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Government will rest next week

Elizabeth Holmes is the founder and CEO at Theranos.

Reuters| Reuters

SAN JOSE, CALIF. — The surprise announcement by the government Wednesday was that Elizabeth Holmes (ex-CEO of Theranos) would not be prosecuted in her criminal fraud trial.

Jeffrey Schenk (assistant U.S. Attorney) stated that it is probable that the government will be resting next week, adding that there would not be enough witnesses for the entire week.

The government’s second witness, Alan Eisenman (a Theranos investor), testified for the announcement. Eisenman is the key witness for the government. He testified that he felt he didn’t get accurate information on the company’s technology.

Eisenman is a Texas retired financial planner who made nearly $1.2million in Theranos investments in 2006. Eisenman’s investment is the foundation of one count in this case for wire fraud. Holmes has pleaded guilty to the twelve wire fraud charges and conspiration to commit wire fraud.

His wife and he shared $900,000. He also contributed $90,000. Eisenman stated that David Harris, the financial advisor to the Holmes family, introduced him to the company.

Eisenman said, “He told him that Elizabeth is brilliant.” Eisenman said that Elizabeth was leaving school in order to set up a business and was already partially on her path.

Holmes was Eisenman’s first source of information. He testified that they spoke frequently one-on-one, in addition to having quarterly calls with investors. These calls dropped to zero in the middle of 2010.

Eisenman claimed that although he had heard about Theranos being a seed-stage startup, he didn’t think the tech was advanced enough to warrant his support. Eisenman testified that he was amazed by the results. OracleLarry Ellison, the founder of Theranos, was involved with it and was informed by him that Theranos had signed contracts with six multinational pharmaceutical companies. PfizerAnd Novartis

Eisenman declared, “It’s an impressive company list.” “To me, that added a stamp of approval for investment.”

Eisenman recalls that Holmes predicted revenue between $50 and $60 million in 2007 and revenue around $200 million by 2008. Eisenman testified to Holmes telling him that Holmes was in talks with Morgan Stanley to launch an IPO within the next 12-18 months. He stated that another reason motivated him to make his investment.

Eisenman stated to jurors that after several conversations regarding a liquidity event, he felt increasingly frustrated.

Eisenman explained that investors all want to be able to leave at some point. It’s okay if a company changes its mind, but it should not be changing every year.

Eisenman stated that there was frustration in trying to find information about the company. “And it wasn’t just that I didn’t have enough information. The company was sending me no information. This is a warning sign.

Eisenman wrote Holmes in November 2012 The email began: “Elizabeth, it has been over 2 years since you have communicated with your investors…”

Eisenman was still open to the possibility of investing in Theranos in 2013, even though he received an email regarding fundraising. This email stated: “With this year’s launch to consumer health care, we are fast scaling to build a national network.”

Eisenman stated that he believed the most recent fundraise was intended to grow Theranos’ market. Eisenman recalled a conversation he had with Ramesh Balwani, the company’s president and chief operating officer.

Eisenman explained that after some time of intense hostility, the phone call was unexpectedly kind and friendly. “They were raising funds and you sometimes put on different faces when you raise money.”

Eisenman claimed that they had been in conflict until Eisenman began to discuss investing more money.

“[Balwani]Eisenman stated that Eisenman was “hostile for a long time” and non-responsive, but aggressive when it came to communicating with him. This was a 180 degree change.

Balwani Ironman, despite his disappointment with Holmes and Balwani Esman, invested an additional $99990 in Theranos.

Eisenman explained to the jury, “This is what you call a place at the table.”

On Monday, he will continue to testify.

Mike Robinson
Mike covers the financial, utilities and biotechnology sectors for Street Register. He has been writing about investment and personal finance topics for almost 12 years. Mike has an MBA in Finance from Wake Forest University.