Tuesday, January 25, 2022

Elizabeth Holmes admits that she was CEO of Theranos, the company she founded

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No one was extra invested in Theranos than CEO and founder Elizabeth Holmes, she testified immediately. She owned the most inventory. She might even hearth the whole board of administrators — and mainly anybody else at the company.

“Is that fair?” Prosecutor Robert Leach requested Holmes in his cross-examination. “The buck stops with you?”

“I felt that,” Holmes replied.

Holmes’ protection has principally tried to put blame elsewhere — lab administrators, her co-defendant Sunny Balwani (who’s being tried individually), advertising agency Chiat Day, and extra. Holmes, who’s standing trial for 11 counts of wire fraud, portrayed herself as a real believer in Theranos’ know-how who was largely unaware of Theranos’ issues.

In order to knock down that testimony, prosecutors bought her to confess to:

  • Knowing Theranos was in a precarious monetary state of affairs in late 2013
  • Altering the textual content of studies Theranos had written for drug firms, along with including logos to them, earlier than sending them to Walgreens, traders, and journalist Roger Parloff
  • Trying to manage Wall Street Journal reporter John Carreyrou’s expertise at a Theranos wellness heart and making an attempt to kill his story by emailing the WSJ’s proprietor, Rupert Murdoch, who occurred to be a Theranos investor
  • Sending the regulation agency Boies Schiller Flexner after Carreyrou’s sources
  • Having legal professionals evaluate the language on Theranos’ web site, then ignoring their strategies in slide decks offered to traders afterwards
  • Asking Balwani to depart the company

Cash guidelines every part round me

Today, jurors stared deeply at an Excel sheet.

In August 2013, Theranos was working out of cash. The company needed to repay cash to Blue Cross Blue Shield as a result of Theranos hadn’t happy the situations of a contract. On the week of September 23, 2013, Theranos had about $14.5 million left in free money. The company had an intense burn fee and was almost out of cash, prosecutor Leach instructed. “I never thought of it like that,” Holmes replied.

Every week later, Theranos raised $21.9 million from traders, however the money crunch hadn’t ended. In December 2013, Balwani texted Holmes to warn her that they have been all the way down to $15 million in free money. “I saw that,” she replied.

Motive established: Theranos wanted cash, quick.

A bit of enhancing

In her direct testimony, Holmes admitted that she’d added logos to the studies Theranos ready for drug firms earlier than sending them to Walgreens, traders, and others. Earlier in the trial, we heard testimony that these recipients thought the logos meant that the studies hadn’t been ready by Theranos. During her direct examination, Holmes mentioned including these logos was an sincere mistake, and she solely wished to convey the partnership. She mentioned she regretted that folks had been fooled.

Today, we have been proven excerpts of Theranos’ contracts with drug firms that expressly forbid use of their logos with out prior written permission.

But the logos weren’t all that modified. Snippets of textual content that may need made it simpler to determine the report was made for Pfizer as an alternative of by Pfizer was eliminated by Holmes. On a memo Holmes added a Schering-Plough brand to, some of the language in its conclusion part was modified to be much more flattering to Theranos. Asked if she regretted it, she was defiant: “I think this was accurately reflecting the data in the document,” Holmes mentioned.

One doc she despatched out did come from a drug company — it was an evaluation from GlaxoSmithKline. It, too, had been altered. The unique, despatched from GSK to Theranos, was a phrase doc with no brand. Holmes added the brand. Someone additionally deleted one of the report’s conclusions, a bullet level that mentioned “finger prick/blood draw procedure was difficult (needed larger lancet and better syringe system).”

Did Holmes make this deletion? She mentioned she didn’t know. She didn’t know who at Theranos may need made these adjustments to the paperwork, she mentioned. I discovered this troublesome to imagine, notably since she’d owned another adjustments on these paperwork.

Bad Blood

When Theranos bought wind of Wall Street Journal reporter John Carreyrou’s investigation into the company, Holmes and Balwani exchanged texts about him. They’d employed a agency, Fusion GPS, to do “oppo.” “Our oppo guy knows him well,” she texted Balwani.

“We’’ll get [a] killer package for when [we] meet with Carreyrou to turn this into our story,” she texted Balwani later. On the stand, Holmes mentioned she didn’t know if that was a reference to work with Fusion GPS, however I actually don’t know what else it may very well be.

“Need to get ahead of all of it,” Holmes texted Balwani. Holmes was proven this textual content and requested if she remembered she was attempting to get forward of the story. She mentioned it didn’t refresh her reminiscence.

The makes an attempt to manage Carreyrou’s reporting didn’t cease there. Holmes and Balwani texted about Carreyrou’s plans to go to a Theranos wellness heart and debated whether or not they need to intervene to verify he didn’t get a fingerstick check.

Then, only for enjoyable, we learn some texts the place Balwani and Holmes mocked Carreyrou for being French.

When Holmes’ makes an attempt to kill Carreyrou’s tales didn’t work, she appealed to a significant Theranos investor: Rupert Murdoch. (Murdoch owns the WSJ and, by the way, is the inspiration for the menacing patriarch Logan Roy on the wonderful tv present Succession). She emailed him, with a doc connected, attempting to get him to dealer a gathering between a senior WSJ staffer and Theranos’ legal professionals. “I’ve also attached the material Theranos has shared with WSJ (responsive to questions from John Carreryrou) since the materials I gave you in July…. I thought that were I in your shoes I would want to know/be in the loop,” she wrote.

Holmes didn’t reach killing Carreyrou’s story. Shortly after it ran, she went on Jim Cramer’s present, Mad Money, to disclaim its central claims — so we watched the clip in courtroom. “Every test we run on our laboratory can run on our proprietary devices,” Holmes advised Cramer. This was not true — solely 12 exams, even fewer than the 15 Carreyrou initially reported, ran on Theranos units.

Holmes was immobile as she watched the video, aside from often urgent her lips collectively.


In Holmes’ and Balwani’s efforts to get forward of the story, Balwani tried to determine who Carreyrou’s sources have been. “Down to 5 people. We’ll nail this motherfucker,” Balwani texted Holmes.

“Who do u think,” she replied. “Now we have legal grounds.”

Asked about this in courtroom, Holmes claimed — not particularly convincingly — that she and Balwani have been speaking about who’d left Theranos some dangerous evaluations on Glassdoor.

Balwani texted Holmes, appropriately, that Carreyrou’s sources have been “Tyler [Shultz], Erika [Cheung] and Adam [Rosendorff].” Holmes didn’t ask who Cheung was, although they’d barely interacted. In reality, the points Cheung raised have been the identical ones regulators later present in the Theranos lab, Holmes admitted. “I sure as hell wish we treated her differently,” Holmes mentioned of Cheung.

The letter Cheung obtained instructed her to “cease and desist from these activities…. Theranos will consider all appropriate remedies, including filing suit against you.” Holmes denied that this was threatening and mentioned she was solely attempting to guard commerce secrets and techniques.

Cheung was tailed and served with a threatening letter from Theranos’ legal professionals, Boies Schiller. Shultz was stunned at his grandfather’s home by Boies Schiller legal professionals, although Holmes denied she’d meant to “ambush” him. Shultz’s grandfather, George, was additionally a Holmes mentor and sat on her board of administrators. He known as her, angrily, about the ambush.


In 2013, Holmes employed a lawyer to evaluate Theranos’ advertising supplies simply earlier than the Walgreens launch. “I haven’t quite worked my way through the whole website, but I’m worried,” the lawyer emailed Holmes. “For example, every time you say ‘better’ without specifying what it is better than, you are making a comparative claim, at least to all market leaders. you must be able to substantiate these claims.”

We noticed a proposed record of language adjustments: changing “highest quality” with “high quality,” “highest levels of accuracy” with “high levels of accuracy,” and “more precise” to “precise.” Lawyers additionally instructed ensuring Holmes substantiated a number of claims on the website.

But when she wished extra money from traders, it appears she ignored the legal professionals.

About three months later, Holmes despatched PFM Management’s Bryan Grossman a Powerpoint presentation. “Theranos provides the highest level of oversight, automation and standardization,” one slide mentioned. Another mentioned Theranos exams had the “highest levels of accuracy.”

Around the identical time, Lisa Peterson — who labored for the DeVos household workplace and in the end led an funding in Theranos— obtained a Powerpoint mentioned that Theranos’ high-complexity lab “requires the highest level of training.” It additionally contained details about Theranos’ proficiency testing, however didn’t point out that testing all happened on standard machines. Holmes mentioned she didn’t keep in mind discussing the slide, however that she didn’t point out modified standard machines with any traders.

Balwani texts

We noticed rather a lot of texts between Holmes and Balwani. The least profitable use of these texts was to attempt to forged doubt on Holmes’ claims that Balwani abused her.

The prosecution delved into Holmes and Balwani’s relationship, bringing Holmes to tears on the stand twice. Though he hadn’t advised her to mislead traders or anybody else, she mentioned that his therapy affected “everything about who I was.”

That appeared notably evident when she testified that, regardless of being Balwani’s boss at Theranos, she needed to get his approval to dwell her life. In one textual content, she requested him if it will be okay for her to see associates in the morning, so long as she was house by 11AM. “I think I was asking permission to see my friends,” Holmes mentioned. “I often tried to ask him if it would be okay if I could see a friend before going to the office or going to a work meeting.”

“Do you know how many times the word ‘love’ appears in these texts?” Leach requested immediately. She didn’t, however mentioned she wasn’t stunned to listen to it was 594 occasions. He then instructed her to learn some tender exchanges to the courtroom, which made her cry. Mixed in with the affection was enterprise, as when Balwani texted her that he was “worried about your ‘all fingersticks on our technology comment.”

It was onerous to inform what the jury made of all this, although I noticed just a few jurors shifting of their seats throughout this section of testimony. It turned my abdomen — and gave the protection a severe opening to problem the prosecution’s overreach.

Some of Holmes’ testimony did really bolster the prosecution’s case. She mentioned she generally gave Balwani course, that he was an at-will worker, and that she might have fired him at any time. As for his exit at Theranos, “I asked him to leave,” Holmes mentioned. She mentioned that her disillusionment with him after a lab audit turned up tons of issues was half of what prompted her to finish their relationship.

Who is Elizabeth Holmes?

The portrait painted on the cross-examination confirmed a CEO who was in management of her company, and who was actively working to verify that its presentation to the world was what she wished it to be.

On direct examination, we have been advised that Holmes was younger and naive. She’d made some errors, certain, however she’d additionally delegated to rather a lot of consultants. Besides, these errors weren’t actually legal.

Today we noticed another person — somebody who was in agency management of Theranos and wished to make its story bigger than life. We noticed memos Holmes doctored to make Theranos extra interesting. We learn her texts and emails, the place she tried to kill an unflattering information story. She additionally tried to punish the story’s sources when she couldn’t get to the reporter. Despite hiring legal professionals to evaluate her language, she ignored their recommendation when she made investor displays.

The jury will quickly resolve whether or not Holmes is responsible of fraud. What’s not up for debate? She was pulling the strings at Theranos.

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