Have you seen the video of former U.S. President Bill Clinton praising Elizabeth Holmes? He could not get over how the young, Stanford dropout actually started the company at 19. No one even considered if she might be bending the truth about her blood testing claims. Then again, no one at first doubted if Bernie Madoff might be fabricating the claims of double-digit returns either.
This week’s key witness was Daniel Edlin, who was hired out of Duke University, a referral through a relative of Holmes. He was a senior product manager at first and then, according to CNN (September 19, 2021):
“He was entrusted with key assignments, including the company’s critical Walgreens partnership, organizing tours of its headquarters for investors, board members, business partners and other VIP guests, and working with military officials about possible use of its technology.”
Edlin testified this week that Holmes misled everyone and that he began to doubt if the equipment could “reliably and accurately test for a range of conditions using just a few drops of blood.”
The tours were essentially window dressing. The equipment, the “miniLab” device did not work. As Edlin followed the line of questioning “He learned in 2016 that the miniLab device had never been used for patient blood testing.”
This dates back to the Wall Street Journal report of 2015 that we have that the technological capabilities were vastly overstated.
Behind the Theranos curtains and partitions put up when investors toured, Theranos scientists were reporting results tested on conventional devices found in most any lab in any hospital.
The Military
Edlin has claimed that he and Holmes had extensive interaction over military contacts and that she approved all communications. Though three devices were allegedly sent to an army testing facility in Kentucky. Edlin testified “Theranos devices were never used in a war zone and were not sent out to the Middle East for research or clinical use.”
Indeed, retired General Mattis sat on the Theranos board, invested $85,000 and even allowed Holmes to take his blood for testing. As tough a general as Mattis may have been in the field, he was a naïve patsy when it came to dealing with a potential scam presided over
The relatively minor point about use in Afghanistan directly conflicts with testimony by Wade Miquelon, the former Walgreens CFO, that he was told the three devices were in use on military helicopters in Afghanistan. It is possible that Holmes was more than pleased to lie in order to make the sale.
Edlin testified he “no longer believed based on what I was seeing that the company was capable of standing behind the claims it had been making about its technology.”
In other words, his sense of ethics eventually overruled his paycheck.
Where does it go from here?
Edlin also shot down claims that Ramesh Balwani, Holmes’ COO and ex-boyfriend ever overruled her in meetings. She apparently was making these decisions on her own. Naturally, the defense, because it must, will say the alleged bullying went on behind the scenes. However, the web becomes ever more complex. For example, if the devices were actually in use in Afghanistan on troops – is the company now guilty of even larger fraud? Obviously, if it didn’t ship the devices as Holmes’ claimed, it is further proof she lied to Walgreen’s.
Where will the trial go from here?
At this juncture, the evidence against Holmes and Balwani point to a “deadly” mix of ambition, greed and non-existent ethics. I believe Holmes will continue to have her defense team hammer away at two issues: that is was simply a failed business, no more or less than thousands of other startups and the ruthlessness of Balwani in controlling her.
Though I believe (if things turn really sour) she will turn to a more heart-string approach (and I am aware of the implied sexism in my comment), but she is looking at 10 years of jailtime.
In the end, Elizabeth Holmes still emerges as a rather driven, sociopathic and confused individual. Fraud stands on a lack of oversite, need and rationalization. Thus far, there is nothing to suggest she did anything to perpetuate the fraud.
