Theranos’ investor pitches go on trial

Prosecutors in the Elizabeth Holmes fraud case are now highlighting allegations the company sought to mislead investors.

Former Theranos CEO Elizabeth Holmes

The fresh details of unproven claims made about the viability of Theranos' blood tests and efforts to conceal errors when demonstrating testing equipment added to the evidence against Holmes, who is accused of fraud in her role leading the company.

Photo: David Paul Morris/Bloomberg via Getty Images

The Theranos trial continued this week with testimony from Daniel Edlin, a former product manager at the blood-testing startup, and Shane Weber, a scientist from Pfizer. Their testimonies appeared to bolster the government's argument that Holmes intentionally defrauded investors and patients.

The fresh details about audacious and unproven claims made about the viability of Theranos' blood tests and efforts to conceal errors when demonstrating testing equipment added to the evidence against Holmes, who is accused of fraud in her role leading the company.

On Tuesday, jurors heard testimony from Edlin. According to New York Times reporter Erin Woo, who relayed Edlin's remarks in a Twitter thread, he testified that Holmes was really involved when it came to Theranos' marketing, which was often misleading. The Wall Street Journal reported that draft copy for the company's website included several statements touting the high accuracy of their blood tests, which a law firm recommended the company change to less weighty claims.

Edlin also recalled sending materials with equally strong claims to investors like Rupert Murdoch, which Holmes approved. One document claimed Theranos was conducting the same blood tests but with a new approach that required only "1/1,000 the size of" a typical blood draw, he said. Edlin didn't recall removing any such language from those materials.

On Wednesday, Edlin testified about Theranos' demo app, which was allegedly designed to hide errors from prospective investors, patients and others viewing a prototype testing device. Woo captured much of the exchange in a Twitter thread.

Kevin Downey, a lawyer for the defense, asked Edlin if he was intentionally trying to deceive anyone via the demos. Edlin said that the app did hide errors from viewers, and said the demos were intended to showcase Theranos' technology. John Bostic, an assistant U.S. attorney, asked Edlin a series of rapid-fire questions about why errors were hidden and results withheld. Edlin said he had relied on higher-ups' decisions on whether to disclose inconsistent results, adding that Daniel Young and Elizabeth Holmes had the final say over which demo results were reported.

Edlin said he ultimately decided to leave Theranos because he didn't believe the company was capable of proving that its technology actually worked.

On Friday, Shane Weber, a scientist at Pfizer, took the stand. According to New York Times reporter Erin Griffith in a Twitter thread, Weber said Theranos didn't hold any clinical interest for Pfizer. And yet, according to the WSJ, prosecutors alleged that a document with an image of the Pfizer logo was shown to investors, implying the drugmaker's approval of Theranos' technology. Weber said he had not seen that email before.

The trial continued with testimony from Bryan Tolbert of Hall Group, a Theranos investor. Tolbert shared a recording of a pitch by Holmes — the first time the jury has heard her voice, Griffith noted.

While earlier testimony in the case focused on operational problems at Theranos' testing facility, the government now appears to be highlighting allegations of deceptive conduct with investors. This is where prosecutors may face their biggest challenge: distinguishing a founder's visionary optimism from outright deceit.
Workplace

The tools that make you pay for not getting stuff done

Some tools let you put your money on the line for productivity. Should you bite?

Commitment contracts are popular in a niche corner of the internet, and the tools have built up loyal followings of people who find the extra motivation effective.

Photoillustration: Anna Shvets/Pexels; Protocol

Danny Reeves, CEO and co-founder of Beeminder, is used to defending his product.

“When people first hear about it, they’re kind of appalled,” Reeves said. “Making money off of people’s failure is how they view it.”

Keep Reading Show less
Lizzy Lawrence

Lizzy Lawrence ( @LizzyLaw_) is a reporter at Protocol, covering tools and productivity in the workplace. She's a recent graduate of the University of Michigan, where she studied sociology and international studies. She served as editor in chief of The Michigan Daily, her school's independent newspaper. She's based in D.C., and can be reached at llawrence@protocol.com.

Sponsored Content

Foursquare data story: leveraging location data for site selection

We take a closer look at points of interest and foot traffic patterns to demonstrate how location data can be leveraged to inform better site selecti­on strategies.

Imagine: You’re the leader of a real estate team at a restaurant brand looking to open a new location in Manhattan. You have two options you’re evaluating: one site in SoHo, and another site in the Flatiron neighborhood. Which do you choose?

Keep Reading Show less

Elon Musk has bots on his mind.

Photo: Christian Marquardt/Getty Images

Elon Musk says he needs proof that less than 5% of Twitter's users are bots — or the deal isn't going ahead.

Keep Reading Show less
Jamie Condliffe

Jamie Condliffe ( @jme_c) is the executive editor at Protocol, based in London. Prior to joining Protocol in 2019, he worked on the business desk at The New York Times, where he edited the DealBook newsletter and wrote Bits, the weekly tech newsletter. He has previously worked at MIT Technology Review, Gizmodo, and New Scientist, and has held lectureships at the University of Oxford and Imperial College London. He also holds a doctorate in engineering from the University of Oxford.

Policy

Nobody will help Big Tech prevent online terrorism but itself

There’s no will in Congress or the C-suites of social media giants for a new approach, but smaller platforms would have room to step up — if they decided to.

Timothy Kujawski of Buffalo lights candles at a makeshift memorial as people gather at the scene of a mass shooting at Tops Friendly Market at Jefferson Avenue and Riley Street on Sunday, May 15, 2022 in Buffalo, NY. The fatal shooting of 10 people at a grocery store in a historically Black neighborhood of Buffalo by a young white gunman is being investigated as a hate crime and an act of racially motivated violent extremism, according to federal officials.

Photo: Kent Nishimura / Los Angeles Times via Getty Images

The shooting in Buffalo, New York, that killed 10 people over the weekend has put the spotlight back on social media companies. Some of the attack was livestreamed, beginning on Amazon-owned Twitch, and the alleged shooter appears to have written about how his racist motivations arose from misinformation on smaller or fringe sites including 4chan.

In response, policymakers are directing their anger at tech platforms, with New York Governor Kathy Hochul calling for the companies to be “more vigilant in monitoring” and for “a legal responsibility to ensure that such hate cannot populate these sites.”

Keep Reading Show less
Ben Brody

Ben Brody (@ BenBrodyDC) is a senior reporter at Protocol focusing on how Congress, courts and agencies affect the online world we live in. He formerly covered tech policy and lobbying (including antitrust, Section 230 and privacy) at Bloomberg News, where he previously reported on the influence industry, government ethics and the 2016 presidential election. Before that, Ben covered business news at CNNMoney and AdAge, and all manner of stories in and around New York. He still loves appearing on the New York news radio he grew up with.

We're answering all your questions about the crypto crash.

Photo: Chris Liverani/Unsplash

People started talking about another crypto winter in January, when falling prices had wiped out $1 trillion in value from November’s peak. Prices rallied back in March, restoring some of the losses. Then crypto fell hard again, with bitcoin down more than 60% from its all-time high and other cryptocurrencies harder hit. The market’s message was clear: Crypto winter was no longer coming. It’s here.

If you’ve got questions about the crypto crash, the Protocol Fintech team has answers.

Keep Reading Show less
Latest Stories
Bulletins