Six weeks in, the high-profile trial of Theranos founder Elizabeth Holmes has been less a display of courtroom fireworks, and more of a slow and steady burn around the health-tech company’s remarkable downfall.
While Holmes—who faces up to 20 years in prison on fraud charges—has yet to take the stand, former Theranos employees, investors, and business partners have all testified about their various experiences with Holmes and her company. In turn, the jury has heard arguments from both federal prosecutors (who claim that Holmes fraudulently deceived her investors and business partners, as well as the greater public) and the defense (which argues that Holmes was merely a entrepreneur whose startup happened to fail).
With the trial heading into a weekend recess, here are some of the key takeaways from the San Jose, Calif., courtroom.
Holmes misled major pharmacy chains, prosecutors say
In seeking to convince pharmacy retailer Walgreens to buy Theranos’ blood-testing machines, Holmes provided what she called “independent due diligence reports” from pharmaceutical companies Pfizer and Schering-Plough that backed the viability of Theranos’ supposedly revolutionary technology.
There was only one problem: the reports were fake, according to prosecutors. In fact, Theranos, allegedly went so far as to forge Pfizer’s logo and letterhead on the report, they claim.
It was enough to fool the likes of Walgreens. On Tuesday, Wade Miquelon, the retailer’s former CFO, testified that the company was impressed by the research and didn’t notice a typo in the name of the Schering-Plough Research Institute. Walgreens eventually partnered with Theranos in 2013 and invested $140 million in Holmes’ company. “We thought this was one of the most exciting companies we’d seen,” Miquelon testified.
Both Walgreens and supermarket chain Safeway insisted they did their due diligence before teaming with Theranos. Former Safeway CEO Steve Burd, who also testified on Tuesday, said his company spent no less than 100 hours conducting its own investigation into Theranos’ technology before signing an agreement in 2010. Safeway would pour more than $350 million into the Theranos deal, renovating nearly 1,000 of its stores to accommodate the startup’s blood-testing technology. Those facilities would never be used by Theranos.
Holmes’ defense team has claimed that both Walgreens and Safeway knew what they were getting into by partnering with Theranos—pointing out that they consulted with experts and researchers at top medical institutions.
Spotlight on Theranos’ lab
This week saw several former Theranos lab workers take the stand—including the company’s former lab director, who had both questionable qualifications and a dubious track record on the job.
Sunil Dhawan is a dermatologist by training, but that didn’t stop him from accepting the role of Theranos’ lab director in 2014 at the request of one of his patients. That patient was Ramesh “Sunny” Balwani, Theranos’ former president—and Holmes’ ex-boyfriend—who himself will face fraud charges in a separate trial next year.
On Thursday, Dhawan testified that he visited Theranos’ lab only a handful of times in his role and seldom interacted with other Theranos lab employees. In fact, he said he spent no more than five to 10 hours doing any actual work for Theranos during his tenure from November 2014 and the summer of 2015. Instead, he operated in what Balwani described in an email as an “on-call consulting role” and performed administrative duties as needed. While Dhawan’s status as a medical doctor meant that he met the regulatory requirements for the lab director role, he had no certification in pathology or laboratory science.
The man who Dhawan succeeded as lab director, Adam Rosendorff, has also spent ample time on the stand, emerging as one of the prosecution’s key witnesses. Rosendorff testified that he had “frequent conversations” with Holmes during which he expressed concerns about the legitimacy of Theranos’ technology, and noted “tremendous pressure at the company to show that this technology was successful” despite ample evidence to the contrary. He eventually left Theranos in November 2014. “I felt that it was a question on my integrity as a physician not to remain there and to continue to bolster results I essentially didn’t have faith in, Rosendorff testified.
But Holmes’ defense team has sought to raise doubts about Rosendorff’s testimony, pointing to evidence they say refutes his claims that Theranos’ leadership was reluctant to address problems with the company’s technology. They have also looked to question Rosendorff’s competency as a lab director by raising doubts about his track record at other companies.
Jury drama
One of the trial’s subplots has been the composition of the jury, which has already undergone several changes.
The first week of the trial, in September, saw one juror depart after learning that her employer would not compensate her for time away from work. And last week, another juror left the trial after claiming a conflict with her Buddhist faith, which left her uncomfortable with the possibility of punishing Holmes if she was convicted.
Meanwhile, the Buddhist juror’s alternate expressed her own reservations to the court about sentencing Holmes, and noted that English is not her first language. Despite those reservations, the judge kept the alternate on the jury.
This week also saw Holmes’ defense raise concerns about a fair trial, amid requests by media outlets that are asking the judge to unseal and release the jury’s questionnaires. There are concerns that doing so could compromise the personal information of the jury and affect their ability to serve.
All these factors—as well as potential COVID-19-related issues, which already forced a day of testimony to be canceled earlier in the trial—could trigger a mistrial, and prompt further delays to a case that’s already been delayed several times.
