Elizabeth Holmes trial: cross-examination of former Theranos CEO begins

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Federal prosecutors on Tuesday launched an aggressive cross-examination of Theranos founder Elizabeth Holmes in Silicon Valley’s highest-profile trial in decades.

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Holmes enters Federal Courtyard in San Jose, Calif., flanked by her partner Billy Evans and her mother for their fifth day on the stand It is alleged that he lied about the company’s core blood testing technology. She faces 11 counts of fraud and up to 20 years in prison.

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Assistant US Attorney Robert Leach hit out at Holmes’ claim that she was not aware of the failures of the company’s proprietary tests, zeroing in on the whistleblower at the company and ways to quash the investigation.

holmes first testified that he believed Theranos’ technology was more accurate than the successful initial tests. He cited studies by Schering-Plough (a pharmaceutical firm that later became Merck) and Pfizer, saying the numbers meant “our system was working well” at the time.

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Leach asked Holmes about her reactions to reporting in the Wall Street Journal by John Carrero, which first revealed cracks in the shiny aspect of the company that had been a Silicon Valley darling for years.

The texts between Holmes and Balvani showed evidence of how the CEO tried to suppress journal coverage of Theranos, hiring an outside opposition research firm to thwart Carrero’s reporting.

Holmes regretted the Theranos reporting as well as his reactions to whistleblowers such as Erica Cheung, a former employee who testified during an earlier trial that he was fired for raising issues with Theranos trials.

“I sure as hell we will treat him differently and listen to him,” she later said, adding that Theranos “handled the entire Wall Street Journal reporting process 100% incorrectly”.

Tuesday was the first day of cross-examination for Holmes. On Monday, she was in tears alleging that her ex-boyfriend and business partner Sunny Balwani had harassed her emotionally and physically. Balwani, who faced his own fraud trial in 2022, has vehemently denied these allegations.

In previous testimony she also addressed blatant evidence presented by prosecutors that she intentionally manipulated documents to include the logos of major pharmaceutical companies, corporate partners implying they supported Theranos technology.

Holmes said she did this not because the companies had tested the technology, but “because this work was done in partnership with those companies and that’s what I was trying to convey”.

Holmes told the jurors, “I wish I had done it differently.”

Holmes was the third witness called by the defense after the prosecution spent 11 weeks presenting its case. Public prosecutors called more than two dozen witnesses, including former employees, investors and patients, who testified that Theranos’ blood testing equipment did not work as advertised, returning false results.

Witnesses also said that many blood tests were being done by outside laboratories rather than by Theranos equipment.

In the opening debate, Holmes’ defense attorney, Lance Wade, painted a picture of a hardworking young female executive steeped in Silicon Valley culture that encourages entrepreneurs to pursue cutting-edge ideas.

“In the end, Theranos failed, and Ms. Holmes walked away with nothing,” he said. “But failure is not a crime – trying your best and falling short is not a crime.”

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