Elizabeth Holmes admits gave journalist wrong info for Theranos story
SAN JOSE, CALIF. – Theranos founder Elizabeth Holmes admitted on Tuesday that she gave a journalist inaccurate information for a lengthy profile that she used to woo investors.
Holmes was given the opportunity to defend herself for six days after the end of cross-examination. Federal prosecutor Robert Leach asked Holmes about her 2014 Fortune cover story, “This CEO Is Out For Blood,” written by Roger Parloff.
Leach showed jurors part of Parloff’s feature story on Holmes in which she appears in her trademark black turtleneck: “It 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.”
“You are adamant that I made an error in your statement? Leach asked.
Holmes stated, “I believe it now.”
Prosecutors claim Holmes used Fortune to lure investors by including it in presentations or binders.
“You have no memory of sending the Parloff article out to potential investors” Leach was curious.
“I don’t,” Holmes said.
Leach told the jury, “Let’s refresh your memories,” and showed them an email Holmes had sent to shareholders at Theranos on June 12, 2014. It linked to the Fortune story.
Holmes said that Holmes could have managed those communications better.
Holmes was once an Silicon Valley darling and raised more than $945 million through luminaries like Rupert Murdoch or Don Lucas. She now faces 11 fraud charges. If convicted, she could spend up to 20 years prison. Holmes is accused of a decade-long conspiracy to mislead investors and patients regarding her blood-testing technology. She pleaded not guilty.
For two days, prosecutors have grilled Holmes in cross examination about discrepancies in her statements to investors, business partners and employees.
On Tuesday, testimony also included the U.S. military’s purported use for the Theranos device.
Numerous witnesses were present, including Steve Burd (ex-Safeway CEO) and Lisa Peterson (representative of the DeVos as Theranos Investors). They testified that Holmes said to them that the technology had been deployed in the Middle East by the U.S. Military.
Holmes admitted that Theranos’ device had never been deployed on the battlefield, but he stood by it.
Holmes also acknowledged that her second-in-command and boyfriend at the time, Ramesh “Sunny” Balwani, never told her or investors that Theranos devices were used in Medevac helicopters or in the battlefield.
Holmes also answered Leach’s question about her 2015 revenue projection of $1 billion. However, the internal estimate was significantly lower. Holmes said that the number was derived from a financial model but didn’t believe she presented it to investors.
Holmes also indicated that the document showed projected revenues of $40 million from drug companies. Holmes however testified that there were no agreements with any pharmaceutical companies.
Leach claimed that “you can’t find a single contract for pharmaceuticals.” You had zero revenue from pharmaceutical companies during 2014.
Holmes said to Holmes, “We didn’t,”
Holmes stated in her testimony that Balwani was charged with certain aspects of the business, such as financial projections.
“You understood that at the end you would be financially responsible for Theranos.” Leach asked.
Holmes testified, “I did.”
Her testimony continues Wednesday. This week, after three months of blockbuster trials, the defense should be done with its case.