In his summary of Holmes’ 2016 presentation at the annual meeting of the American Association of Clinical Chemistry (AACC), titled, “After AACC Presentation, Elizabeth Holmes and Theranos Failed to Convince Clinical Laboratory Scientists and the News Media about Quality of Its Technology,” Robert Michel, Editor-in-Chief of Dark Daily and its sister publication The Dark Report, wrote, “It would be safe to summarize most reactions as skeptical.”

Holmes’ presentation, Michel noted, was met with suspicion as her credibility with the media and clinical laboratory scientists eroded. “Holmes did not fool many in the audience.”

One clinical chemist who attended the AACC meeting said, “I came to see scientific data about this remarkable technology that could do up to 70 medical laboratory tests on a single drop of capillary blood. Instead, I heard her talk about the new corporate strategy at Theranos, including the details as to how their analyzer works. The data that followed had nothing to do with anything but their new analyzer.”

Prosecutors Claim Fraud Paid for Holmes’ Extravagant Lifestyle

Holmes’ celebrity status helped fuel Theranos’ rapid valuation growth, which reached a high of $10 billion in 2015. But her gold-plated lifestyle became a point of contention during the recent pre-trial hearing. Prosecutors maintained that Theranos’ fraud propelled Holmes’ extravagant spending.

“In addition to her salary, the company provided for her luxurious travel on private jets and expensive lodging,” Assistant US Attorney John Bostic told CNBC. “The point here is the so-called success of Theranos was entirely the product of fraud.”

But according to CNBC, the judge “pushed back” on the government’s argument, stating Holmes’ benefits likely were on par with other CEOs. “What’s the value that she’s at the Four Seasons or a Motel 6?” the judge asked the prosecutors.

CNBC reported the two sides also sparred over whether jurors will learn about Holmes’ private text messages and regulatory reports.

Holmes and former Theranos President and Chief Operating Officer Ramesh Balwani have both pleaded not guilty. Balwani will face a separate trial after Holmes’ court case concludes.

Clinical laboratory scientists will watch with interest as the Holmes and Balwani trials finally get under way, since the accuracy of Theranos’ blood tests will be under the microscope along with Holmes’ participation in the alleged fraud.

Andrea Downing Peck

Related Information:

Elizabeth Holmes Makes First Courtroom Appearance in Over a Year

Hot Startup Theranos Has Struggled with its Blood-Test Technology

Elizabeth Holmes Lavish Lifestyle Looms over Theranos Fraud Case

Accuracy of Theranos Blood Tests at Heart of Elizabeth Holmes’ Criminal Case

Elizabeth Holmes Reappears in Court for First Time in 15 Months Putting Silicon Valley Culture Under Scrutiny

After AACC Presentation, Elizabeth Holmes and Theranos Failed to Convince Clinical Laboratory Scientists and the News Media about Quality of its TechnologyFederal Prosecutors Add a 12th Felony Fraud Charge in Latest Criminal Indictment Against Theranos Founder Elizabeth Holmes

;