Elizabeth Holmes returned to the stand in her own defense today, continuing with cross-examination by the prosecution’s Robert Leach. From the coverage published so far of six hours of questioning, Holmes has done everything to deny key statements she made multiple times to writers and investors, just short of ‘taking the Fifth’ (Amendment, which is a Constitutional guard against self-incrimination).
Starting with the now-infamous 2014 Fortune cover story authored by Roger Parloff, Holmes admitted to Leach that the claim of 200 tests using the equally infamous nanotainers was incorrect, but used what marketers call ‘weasel words’: “I believe that now.” Did she not believe that then? She then proceeded not to remember that she forwarded the article via email to investors on 12 June 2014. “I think I could have handled those communications differently.”
More not knowing or remembering. Were Theranos labs being used on military medevacs, as witnesses from Walgreens and Safeway, among others, have testified? Was Walgreens told of difficulties with the Theranos labs? Did or didn’t she dismiss concerns raised by Erika Cheung and Tyler Shultz to John Carreyrou of the WSJ as coming from disgruntled employees? Did she present a 2015 revenue projection of nearly $1 billion to investors, especially as the internal estimate was much lower and there were no contracts with pharma companies? Did she listen to her lab directors about problems with the tests?
But regrets, she had a few. The WSJ investigation, for instance. And slapping pharma company logos on Theranos reports.
It all comes down to who the jury believes. The prosecution either will close today or tomorrow (Wednesday). The defense will return to wrap up, either with Holmes or with expert witnesses such as Mindy Mechanic and, possibly, others. The defense will return to the 3 Ds–diffusion, deflection, and diminished capacity. The luridly resonant theme of Sunny Balwani as an abusive Svengali, which led her to be not in control of herself even after he departed, will be the coda. The Guardian, CNBC
Wednesday Update. Boy, was your Editor wrong. The defense rested today (Wednesday).
- Dr. Mindy Mechanic, the defense’ expert on relationship violence, will not be testifying about the nature of the Balwani-Holmes relationship. By not calling Dr. Mechanic, the prosecution cannot call their psychiatrists who also spoke with the defendants. For his part, Balwani has consistently defended himself from these charges of relationship abuse. The prosecution is also seeking to strike Holmes’ testimony of being sexually assaulted while a freshman at Stanford as now being irrelevant to the case, but it is hard for a jury to unhear it.
- Holmes was, of course, the star witness in her own defense, joined in minor roles by paralegal Trent Middleton from Williams & Connolly, Holmes’ law firm, who summarized evidence in the case, then former Theranos board member Fabrizio Bonanni, who testified that Holmes attempted to remedy Theranos’ problems–but only after it came under regulatory scrutiny, which was late in the game. He had been offered the COO position but declined as ‘too old for that’.
- Holmes returned in her final testimony to Balwani. Sunny, she said, was her most important advisor though she was, admittedly, the decision-maker. He was volatile. She “tried not to ignite” Balwani in emails and frequent texts. “Sunny would often blow off steam or vent through text,” Holmes said. “I was trying to be supportive.”
- Returning to tugging on the heartstrings of the four women on the jury, she stated that breaking up with him was a ‘process’. He’d just show up at places she would go, like church and The Dish near Stanford.
- Holmes explicitly denied ever trying to mislead investors, Her own summary was restating her original ‘healthcare vision’ and the impact the company would make on healthcare.
Summaries by the prosecution and defense will be next up. Mercury News (partial paywall), CNBC
To be continued…
TTA’s earlier coverage: Chapter 12, Chapter 11, Chapter 10, Chapter 9, Chapter 8, Chapter 7, Chapter 6, Chapter 5, Chapter 4 (w/comment from Malcolm Fisk), Chapter 3, Chapter 2, Chapter 1
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