Elizabeth Holmes admits whistleblower was right and reporter was ‘mishandled’

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San Jose, Calif. The government on Tuesday got a chance to cross-examine Theranos founder Elizabeth Holmes about fraud allegations involving the failed blood-testing startup.

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During several hours of testimony, prosecutors surrounded Holmes with questions ranging from lab reports with fake logos, a multimillion-dollar home, alleged vendetta against a whistleblower, and his aversion to a dog reporter.

The first round of inquiries focused on Holmes’ reaction to reporting efforts in 2015 by then-Wall Street Journal reporter John Carrero, who was pursuing a story on the company.

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Assistant United States Attorney Robert Leach shows court text messages between Holmes and her ex-boyfriend, Theranos chief operating officer Ramesh “Sunny” Balwani, demonstrating his preparation for Carrero’s visit amid concerns that he will write something negative. We do. Balwani said he would “nail” the reporter, and Holmes said he had a meeting with opposition research firm Fusion GPS for the reporter’s details.

“I think I handled the whole Wall Street Journal reporting process the wrong way,” Holmes said Tuesday.

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Leach then asked Holmes about his treatment of Erica Cheung, a former Theranos employee and whistleblower who had raised concerns on several occasions about quality issues with the company’s signature blood-testing devices. Cheung previously testified at trial that after leaving the company, Theranos sent her threatening legal letters and hired investigators to monitor her outside her home.

But in a surprising confession, Holmes admitted on Tuesday the witness stand that whatever point Cheung raised was correct.

“I sure as hell we treat her differently and listen to her,” Holmes said.

“You know today that Ms. Cheung was right, isn’t that fair?” Leach asked.

“Yes,” replied Holmes.

Holmes stopped acknowledging that the company had hired investigators to follow up a whistleblower, despite having $150,000 in receipts.

The startup’s founder went on to admit that the company had even hired private investigators to follow up his former employee, even though Leach tried to refresh his memory by showing him his receipts for the $150,000 payment. tried.

Holmes testified that he owned 51 percent of Theranos and had the ability to remove or remove anyone, including Balwani, laboratory directors and board members, effectively placing him in control of the company.

When asked about her annual salary, Holmes testified that from 2010 to 2013, it was around $200,000. In 2014, this increased to $360,000. Prosecutors also asked about the $9 million dollar home Holmes owned with Balvani in the affluent city of Atherton, California, from 2013 to 2016.

Holmes, who was once valued at more than $4 billion due to Theranos Holdings, testified that he had never sold a single share in his company. “I didn’t want to. I believed in the company and wanted to put my all in it,” she said.

Prosecutors also took note of the relationship between Holmes and Balwani, uncovering affectionate text messages sent between the two.

In a supporting message from Balwani in October 2015, shortly after the initial journal article was published – and with the investigation about Theranos mounting – he told Holmes, “You are God’s tigress and warrior. You are extraordinary.”

As the investigation into Theranos began, Balwani wrote to Holmes, “You are God’s tigress and warrior. You are extraordinary.”

“Coming from my tiger meant the whole universe to me,” she wrote back.

Prosecutor Leach asked, “Would it be fair to say that you thought you and Mr. Balwani had a spiritual connection?”

“I did at the time,” said Holmes.

The messages were in stark contrast to her dramatic testimony on Monday, when she testified that Balwani, 20 years her senior, He decided how she should control his body movements and behave as a businessman, and several times forced her to have sex with him.

She said that she broke up in 2016 after losing trust in Balwani.

Holmes said, “I began to realize that not only was he not the person he said was meant for me personally, but that if he had been there I could have saved my company. “

Leach later questioned Holmes about how the company had been advised by lawyers to reduce claims on its website prior to launch and whether it had fully exploited the use of modified third-party tools for investors and board members. was disclosed.

“There are so many things that I wish I had done differently,” Holmes said in response to a question about how clear she was with her board.

Holmes also testified that she not only added the pharmaceutical company’s logo to Theranos Lab report without permission before sending it to Walgreens, with which she was having a retail deal, but she also made additional changes.

In Pfizer’s case, she testified that she dropped the words “prepared for Dr. Aidan Powers” from one of the Pfizer employees she was conversing with. In a report by Schering-Plow, he added the phrase “gold standard.”

Holmes, 37, a former Silicon Valley darling who was once on the cover of glossy business magazines, founded the collapse after investigative reporting to a $9 billion company and finding flaws in its blood diagnostics technology after failing government lab inspections Went.

The company claimed that it can run all commercially available tests with just the prick of a finger. However, in reality, the blood testing equipment could have run fewer than a dozen tests and used the Siemens diagnostic tool covertly rather than on its own – while still returning false results to patients, including a patient who had One was given an HIV diagnosis, and another whose blood tests indicated she was at high risk of miscarriage.

If convicted, Holmes faces decades of prison, fines and damages to his investors.

Credit: www.nbcnews.com /

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