SAN JOSE, Calif. — For four days, Elizabeth Holmes took the stand to blame others for the alleged fraud at her blood testing startup, Theranos. On the fifth day, prosecutors tried making one thing clear: She knew.
Over more than five hours of cross-examination Tuesday, Robert Leach, the assistant U.S. attorney and lead prosecutor for the case, pointed to text messages, notes and emails with Holmes — and with her business partner and former boyfriend, Ramesh Balwani — discussing problems with Theranos’ business and technology. Leach had a common refrain: No one hid anything from Holmes. As Theranos’ chief executive, he argued, she was to blame.
“Anything that happens at the company was your responsibility at the end of the day?” Leach asked.
“That’s how I felt,” Holmes said.
It was the culmination of three months of testimony and nearly four years of waiting since Holmes was indicted on charges of wire fraud and conspiracy to commit wire fraud in 2018. Prosecutors have shown jurors evidence of faked product demonstrations, falsified documents and communications with the goal of showing that Holmes knowingly misled investors, doctors, patients and the world about Theranos.
The outcome of her case has consequences for the tech industry at a moment when fast-growing startups are amassing wealth, power and cultural cachet. Few startup founders have been prosecuted for misleading investors as they strive to hustle their long-shot business ideas into existence. If convicted, Holmes, 37, who has pleaded not guilty, faces up to 20 years in prison.
Theranos rose to a $9 billion valuation in 2015, raising $945 million on Holmes’ promise that its blood testing machines could perform hundreds of tests quickly and cheaply using just a few drops of blood. She started the company in 2003 after dropping out of Stanford University.
But in reality, prosecutors have argued, Theranos’ machines could conduct only a dozen tests, and those were unreliable. Instead, it secretly used commercially available machines from Siemens. After that and other misrepresentations were exposed, Theranos voided two years’ worth of blood test results. It also settled lawsuits with investors and the Securities and Exchange Commission, ultimately dissolving in 2018.
In her initial testimony, Holmes tried dismissing the fraud accusations as too simple and as a misunderstanding of her statements. She also pleaded ignorance to many of Theranos’ problems, emphasizing her lack of experience and qualifications to run a scientific lab.
Under cross-examination Tuesday, Holmes admitted to making mistakes. “There are many things I wish I did differently,” she said.
Theranos mishandled a 2015 exposé in The Wall Street Journal about problems with the company’s technology, she said.
“We totally messed it up,” Holmes said. She also admitted to reaching out to Rupert Murdoch, owner of The Journal who invested in Theranos, to quash the story.
Holmes said she also regretted the way Theranos treated Erika Cheung, an employee who raised concerns about the company’s lab practices. After Cheung left the company, Theranos hired a private investigator to track her down and serve her with a legal threat.
“I sure as hell wish we had treated her differently and listened to her,” Holmes said.
The testimony followed dramatic revelations about Holmes’ relationship with Balwani. On Monday, she said through tears that she had been raped as a student at Stanford and that Balwani had emotionally and physically abused her in the wake of that experience.
She accused Balwani, who is 20 years her senior, of controlling what she ate, how she presented herself and how much time she spent with her family. She said he forced her to have sex with him against her will and told her she had to “kill herself” to be reborn as a successful entrepreneur.
It was the first time Holmes told her side of the story of Theranos’ rise and fall, which had been held up in podcasts, documentaries and scripted series as a tale of Silicon Valley arrogance and comeuppance. Her testimony complicated that narrative, casting new light on the behind-the-scenes relationship between herself and Balwani, which they had kept secret as her profile rose.
Holmes tried tying her relationship with Balwani to her fraud charges by stating that he impacted “everything about who I was,” including Theranos. She said she pushed him out of the company and broke up with him after she learned that Theranos’ lab, which Balwani oversaw, had major issues.
“There was no way I could save our company if he was there,” she said Tuesday.
Balwani has denied assault accusations. He was indicted on fraud charges alongside Holmes and will be tried separately next year. He has also pleaded not guilty.
Over a long and detailed day of testimony, Leach lingered on the relationship, using text messages between Holmes and Balwani as his primary evidence. He asked Holmes to read text messages that showed her exchanging affectionate remarks with Balwani. The pair called each other “tiger” and “tigress” in between pep talks about building Theranos.
“No one but you and I can build this business,” Balwani wrote in one exchange.
After each, Leach asked Holmes to verify that she had just read an example of Balwani acting lovingly toward her. Reading the messages, Holmes cried for a second time on the stand.
Jill Hasday, a professor at the University of Minnesota Law School who has written a book on intimate partner violence and the law, said the prosecution’s tactic could work to undermine Holmes’ previous testimony, depending on jurors’ understanding of abuse.
“My gut is, it can be effective, because people have a lot of misconceptions about intimate partner violence, among other things that it’s constant,” Hasday said.
The trial, which is scheduled to end in December, resumes next week.