Holmes denies deception at fraud trial
In her third day defending herself on the witness stand against criminal fraud charges, Theranos founder Elizabeth Holmes testified that she was responsible for putting logos from pharmaceutical companies on Theranos reports without authorization, telling jurors, ‘”I wish I had done it differently.”
The pilfered logos from pharma giants Pfizer and Schering-Plough, slapped onto Theranos reports lauding its own blood-testing technology, are among the most damaging evidence against Holmes that the jury has seen. Jurors have heard that Holmes distributed the reports to investors, as well as executives from Walgreens as Theranos was developing a partnership with the drugstore chain.
Holmes told the jury she put the logos on the Theranos reports because “this work was done in partnership with those companies and I was trying to convey that.”
Representatives from both companies previously testified that they disagreed with the reports’ glowing conclusions about Theranos, and had found Holmes “evasive” when asked questions about her startup’s technology.
Holmes lawyer Kevin Downey noted that witnesses had testified that they believed the Pfizer and Schering-Plough logos meant those companies had produced the reports. Holmes said she put the logos on just before she sent the reports to executives at Walgreens, and claimed she did not intend the logos to give the impression the reports were done by the pharma companies.
Holmes, who founded the now-defunct Palo Alto blood-testing startup at age 19 in 2003, is charged with allegedly bilking investors out of hundreds of millions of dollars, and defrauding patients with false claims that the company’s machines could conduct a full range of tests using just a few drops of blood. She and her co-accused, former company president Sunny
Balwani, have denied the allegations. Balwani is to be tried next year.
Holmes also took aim at a key allegation in the prosecution’s case: that Theranos secretly used other companies’ blood-testing machines for many tests, because its own devices could not perform them. Holmes admitted before the jury that Theranos hid its use of others’ machines, but she claimed that was to safeguard the patent-protected modifications her company had made to those devices from being copied by competitors. Her company told the U.S. Food and Drug Administration, however, because the agency assured Theranos of trade-secret protection. And she told the Theranos board in 2013 about the need for trade secrecy around the modification of third-party devices to run tests on small samples, she testified, because if competitors found out, “they could put us out of business.”
Holmes also sought to dampen the damage from evidence that her company had to use blood drawn from veins for many tests, rather than the finger-stick that her company had hyped as a key value of its blood testing. “We launched thinking that finger-stick was going to be a really big deal for consumers but what we learned from the data … is that price was actually more significant,” she testified. That data came from patients using Theranos testing at Walgreens drug stores, Holmes told the jury.
Holmes and her lawyer Downey sought to distance her from claims in Theranos promotional materials sent to prospective investors and others, and on the Theranos website, that jurors have heard did not match reality. Public relations and advertising firms were involved in creation of those materials, Holmes testified. She did not verify every statement in marketing materials, she testified.
The trial in U.S. District Court in San Jose has attracted massive media attention, with TV news crews and newspaper, radio and online reporters getting in line outside the courthouse starting as early as 2 a.m.