Theranos blood testers, which U.S. prosecutors say failed 51% of the time, provided no indication whether things went wrong during protests for visitors, a court said.
Seven weeks after the start of the criminal fraud trial of Theranos founder and CEO Elizabeth Holmes, federal authorities are trying to show that Holmes, along with her former partner and COO Ramesh “Sunny” Balwani (who will be on trial l next year after denying any wrongdoing), raised hundreds of millions of dollars from investors based on false claims about technology that didn’t work.
In court Tuesday, Daniel Edlin, a former Theranos project manager who used Theranos’ Edison blood testing machines, said device demonstrations, given primarily to VIP visitors, used a demo app that hid messages from ‘failure.
Prosecutors pointed to an August 2013 email from Edlin, citing the need to set up a testing lab to show the company’s technology to visiting executives. In response, according to the Law360 reporter Dorothy AtkinsFormer Theranos software engineer Michael Craig suggested using the demo application, which “protects against client protocol failures.”
Last week, former Safeway CEO Steven Burd said Holmes brought a Theranos machine with her to a meeting in 2011 and agreed to a finger-prick blood test. The machine would have made a lot of noise but never produced any results.
Nonetheless, Safeway struck an $ 85 million deal with Theranos to test the machines and spent around $ 350 million to prepare its stores to offer rapid blood tests before it became clear that Theranos could not complete its. part of the partnership.
Federal officials claimed earlier this year that testing Theranos’ Edison machine was about as accurate as flipping a coin. However, the company’s database with details of its test results was somehow destroyed in 2018 after being subpoenaed.
Holmes’ attorney argued on Wednesday that the Theranos tests were not attempts to deceive anyone. According to the Wall Street Journal, Kevin Downey pointed out a 2012 email from Balwani to staff at Theranos after a protest for Walgreens Boots Alliance executives in Chicago.
The email stated that results produced by a Theranos machine during a demonstration matched results from a lab. And Downey then asked Edlin if he was trying to cheat on anyone, to which Edlin replied, “Of course not.”
Theranos, founded in 2003, raised around $ 700 million from investors, and for a time in 2014 was valued at around $ 9 billion, based on the idea that it could quickly test multiple conditions with a simple prick of blood. But after Wall Street Journal reporter John Carreyrou published a report in 2015 that challenged the company’s claims, things started to take a turn for the worse and by 2018 Theranos had closed its doors.
Holmes’ legal team filed a brief last week to defend their claim that Carreyrou should not be allowed to testify as a witness during the trial [PDF]. The government tabled its own brief [PDF] arguing that the gag order imposed on Carreyrou is unconstitutional and that he should be allowed to testify.
Holmes’ trial is expected to last another six weeks. Â®