Elizabeth Holmes spent over six hours on the stand yesterday, trying to make the case that, while mistakes were made, she never meant to defraud anyone.
It’s an argument that appears to rely heavily on nuance and emotion. When Holmes handed investors forged reports, did she mean to deceive them? When she shared overly optimistic financial projections, was she merely relying on the work of others? When she declined to tell investors that Theranos was using third-party devices to run blood tests—contrary to her company’s carefully cultivated public image—was she being duplicitous or merely protecting her company’s hard-won trade secrets?
How the jury interprets Holmes’ answers will likely depend on her performance under cross-examination, which has yet to begin. But her testimony yesterday attempted to paint an image of a conscientious executive who was misguided at key decision points. She and her attorneys dropped hints that, at each of those points, her intentions were noble, ranging from selflessness to trust, respect, and even motherly protectiveness.
Perhaps the biggest revelation yesterday came when Holmes admitted to placing pharmaceutical company logos atop a Theranos report without their permission. She claims she didn’t think that investors or executives at Walgreens and Safeway would think that other companies had produced the reports. Rather, by placing Pfizer and Schering-Plough logos on the reports—on every page, in the case of the Pfizer report—she said she was merely giving credit to her partners.
“This work was done in partnership with these companies and I was trying to convey that,” she testified.
Did she realize that other people would believe that the pharmaceutical companies, not Theranos, were the authors of the report, Downey asked her. “No,” she said. “I’ve heard that testimony in this case, and I wish I’d done it differently.”
Another bombshell came when she placed the blame for rosy financial projections squarely with Ramesh “Sunny” Balwani, Theranos’ COO and her boyfriend at the time. The projections came from financial models he created, Holmes said, which were heavily influenced by assumptions about how quickly Theranos could roll out its testing services in Walgreens stores. The startup had a deal with the drug store to put its proprietary devices at some 3,000 locations.
While she trusted Balwani with the financial projections, Holmes said that she put Vice President Daniel Young in charge of the Walgreens rollout. “He had skillsets in modeling and data, and we wanted to apply them,” she told the court.
When that rollout faltered, it wasn’t because Theranos’ technology wasn’t up to snuff, she said, but because Walgreens’ new management got cold feet, thinking they would run into regulatory trouble if they put a Theranos device in every store. “Our lawyers had different opinions, but we agreed to do what Walgreens wanted,” she said.