David Paul Morris/Bloomberg
In Elizabeth Holmes’ sixth day on the stand, the prosecution sought to undermine her previous testimony one piece of evidence at a time.
On the stand, Holmes admitted to some mistakes. For other mistakes, she placed the blame on her colleagues. And in many cases, she simply couldn’t recall what had happened. The prosecution, though, had plenty of testimony, emails, and documents to refresh her memory.
Prosecutor Robert Leach asked Holmes about the Fortune cover article by Roger Parloff, the one that she proudly sent around to investors. The article contained many errors because Holmes either gave him incorrect information or never bothered to correct him.
“At the time, you were not worried people would be given an inaccurate impression?” Leach asked.
“I was not,” Holmes replied.
The errors and omissions were ones that conveniently painted Theranos as more technologically savvy than it really was. Leach highlighted three passages from Parloff’s article.
“[Theranos] currently offers more than 200–and is ramping up to offer more than 1,000–of the most commonly ordered blood diagnostic tests, all without the need for a syringe.”
“Theranos, which does not buy any analyzers from third parties, is therefore in a unique position.”
“They take up a small fraction of the footprint required by a conventional lab today.”
Holmes acknowledged on the stand that none of those statements was accurate. Leach homed in on the number of tests Theranos could perform using finger sticks. “You agree with me that this was an incorrect statement?” he asked.
“I believe that now,” Holmes replied.
Yet despite the admission, Holmes wouldn’t admit that she sent the article to investors. “You don’t have a memory of forwarding the Parloff article to investors or potential investors?” Leach said.
“I don’t,” Holmes said.
“Let’s refresh your memory,” Leach said. He then pulled up an email from June 12, 2014, that Holmes had sent to Theranos shareholders. In it was a link to Parloff’s Fortune article.
Hiding Theranos’ shortcomings
Prosecutors also showed the lengths to which Theranos and Holmes went to hide the fact that many of their tests required venous draws rather than their much ballyhooed finger sticks. When people from BDT Capital Partners, a potential investor, wanted to experience Theranos testing for themselves, Theranos employees made sure they would’t be given a venous draw.
An email from Christian Holmes, Elizabeth’s brother, ran through how to handle a range of possible scenarios if the tests they ordered prompted venous draws. “Assumptions here from EAH [Elizabeth A Holmes] that we must not do venous draws, and we cannot tell them their order prompts venous if it does,” he wrote.
Why did she go to such lengths? She said she merely wanted to impress the investor.
Ultimately, BDT Capital Partners declined to invest because the Cleveland Clinic never validated Theranos devices—the company hadn’t sent one, despite claims that they had an arrangement with the clinic.
Then there was the matter of Theranos devices and the US military. Leach began his questioning by asking whether the military ever used Theranos devices on its medevac helicopters. It did not, she replied. Did she ever tell investors that they did? “I don’t think so,” Holmes replied.
Leach then pointed to testimony given by previous witnesses, including Parloff, Safeway’s ex-CEO Steven Burd, and investors Brian Grossman, Bryan Tolbert, and Lisa Peterson. They all said that Holmes told them that Theranos devices were being used on military helicopters.
“Again, I don’t think I did,” Holmes said.
Future tense
Holmes’ memory of key events wasn’t the only thing she didn’t seem to have a good handle on. She also refused to acknowledge that she understood the future tense.
Leach asked her about slides that Ian Gibbons, Theranos’ former chief scientist, had prepared about the company’s technology. In the slide presentation, he made various statements about how well the technology was performing—“results have been excellent” and “performance design goals have been demonstrated,” that sort of thing.
But he also said that an upcoming revision of the device, version 4.0, “will be capable of performing any measurement required in a distributed test setting. It is envisaged that several distinct measurement technologies will be incorporated.”
In earlier testimony, Holmes said that, based on Gibbons’ slides, she “understood that the four series could do any blood test.”
Yesterday, Leach pointed out that Gibbons used the future tense and that the deck was riddled with “TBD.” Holmes acknowledged that TBD means “to be determined,” but she wouldn’t concede the point. She said “there was still work to be done” on the device but that at the time she believed version 4.0 could really do any test, even though it didn’t exist yet.
When it did eventually exist, it couldn’t do “any test.” At best, the most tests Theranos could do using its own technology was 12.
