Elizabeth Holmes sentenced to 11 years in prison for her Theranos fraud

Human memory is fallible. That’s why defense lawyers like to age their cases — and why prosecutors were so frustrated with the multiple delays in trying Elizabeth Holmes for her role at the failed blood-testing company Theranos. Given enough time, people forget things. That can open the door for reasonable doubt. 

Several times on Friday, his fourth day of testimony, former Theranos lab director Adam Rosendorff was asked about details in meetings and didn’t remember them. But Lance Wade, defense attorney for Elizabeth Holmes, was able to produce minutes from a meeting, a Powerpoint presentation, and old emails that made Rosendorff look less reliable.

After a tedious day of bickering, Victoria Sung appeared like manna from heaven — to tell us that Theranos’ tests sucked.

Sung worked at Celgene when it contracted with Theranos. Her testimony was brief and to the point: Celgene had not “comprehensively validated” Theranos technology, she said. That would have taken more work than what she did with Theranos’ tests. The work she showed the court from 2012 demonstrated Theranos performed dismally compared to standard testing — often returning results that were “out of range.”

Lance Wade didn’t say “snitches get stitches” out loud, but with his behavior in the courtroom today he didn’t have to. It’s the most aggressive performance we’ve seen so far from Elizabeth Holmes’ defense attorney, and that’s probably because the latest testimony is just that bad for Holmes’ case.

On the stand today was former Theranos lab director Adam Rosendorff, who was responsible for the lab where patient results were processed. In his opening statement, Wade was clear that he was prepared to blame Theranos lab directors — including Rosendorff — for many of the company’s problems. His questioning of Rosendorff drew two successful objections from the government, for argumentativeness. 

Former Theranos lab director Adam Rosendorff was the second employee who testified in Elizabeth Holmes’ trial who kept his work emails. Forwarding work emails to a personal account can violate a non-disclosure agreement, which Rosendorff signed when he joined the company. But, like Surekha Gangakhedkar before him, he was worried he’d be blamed for the company’s problems.

He was right to worry: he’s one of the people Elizabeth Holmes’ defense is trying to blame.

Theranos’s board member James “Mad Dog” Mattis, a four-star general and the former secretary of defense, served among the company’s impeccably credentialed supporters — but testifying in Elizabeth Holmes’s trial on Wednesday, he resembled nothing so much as a nattily-dressed grandfather. At one point, he seemed befuddled when the defense asked him if he remembered discussion of high-throughput devices.

When Mattis first met Theranos’ Holmes in 2011, he told the court, she pricked his finger to give him an idea of the blood draw process. And like a damsel in a fairy tale, he fell under her spell. At the trial of the US v Elizabeth Holmes, he said he was “taken” with the Theranos device. Now “young Elizabeth,” as Mattis addressed her in an email, faces 10 counts of wire fraud and two of conspiracy to commit wire fraud.

Brittany Gould, wearing a black mask with a clear window through which you could see her mouth, got choked up as she told the court about her experience with Theranos in 2014. She’d used the company’s tests because they were cheap — her language was “cost-effective” — and the results told her, wrongly, that she was miscarrying. It would have been her fourth miscarriage in a row.

The defense in US v. Elizabeth Holmes blocked testimony from Gould about the emotional impact of the bad test, so jurors didn’t hear how it affected her. But “the loss of all these babies and pregnancies, and going through the experience of thinking I’m losing another one, is a lot,” Gould told The Wall Street Journal in an interview before the trial.

Today, we had the first direct link between the problems in Theranos’ labs and Elizabeth Holmes. Former manager of assay systems Surekha Gangakhedkar’s job was preparing blood tests for use in patients. The system was unreliable; describing herself as “stressed and unhappy and concerned with the way the launch was going,” Gangakhedkar quit.

Gangakhedkar met with Holmes to explain why she was resigning: she didn’t think the Edisons were good enough for patient use. Holmes told her Theranos had “promised to deliver to the customers and didn’t have much of a choice,” except to go ahead with the launch, Gangakhedkar testified.

Erika Cheung, who took the stand yesterday for her direct testimony, which continued today, is known for being one of John Carreyrou’s sources for his blockbuster article about Theranos. You know, the article that’s part of the reason we are now witnessing US v. Elizabeth Holmes. (Holmes is on trial for several counts of wire fraud and conspiracy to commit wire fraud.) 

Cheung is, famously, one of the people who blew the whistle on Holmes. She’s even given a TED talk about it. The other major source for Carreyrou was her friend, Tyler Shultz, who also worked at Theranos and was the grandson of one of the board members. He is expected to testify later in the trial, since he tried to bring problems in the lab to Holmes’ attention.

It was around the time that the defense counsel referred to “deferred revenue” that I began to feel genuinely bad for the members of the jury in the wire fraud trial of Elizabeth Holmes. 

Tuesday’s testimony involved the nuances of accounting, how quality control works in labs, and way too many Excel spreadsheets. I get it — you have to show the financials to show that Theranos was in a tricky financial position. And you have to show how the labs were failing in order to establish that they were failing and that Holmes knew it. But go through this too fast, and you risk confusing people.

Would you rather be a failure or a fraud? Judging by the opening statements in Elizabeth Holmes’ wire fraud trial, those seem to be Holmes’ options. 

Here’s Robert Leach, assistant U.S. attorney, who is prosecuting the case against Holmes: “This is a case about fraud, about lying and cheating to get money,” Leach says. “That’s a crime on Main Street and a crime in Silicon Valley.” But according to Lance Wade, Holmes’ attorney, Holmes is just another failed startup leader: “In the end, Theranos failed. And Ms. Holmes walked away with nothing. But failure is not a crime.”