03 Dec 2021 By theguardian
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Theranos founder Elizabeth Holmes wept in court on Tuesday as a federal prosecutor grilled her over the nature of her relationship with Sunny Balwani, her former business and romantic partner, and her knowledge of problems at the company.
Holmes, who faces 11 counts of fraud and up to 20 years in prison over charges that she lied about the company's core blood-testing technology, had previously testified that she was emotionally and physically abused by Balwani. In Monday's testimony, she said Balwani closely controlled how she ran the business, who she spent time with, and even what she ate. Balwani, who faces his own fraud trial in 2022, has strongly denied these accusations.
Taking the stand for a fifth day, Holmes faced six hours of cross-examination from assistant US attorney Robert Leach, who questioned her over the relationship and also attempted to pick apart her assertions that she was not aware of problems with the company's signature blood testing devices.
Leach zeroed in on methods Holmes used to quash investigations into the company and underscored her role as the primary decision maker at Theranos.
"Anything that happens at the company was your responsibility at the end of the day?" Leach asked.
"That's how I felt," Holmes replied.
Although Holmes has been on the stand since 19 November, Tuesday marked the first opportunity for federal prosecutors to grill her under oath.
Leach sought to prove Balwani repeatedly alerted her to problems with Theranos devices. In one text shown in court, Balwani told Holmes "it is most maddening there is no focus in any chem teams and no product coming out". In another he expressed concerns she was overstating the capabilities of its fingerstick technology.
"He is not hiding his view, is he?" Leach asked Holmes.
"No, he is not hiding his view," she replied.
At some points Holmes grew tearful when asked to read aloud romantic texts she and Balwani exchanged during their five years of running the company and living together secretly behind the scenes.
"U are God's tigress and warrior. You are extraordinary," Balwani said to Holmes in one 2015 text message displayed in court. Holmes responded: "Coming from my tiger means the whole universe to me."
Holmes previously testified she believed Theranos's technology to be more accurate than it was due to successful early trials. She cited studies conducted by Schering-Plough (a pharmaceutical firm that later became Merck) and Pfizer, saying that at the time the numbers meant "our system was working well".
Leach asked Holmes about her responses to reporting in the Wall Street Journal by John Carreyrou, which first revealed cracks in the shiny facade of the company, which had for years been a Silicon Valley darling.
"I could not say more strongly the way that we handled the Wall Street Journal process was a total disaster. We really messed up," Holmes said.
Texts between Holmes and Balwani submitted into evidence showed how the CEO sought to suppress the Journal coverage of Theranos, hiring an external opposition research firm to thwart Carreyrou's reporting.
Holmes also expressed regret at her responses to the Theranos reporting as well as to whistleblowers like Erika Cheung, a former employee who previously testified during the trial that she was fired for raising issues with Theranos tests.
"I sure as hell wish we'd treated her differently and listened to her," she said.
In previous testimony she also addressed the bombshell evidence introduced by the prosecution that she intentionally doctored documents to include logos of major pharmaceutical companies, which corporate partners took to mean they had endorsed Theranos technology.
Holmes said she did so not to imply that the companies had vetted the technology but "because this work was done in partnership with those companies and I was trying to convey that".
"I wish I had done it differently," Holmes told jurors. That piece of evidence was revisited in the cross-examination, when Leach asked Holmes whether she personally applied the logo to the documents. She said she did.
Holmes was the third witness called by the defense after the prosecution spent 11 weeks presenting its case. Government attorneys called more than two dozen witnesses including former employees, investors and patients who testified that Theranos's blood-testing devices did not work as advertised, returning inaccurate results.
Witnesses also said many blood tests were being carried out by external labs rather than on Theranos devices.
In opening arguments, Holmes's defense attorney Lance Wade painted a picture of a hardworking young female executive caught up in the Silicon Valley culture that encourages entrepreneurs to push cutting-edge ideas.
"In the end, Theranos failed, and Ms Holmes walked away with nothing," he said. "But failure is not a crime - trying your hardest and coming up short, is not a crime."
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