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- The second week of Theranos founder Elizabeth Holmes’ fraud trial has finished.
- It included revelations about finances, whistleblower testimony, and a setback for Ramesh Balwani.
- Here’s everything that happened in the trial in its second week.
- See more stories on Insider’s business page.
Holmes’ ex and former COO is denied reserved seats
On Monday, Judge Edward Davila denied Ramesh “Sunny” Balwani’s request for saved seats at Holmes’ trial.
Balwani is the former president and COO of Theranos; he and Holmes dated while working at the now-defunct startup. He faces his own trial in January for the same criminal charges as Holmes. He had asked to have two reserved seats at her trial for members of his defense team. He argued that, without guaranteed seats, prosecutors would have greater access to relevant evidence and testimony that could also feature in his trial, giving them an unfair advantage.
Davila didn’t explain why he denied Balwani’s request. Balwani’s defense can still attend Holmes trial but will have to wait in the first-come, first-served line like everyone else.
A juror is excused
A juror was excused Tuesday for financial hardship and replaced by an alternate juror. She previously told the judge she needed to support her mother, but her employer wouldn’t pay for her jury duty service.
Revelations about Theranos’ finances
Former Theranos financial controller So Han Spivey, also known as Danise Yam, continued her testimony, telling the jury that Theranos had racked up losses of $585 million by 2015, CNBC reported. At one point in 2013, Theranos was spending $2 million per week, she testified.
Prosecutors said a company tasked with valuing Theranos’ stock had projected revenues of $50 million in 2013 and almost $132 million three years later, according to the Wall Street Journal. However, a document that had been shared with investors projected revenue amounts of $140 million in 2014 and $990 million in 2015. Yam responded that she didn’t know where those projections came from and that she hadn’t been involved in preparing the document.
Whistleblower testimony
Theranos whistleblower Erika Cheung, a former lab worker there, testified that the company’s Edison blood-testing machines often failed quality control tests. She said, as a result, Theranos workers had to routinely cherry-pick data to remove outlier data points so they’d pass these tests, the Washington Post reported.
Cheung added that she brought her concerns to Balwani.
“The feedback and reception I got from him was ‘What makes you think you’re qualified to make these calls?'” she recalled.
Cheung said she also raised her concerns with the late George Shultz, former US secretary of state and a then-Theranos board member.
“I was attempting to tell as many people as I could, but it was just not seeming to get through to people,” she testified.
Cheung ultimately quit and later filed a complaint with the Centers for Medicare and Medicaid Services, which regulates clinical labs. She also spoke with former Wall Street Journal reporter John Carreyrou, who broke the story of the Theranos scandal. Cheung testified that Theranos’ lawyers sent her a letter after she quit saying they believed she had shared confidential information and threatened to sue her.
Holmes knew Theranos machines weren’t ready for Walgreens, witness says
Surekha Gangakhedkar, a former senior scientist at Theranos who reported to Holmes, testified on Friday that Theranos’ machines weren’t ready to be used on patient blood samples when the startup was preparing to roll them out in Walgreens stores, the Wall Street Journal reported. Gangakhedkar said Holmes was aware of “reliability issues” with the machines but nonetheless told staff to barrel ahead with the rollout.
“Hanson” revealed
A man who identified himself to trial reporters as a “concerned citizen” named Hanson turned out to be Bill Evans, the father of Holmes’ partner, NPR reported.
If you missed Week 1 of the trial, you can catch up here. For a list of other potential witnesses who may take the stand, read this. A full account of Holmes’ rise and fall can be found here. For everything else you need to know about the trial, have a look here.
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