SAN JOSI, California. For four days, Elizabeth Holmes accused others of alleged fraud at her blood test startup Theranos. On the fifth day, the prosecutor’s office tried to clarify one thing: she knew.
During more than five hours of cross-examination on Tuesday, Robert Leach, assistant U.S. attorney and lead attorney for the case, pointed to text messages, notes, and emails from Holmes – and his business partner and ex-boyfriend Ramesh Balwani – discussing business and technology issues. Theranos. Leach had a common chorus: no one was hiding anything from Holmes. He argued that, as the chief executive of Theranos, she was to blame.
“Was everything that happens in the company in the end your responsibility?” Leach asked.
“This is how I felt,” Holmes said.
This is the culmination of three months of testimony and nearly four years of waiting since Holmes was charged in 2018 with electronic fraud and conspiracy to commit electronic fraud. Prosecutors presented evidence to the jury of demonstrating counterfeit products, falsified documents and messages to demonstrate that Holmes deliberately misled investors, doctors, patients and the world about Theranos.
The outcome of her case has implications for the tech industry at a time when fast-growing startups amass wealth, power and cultural significance. Few startup founders have been prosecuted for misleading investors when they tried to pursue their long-standing business ideas. If convicted, 37-year-old Holmes, who pleaded not guilty, faces up to 20 years in prison.
In 2015, Theranos ‘valuation rose to $ 9 billion, raising $ 945 million on Holmes’ promise that his blood testing machines could perform hundreds of tests quickly and cheaply with just a few drops of blood. She founded the company in 2003 after dropping out of Stanford University.
But in reality, prosecutors say the Theranos machines could only run a dozen tests, and they were unreliable. Instead, she secretly used commercially available machines from Siemens. After this and other misrepresentations were revealed, Theranos canceled the blood test results for two years. He also settled lawsuits with investors and the Securities and Exchange Commission, which eventually disbanded in 2018.
In her initial testimony, Holmes tried to dismiss the fraud allegations as too simple and as a misunderstanding of her statements. She also cited her lack of knowledge of many of Theranos’ problems, highlighting her lack of experience and qualifications to run a scientific laboratory.
Holmes confessed to his mistakes during cross-examination on Tuesday. “There are many things I would like to do differently,” she said.
Theranos mishandled a revealing article in The Wall Street Journal in 2015 about the company’s technology problems, she said.
“We’ve ruined everything,” Holmes said. She also admitted that she approached Rupert Murdoch, the owner of The Journal, who invested in Theranos, to refute the story.
Holmes said she also regrets the way Theranos treated Erica Chung, an employee who expressed concerns about the company’s laboratory practices. After Chung left the company, Theranos hired a private investigator to track her down and hand her legal threats.
“I fucking wish we would treat her differently and listen to her,” Holmes said.
The testimony followed dramatic revelations about Holmes and Balwani’s relationship. On Monday, she said through tears that she was raped when she was a Stanford student and that Balwani had abused her emotionally and physically after the experience.
She accused Balwani, 20 years her senior, of controlling what she ate, how she presented herself, and how much time she spent with her family. She said that he forced her to have sex with him against her will and told her that she must “kill herself” in order to be reborn as a successful entrepreneur.
This was the first time Holmes told her version of the rise and fall of Theranos, which portrayed Silicon Valley’s arrogance and outrage in podcasts, documentaries, and screenplays. Her testimony complicated this story, shedding new light on the behind-the-scenes relationship between her and Balwani, which they kept secret as her profile grew.
Holmes attempted to link her relationship with Balwani to her fraud allegations, stating that he influenced “everyone in who I was,” including Theranos. She said she pushed him out of the company and broke up with him after learning that the Theranos lab, which Balwani oversaw, was in serious trouble.
“I couldn’t have saved our company if he was there,” she said Tuesday.
Balwani denied assault charges. He was charged with fraud along with Holmes and is tried separately the following year. He also pleaded not guilty.
Over the course of a long and detailed day of testimony, Leach lingered on the relationship, using text messages between Holmes and Balwani as primary evidence. He asked Holmes to read text messages that showed her exchanging affectionate remarks with Balwani. The couple referred to each other as “tiger” and “tigress” in between bombastic talks about the construction of Theranos.
“Nobody but you and me can build this business,” Balwani wrote in one conversation.
After each session, Leach asked Holmes to make sure she had just read Balwani’s example of love for her. Reading the messages, Holmes cried a second time at the stand.
Jill Hasday, a professor at the University of Minnesota School of Law who has written a book on intimate partner violence and the law, said prosecution tactics could work to undermine Holmes’ previous testimony, depending on the understanding of jury abuse.
“I think it can be effective because people have a lot of misconceptions about intimate partner violence, including that it is constant,” Hasdei said.
The trial, due to end in December, will resume next week.