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Elizabeth Holmes testifies college rape, partner’s control fueled her drive at Theranos

With tears and emotion, Holmes testified that former partner Ramesh "Sunny" Balwani dictated how she should become "The New Elizabeth."
Image: Former Theranos President and COO Ramesh "Sunny" Balwani leaves after a hearing at a federal court in San Jose, Calif., on July 17, 2019.
Former Theranos President and Chief Operating Officer Ramesh "Sunny" Balwani leaves after a federal court hearing in San Jose, Calif., on July 17, 2019.Stephen Lam / Reuters file

SAN JOSE, Calif. — Elizabeth Holmes testified Monday that being sexually assaulted when she was a student at Stanford University drove her decision to drop out at 19 and devote herself to her failed blood-testing startup, Theranos.

"I was raped when I was at Stanford, and I decided to put myself into building Theranos,” Holmes, the company's former CEO, testified through tears. "I wasn’t going to class, and I was questioning how I was going to process that experience. And I decided that I was going to build a life by building this company."

The account, part of Holmes' defense in a fraud case, kicked off a series of questions about her relationship with her former boyfriend and chief operating officer, Ramesh “Sunny” Balwani, a co-defendant in the fraud trial.

Holmes testified that Balwani, 20 years her senior, coached her to adopt a rigorous daily schedule, dictated how she should control her body movements and behave as a business person, and forced her to have sex with him, "because he said he wanted me to know that he still loved me."

He has denied all allegations of abuse.

“Balwani told me that I didn’t know what I was doing in business and that my convictions were wrong, that he was astonished at my mediocrity and if I followed my instincts, I was going to fail," she said.

"I needed to kill the person that I was to become what he called ‘the new Elizabeth,’ to become a successful entrepreneur,” Holmes testified.

Holmes said Balwani was controlling in their personal and professional relationships and read aloud texts the pair exchanged to the silent courtroom.

"I have molded you," Balwani texted in May 2015.

"Now I can be yours. No question. Completely," she texted back.

Balwani has rejected the accusations.

The testimony tied together two previously disparate narratives from Holmes’ trial testimony and from media coverage. One image was of Holmes as a strong, charismatic and demanding leader. The other, according to a motion the defense filed on the eve of the trial, was of a victim of an abusive personal and professional partner.

Her attorney led her through questioning that distanced her from blame for failed lab operations.

“Who was responsible for operational management of the lab?” asked the attorney, Kevin Downey.

“Sunny Balwani,” Holmes said. He oversaw all the “business parts” of the lab, she testified, adding that clinical and scientific decisions were the purview of the lab director.

Taking direct aim at one of the major themes repeatedly raised by the prosecution, Holmes contradicted previous witnesses and said she never claimed that miniaturized Theranos diagnostics equipment was being used on military helicopters in live battlefield operations.

Theranos had signed a contract with the Army to perform a limited test, but it was never able to complete a device to specifications in time, Holmes testified.

Holmes said she had been "trying to convey we were doing a lot of work on developing this new device for use on medevacs" but that she never outright said they were being used as such.

Investors like the DeVos family office, the founder of a biotech investment firm and a private investor who put in $6 million of his and his family's money testified that Holmes’ remarks about doing business with the military were factors in their decisions to invest millions.

"They told us that the technology had been used in the battlefield on medevacs, for example, and that getting diagnostic information to medical personnel in that setting was a matter of life and death," said Brian Grossman, the founder partner of PFM Health Sciences, an experienced biotech investment firm, which invested $96 million in Theranos.

Lisa Peterson, a representative for the DeVos family office, testified in mid-October that Holmes said "they were using them on military helicopters." The DeVos family invested $100 million in Theranos.

In total, Holmes raised $945 million from investors, ultimately boosting Theranos' valuation to $9 billion.

Monday's testimony was the latest shock turn following Holmes' surprise appearance on the witness stand.

Holmes revealed last week that she was the person at Theranos who added pharmaceutical company logos to the company’s lab reports.

Investors have testified that the logos made them believe the reports were endorsed by the pharmaceutical companies and that they weighed heavily on their decision to invest.

Holmes, who is charged with 11 counts of fraud, is accused of lying to patients, doctors and investors about the capabilities of her company's blood-testing technology. While she portrayed her proprietary devices as able to run every commercially available test, they were, in fact, never able to do more than a dozen, Holmes testified. And she never disclosed that the bulk of the tests were conducted with modified third-party testing equipment, the very machines her company was designed to disrupt.

The prosecution must prove that Holmes had an intent to defraud. The defense wrapped up her testimony by asking whether she ever cashed out.

“Did you ever sell a share of your stock in Theranos?” her attorney asked.

"I did not," Holmes said. Asked to explain, she said: “I didn’t want to. I believed in the company and wanted to put everything I had into it.”

If she is convicted, Holmes could face up to 20 years in prison, a $250,000 fine and an order to pay restitution. The trial is scheduled to end Dec. 17.

Pretrial motions for her co-defendant, Balwani, are scheduled to begin Dec. 16.