Elizabeth Holmes Trial Enters Fifth Week
Image Courtesy of CNN Business
Former CEO and founder of now-defunct health technology company, Theranos, Elizabeth Holmes now faces 12 counts of fraud for her role in swindling wealthy customers and donors.
Holmes, who started Theranos in 2003 at the age of nineteen, touted her company as a breakthrough health technology company, claiming to have devised blood tests that required only very small amounts of blood and could be performed very rapidly using small automated devices the company had developed.
The idea behind Theranos was to develop a wearable patch that could adjust the dosage of drug delivery and notify doctors of variables in patients’ blood. Holmes started developing lab-on-a-chip technology for blood tests, with the idea to start a company that would make blood tests cheaper, more convenient, and more accessible to consumers. Holmes dropped out of Stanford in 2003 and used the education trust from her parents in order to achieve her dream by founding the company that would later be called Theranos. To many it was considered a revolutionary idea, but to others, some things just didn’t add up.
After questioning and investigation starting in 2015, the company faced a string of legal and commercial challenges from medical authorities, investors, the U.S. Securities and Exchange Commission (SEC), Centers for Medicare and Medicaid Services (CMS), state attorneys general, former business partners, patients, and others. Eventually the company was resolved in 2018 and Holmes, as well as former company president Ramesh “Sunny” Balwani, were charged with two counts of conspiracy to commit wire fraud and nine counts of wire fraud by the SEC.
In their most recent court session, Dr. Adam Rosendorff, who was Theranos’s lab director in 2013 and 2014, testified for the past six days about highly technical elements of the company’s inner workings, leaving many confused as to why Rosendorff’s testimony was used at all. But, contrary to speculation, Rosendorff’s testimony was critical to the prosecution’s case.
After taking the stand he described repeated instances of irregular and inaccurate results in Theranos’s blood tests, which he said made him uncomfortable and ultimately led him to leave.
“I wanted to join a reputable company whose mission I believed in,” Rosendorff testified in court.
Former chief executive of Safeway, Steve Burd, began testifying last Wednesday, telling the story of Safeway’s partnership with Theranos, which ultimately unraveled.
Burd met Holmes back in 2011 and was immediately impressed by the concept of her so-called research. In court, he described the promises she had made about Theranos’s technology, testifying that he was excited to bring fast and cheap blood testing to Safeway’s grocery stores. People could shop for groceries while they waited for their results and picked up their prescriptions at Safeway’s pharmacies, he said.
The two companies struck a deal for Safeway to pour as much as $85 million into Theranos by investing, buying its equipment and more. The negotiations were all done directly with Holmes and with no lawyer present, a move Burd said he found “unusual.”
His testimony is set to continue in trial next week.
So far Holmes has pleaded not guilty to the charges she’s facing in court, and if convicted, could be facing up to 20 years in prison.
