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SAN JOSE, California — Week nine of testimony in court Fraud case against Elizabeth Holmes It raises questions about what risks and responsibilities investors have when they invest money in high-growth startups like Theranos, Ms. Holmes’ failed blood-testing company.
In the final weeks of the trial, the jury heard from executives and board members who said Ms. Holmes had been fielded for blood testing machines capable of hundreds of blood tests, as well as former Theranos employees who were concerned about Theranos’ practices. from a drop of blood accurately and quickly.
This is based on testimonies from investors, which prosecutors say are victims in the 12 wire scam count at the heart of the case. Before Theranos collapsed in 2018, it raised $945 million from investors, valued at up to $9 billion, making Ms. Holmes a billionaire.
Mrs Holmes pleaded not guilty. If found guilty, he faces 20 years in prison.
Here are key takeaways from this week’s hearing, which took place on Tuesday after a water shortage near the courthouse on Wednesday forced the cancellation of that day’s events.
Carefully selected investors
Lisa Peterson, an investment manager at RDV Corporation, an investment firm that represents Michigan’s wealthy DeVos family, explained how the group began investing $100 million in Theranos and eventually losing it.
According to an email shown in court, RDV’s CEO, Jerry Tubergen, met Ms. Holmes at a conference in 2014 and became enthusiastic about Theranos. Ms Peterson, who was responsible for researching and facilitating the investment, said Theranos had selected several wealthy families to invest in and Ms. Holmes felt lucky to have the firm involved.
“She was inviting us to participate in this opportunity,” said Ms. Peterson. A presentation shown in court said Theranos deliberately sought out private investors who did not force the company to go public.
In Ms Peterson’s testimony, prosecutors relied on how Theranos used fake endorsements from pharmaceutical companies to deceive its partners and investors. Theranos had shown Walgreens and Safeway executives a verification report showing the logos of pharmaceutical companies and saying they support their technology.
Last week, a Pfizer executive said the company was researching Theranos’ technology and “had come to the opposite conclusion.” Ms. Peterson said she saw the verification report and believed it was prepared by Pfizer, which helped convince her firm to invest.
bad industriousness
In a heated cross-examination, Ms. Holmes’ lawyers sought to portray Ms. Peterson as a negligent capital officer who did not do proper research before investing money in a young venture.
Ms. Holmes’ lawyer, Lance Wade, highlighted the contradictions between Ms Peterson’s statements and a legal statement she had previously made. When Ms. Peterson insisted that her current statement was correct, she asked, “Has your memory improved over time? Is this your testimony?”
Mr. Wade also urged Ms. Peterson for not hiring science, legal and technology experts to investigate Theranos’ allegations and did not demand to see copies of Theranos’ contracts with Walgreens and Safeway. “Do you understand that it’s typical to invest?” He asked.
Ms Peterson said the firm trusted what Ms. Holmes and other Theranos executives told them.
Mr. Wade sought to reduce Ms. Peterson’s decision-making power within the firm, pointing out that he was not on RDV’s investment committee and was not present at all meetings involving Theranos.
Ms. Holmes’ lawyers walked a delicate line, arguing that investors like Ms. Peterson had not done enough research. That’s because their arguments included the tacit admission that Theranos’ technology didn’t do everything it promised, even if they had to argue that Miss Holmes wasn’t lying about the technology.
‘Conspiracy era’
Jurors watched two videos of Ms. Holmes, likely the first to see her face unmasked, while defending Theranos in interviews after The Wall Street Journal reported in 2015 that the new company’s blood-testing machines weren’t doing as much as claimed. .
a Jim Cramer’s appearance in “Mad Money”On the show on CNBC, Ms. Holmes said that Theranos’ machines could run more than 100 tests, rejecting the critical report. Inside Interview with CBS In 2016, Ms. Holmes regretted even more, “I am the CEO and founder of this company. Everything that happens in this company is my responsibility.”
Ms. Holmes’ lawyers at one point argued for excluding the videos as evidence, referring to the period after The Journal article as a “conspiracy period”.
Ms Peterson said she and others at RDV had spoken to Ms. Holmes during this time. At the meeting, Ms. Holmes downplayed the disclosures, said Ms. Peterson, who said that The Journal’s reporting was “made by a very enthusiastic reporter who wanted to win a Pulitzer.”
Mr Wade asked the court to remove that comment from the record.
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