In a surprise turn, failed startup founder Elizabeth Holmes began testifying Friday to defend herself against the 11 counts of criminal fraud she faces in connection to the Theranos blood-testing firm she founded as a 19-year-old Stanford dropout.
Until it happened, it was uncertain to outsiders whether Holmes would speak during her trial. Even by Friday afternoon, legal experts stressed it was unlikely, given the risky move that could open her to cross-examination by the prosecution and possibly damage her credibility with the jury.
Holmes, wearing a navy blue blazer and white collared shirt, took the stand, removed her mask and smiled. Her defense team had previously pushed for the right for vaccinated witnesses to testify without a mask.
She has pleaded not guilty to defrauding Theranos investors and patients by falsely claiming that the company had developed technology to run a wide range of tests on a single drop of blood.
In her signature baritone, she told the jury her birthday — February 3rd, 1984 — and said that she spent her “first year and a half” of college at Stanford. There, she said, she met Channing Robertson, who was chair of the chemical engineering department and encouraged her to continue her research.
“Can you tell us what was happening in your head that generated that idea that you might file a patent application?” defense attorney Kevin Downey asked.
Holmes said she had been working at Stanford on microfluidics and on diagnostic machines in Singapore and “thought I could combine them and miniaturize some of the tech I had seen in the lab." That led her to file her first patent application in September 2003, before her sophomore year. It was ultimately granted in 2007.
The defense walked Holmes through the early days of Theranos as she sought advisors through the Stanford community, developed a business plan and attracted investment, and, she thought, “nailed” expectations.
After the first demonstration of the Theranos equipment at pharmaceutical giant Novartis, Holmes sent staff an email, which was shown in court, that read, “Team. We nailed this one. You all did an incredible job in making this happen — this is the Theranos way.”
That’s not how everyone saw it. A Novartis demonstration was described as having been a failure, in the book “Bad Blood” by Wall Street Journal reporter John Carreyou. The passage described a machine failing and a bogus result being sent in from California.
The former CEO’s testimony concluded after just an hour. Her testimony is expected to continue Monday and into Tuesday. The court is then scheduled to break for the holidays and resume Nov. 29th.
Holmes, 37, left the courtroom holding the hand of her boyfriend, hotel chain heir Billy Evans. The pair had a son, born in July, shortly before the trial was scheduled to begin.
The defense is trying to offer the jury an alternative narrative to the one put forth by the government over the past 11 weeks, going through 29 witnesses and weathering technical delays, a water outage and the dismissal of three jurors.
Earlier Friday, the government rested its fraud case against Holmes.
One of the 12 counts was immediately dismissed, the result of an earlier error by prosecutors. The defense had previously asked the government to submit a list of the specific Theranos diagnostic tests for which the patient witnesses allege they received mistaken results.
For one of the patients whose testimony formed the basis of Count 9 against Holmes, the government thought the patient’s test was covered by those on the list, but it wasn’t. By the time the oversight was discovered, it was too late for the prosecution to fix it by filing a superseding indictment, as the statute of limitations had passed.
The defense moved to have several exhibits and testimonies excluded and moved for acquittal under Rule 29, which requires a judge to give an acquittal if the government hasn’t presented sufficient evidence for a jury to find a defendant guilty beyond a reasonable doubt. While the move isn’t unusual, it does indicate that her lawyers think it has some chance of success.
Holmes’ defense team also argued that the testimony of Theranos patient Erin Tompkins, who said she received a test incorrectly indicating she was HIV-positive, should be struck as prosecutors did not call her doctor to testify.
“The testimony of Ms. Tompkins should remain in the record,” Prosecutor John Bostic countered, as she “was qualified to talk about her experience with the Theranos test, and present to the jury about the results she obtained."
Her lawyers also moved to strike a portion of a cover letter on a government lab inspection report, saying the prosecution never called a witness from the inspection agency, CMS. The damning report read, in part, that “deficient practices of the laboratory pose immediate jeopardy to patient health and safety.”
“Ms. Holmes respectfully moves for a motion for acquittal,” defense attorney Amy Mason Saharia told the judge. The evidence provided is “insufficient for every element on every count,” she said.
“Ms. Holmes respectfully moves for a motion for acquittal.”
The defense called its first witness Friday, a paralegal for the law firm of Williams & Connolly representing Holmes, who was there to introduce several summary exhibits into evidence, such as the number of patents assigned to Theranos, the company’s total customer receipts, and the number of tests Theranos offered.
One of the clearest examples of potential fraud presented by the prosecution came in the form of manipulated lab reports that Theranos sent to investors and the media. The company sent the results of its own tests to prospective pharmaceutical partners, Pfizer and Schering-Plough. It would then go on to affix the logos of those companies to the reports and represent them as having been validated and endorsed by those companies, prosecutors argued.
Witnesses testified that Holmes represented that the company’s devices were being used by the military on medical evacuation helicopters in live battlefield operations. This was never the case, former Defense Secretary Jim Mattis, who was a former Theranos board member, testified during the trial.
Besides the former investors, employees and board members, jurors also heard testimony from journalist Roger Parloff, whose later-retracted Fortune magazine cover story on Holmes helped further her reputation and was included in investor binders. Prosecutors argued that Holmes made numerous misrepresentations to him before the article ran, leading to the article perpetuating falsehoods and misstatements the company leveraged to drum up publicity and investment.
In 2004, Holmes dropped out of Stanford University at 19 to pursue an idea to invent a microfluidic blood diagnostics system that could quickly perform a multitude of tests on just a finger-prick of blood, instead of the standard venous draws used by commercial labs. After securing investments and media accolades, she became the world’s youngest female self-made billionaire and her company was valued at over $9 billion.
Then it all came crashing down after a series of skeptical Wall Street Journal articles in 2015 and 2016 exposed that the company was actually performing its tests on doctored third-party equipment instead of its own proprietary devices.
Due to Theranos lab deficiencies, and the fact that it had to massively dilute finger-prick samples to be run on the large commercial machines built to analyze venous blood draws, Theranos gave patients erroneous results, the Journal reported.
The results led one pregnant patient to believe that she was going to miscarry. An Arizona man, identified as R.C. in a class-action lawsuit, alleged that faulty Theranos sugar and lipid test results had led his doctors to not alter his medication regimen, which he claimed led to his heart attack.
Some results also indicated that some female patients had a marker that they would normally only have if they had a prostate — which women do not have. Later, the company voided tens of thousands of patient results, including every single test done on its own machines.
If convicted, Holmes and her co-defendant and former boyfriend Ramesh “Sunny” Balwani face up to 20 years each in prison, a fine of $250,000, plus restitution, according to the indictment.
