Aggrieved Theranos investor takes the stand
A retired Texas money manager testified bitterly Wednesday in Theranos founder Elizabeth Holmes’ fraud trial about his lost investments in the company, but refrained from repeating before the jury that he wanted Holmes to go to prison.
Alan Eisenman told the jury that he and his family invested $1.1 million in Theranos in 2006. He grew frustrated at what he described as an unwillingness by Holmes to provide information on the company. Despite the suspicions that the lack of information raised for him, Eisenmann put another $100,000 into Theranos in 2013, based on claims from Holmes and Balwani, and press reports about Theranos, that persuaded him the investment would pay off, he testified.
Before Eisenman took the stand, and without the jury present, lawyers for both sides discussed a purported statement he made, outside the proceedings, that he wished Holmes would be imprisoned. Prosecutor John Bostic told Judge Edward Davila that the government would not seek to elicit any such comments from Eisenman. The jury has been warned that their decision about Holmes’ possible guilt cannot consider punishment, which will be decided by the judge.
Eisenman frequently took a bitter tone in his testimony, and often responded angrily to cross-examination by a Holmes lawyer, but made no comments about what outcome he desired for Holmes. He was to return to the stand when the trial resumes Monday.
Earlier Wednesday, a Holmes lawyer sought to distance the former CEO from operations in the company laboratory that produced tens of thousands of problematic blood test results. Holmes attorney Lance Wade was cross-examining a former Theranos lab director who had testified the day before that he voided at least 50,000 patient test results because he believed the company’s devices were faulty. Wade highlighted both Holmes’ lack of expertise in lab operations, as well as purported failures by previous lab managers to fix problems in the now-defunct company’s lab.
Former lab director Kingshuk Das testified Wednesday that Theranos CEO Holmes did not have the qualifications of a lab director and that he educated her on legal requirements and lab operations. Das was hired at Theranos shortly before the release of a devastating federal probe that concluded the company’s technology threatened the lives and health of patients.
Das acknowledged that lab owners such as Holmes — who Das said lacked the “technical background” to grasp the intricacies of lab management or to run a quality-control program — are to a degree dependent on lab directors for ensuring compliance with regulations.
Holmes, who founded the 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 coaccused, former company president Balwani, have denied the allegations. Balwani is to be tried next year.
Das said he worked at Theranos for two and a half years starting in late 2015. He testified that he believed previous Theranos laboratory professionals should have identified problems with the company’s “Edison” blood analyzers, and should not have validated tests run on them or allowed those tests to be performed in the clinical lab.
Wade earlier this month claimed before the jury that “incompetence” by former lab director Adam Rosendorff explained problems in the lab. “It’s exculpatory for my client,” Wade told jurors. However, Rosendorff had testified that Theranos cared more about public relations and fundraising than patients, and that he quit over inaccurate test results from the lab.
Wade got Das to acknowledge that the Theranos lab was “not well run” when he arrived. But in a March 2016 email to a colleague, displayed on courtroom screens, Das wrote that Holmes had been “fully supportive” of efforts to remedy lab problems identified by the U.S. Centers for Medicare & Medicaid Services.
Das testified that when he left Theranos in mid-2018, a few months before it shut down, he still believed in the vision of the company and what it was trying to accomplish. However, he added, he believed the serious problems identified by the regulator were “representative” of Theranos’ technology.
Holmes faces maximum penalties of 20 years in prison and a $2.75 million fine if convicted, plus possible restitution, the Department of Justice has said.