Elizabeth Holmes denies deception at her criminal trial
San Jose, California. Biotech entrepreneur Elizabeth Holmes, a former billionaire accused of plotting a large-scale medical fraud, expressed remorse while attending the witness stand on Tuesday, but denied trying to hide that her company’s blood-testing methods were not working as promised.
On the third day of her testimony during the high-profile criminal trial, Holmes admitted to making some mistakes as CEO of Theranos, a company she founded in 2003 when she was just 19. But she has repeatedly emphasized that she made most of her decisions with help from other CEOs and a respected board that includes former cabinet members in various presidential administrations.
Holmes, 37, made it clear that she never stopped believing that Theranos would revolutionize healthcare with a technology that was supposed to be able to detect a wide range of diseases and other problems by testing just a few drops of blood.
She testified: “Things are not smooth at all. There are always challenges.”
Theranos eventually collapsed after a series of explosive articles in the Wall Street Journal, and a review by federal regulators revealed serious and potentially dangerous flaws in the company’s blood tests. The scandal wiped out Holmes’ fortune, estimated at $4.5 billion, in 2014 when she was the subject of a glowing cover story in Fortune magazine.
Holmes has denied that she intends to deceive anyone about how her partnership with Walgreens, which aims to install Theranos testing devices in 3,000 drugstore chain stores, operates. Walgreens terminated the partnership after issues with inaccurate test results and the discovery that Theranos was testing many of its samples on conventional diagnostic equipment — not with Theranos’ Edison device, which was supposed to provide faster and less expensive testing.
Holmes said that when Theranos was about to start running tests at Walgreens stores, she purposely sent them to a central lab for conventional analysis instead. Holmes claimed that Edison was not designed to work in large groups to process huge numbers of blood samples.
Her testimony contradicts previous witness testimony and prosecutors’ claims that Theranos switched to traditional auditions due to test failures and other problems with Edison. Theranos never told its customers that it was using regular test equipment instead of the Edison.
Holmes testified that Theranos remained silent because he invented an “invention” that could process small blood samples on conventional testing machines. It claimed that the company did not tell Walgreens or anyone else to protect this trade secret from potential theft by a larger, certified testing company. “They had more engineers than we had,” Holmes said.
One key question remains in Holmes’ testimony – whether she will address her claim in legal filings that she was secretly manipulated by her former lover and former chief operating officer of Theranos, Sunny Balwani, into unethical behavior.
In court documents revealed shortly before the trial began in early September, Holmes’ lawyers accused Palwani of subjecting Holmes to “intimate partner abuse.” Balwani, who faces a separate fraud trial next year, has denied the allegations through his attorney.
Balwani also made a series of financial predictions that were a focal point of the trial, according to Holmes. In documents distributed to potential investors, Theranos forecast annual returns of $140 million in 2014 and $990 million in 2015. Other evidence presented during the trial showed the company never came close to meeting these goals.
Holmes testified that the 2015 revenue forecast was based largely on the expected expansion of Walgreens stores that never materialized.
The former CEO of Theranos took charge of adding the logo of Pfizer, a major drug maker, to a report praising the effectiveness of Theranos technology. The decision followed an internal report by Pfizer that Holmes said it had never seen expressed doubts about the reliability of Theranos’ blood tests.
“I wish I had done it differently,” said Holmes. Several investors testified that seeing the Pfizer logo in the report helped convince them to invest in Theranos.
Holmes raised nearly $1 billion after founding Theranos in 2003. She faces allegations of deceiving investors, patients and business partners while managing Palo Alto in California. If convicted, she could face up to 20 years in prison.
Holmes has spent eight hours so far on the podium and will not return until Monday, when the trial will resume after a break over the Thanksgiving holiday.
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