Elizabeth Holmes denies misleading investors in trial testimony

[December 08, 2021]  By Jody Godoy

SAN JOSE, Calif. (Reuters) -Theranos founder Elizabeth Holmes denied making misleading statements about the blood-testing startup during cross-examination on Tuesday, as her testimony in defense against fraud charges neared its end.

Former Theranos investors have testified at the trial that Holmes had led them to believe the company's technology was being used by the U.S. military in the field. Under questioning from prosecutor Robert Leach, Holmes said she had never made such statements to investors and that they would not have been true.

Holmes also said she did not recall telling an investor that Theranos expected to achieve $990 million in revenue in 2015, a claim prosecutors have said was false.

But Holmes acknowledged she was in regular contact with Theranos' financial controller and had ultimate responsibility for the company's finances as its chief executive officer.

Leach completed his cross-examination of Holmes on Tuesday afternoon.

Holmes rose to fame in Silicon Valley for her ambitious play to reinvent diagnostic testing. But she has been on trial for three months in a San Jose, California, court, accused of exaggerating Theranos' technology to bilk patients and investors.
 

Once valued at $9 billion, Theranos collapsed after the Wall Street Journal published a series of articles, starting in 2015, that suggested its devices were flawed and inaccurate.

On the stand, Holmes has testified that she believed Theranos could have achieved its goal of a miniaturized device that would make blood testing cheaper and more accessible.

Holmes has explained some of her actions, such as attempts to quash a Wall Street Journal story on Theranos, saying they were aimed at protecting the company's trade secrets.

Former Theranos CEO Elizabeth Holmes leaves after a hearing at a federal court in San Jose, California, July 17, U.S., 2019. REUTERS/Stephen Lam

She also invoked intellectual property concerns to justify withholding Theranos' use of third-party blood testing machines from Walgreens.

The pharmacy chain had a partnership with Theranos to offer blood tests in some of its stores.

Holmes testified on Tuesday that Theranos shared confidential information in other instances, including sending one of its devices to Walgreens for it to examine.

Theranos trusted Walgreens not to reverse-engineer its technology because that would violate a confidentiality agreement between the companies, she said.

Her attorneys, who have characterized Holmes as young entrepreneur who underestimated the obstacles Theranos faced and argued that the company's failure was not a crime, said the defense case is expected to conclude this week.

Holmes' testimony is expected to conclude on Wednesday.

(Reporting by Jody Godoy in San Jose; Editing by Noeleen Walder, Dan Grebler and Bill Berkrot)

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