Elizabeth Holmes trial: former defense secretary James Mattis testifies

Mattis, in a San Jose federal courtroom for nearly four hours, described believing so much in the company’s mission promise to test a range of conditions with just a few drops of blood that he invested 85 $ 000 in the startup. But he said that at one point, after careful consideration of the company’s testing capabilities, “I was at a loss what to believe about Theranos.”

“I did not see why we were surprised by such fundamental issues,” Mattis said during questioning of federal prosecutor John Bostic.

Holmes, who founded Theranos in 2003 at the age of 19 with the goal of revolutionizing blood testing, surrounded herself with a remarkable roster of prominent men during her tenure as CEO, including media mogul Rupert Murdoch, who is said to have been the company’s biggest investor; David Boies, the eminent lawyer who was an investor, board member and legal advocate for Holmes and Theranos for a time; as well as former Secretary of State Henry Kissinger. All have been listed as witnesses for the government to call.

Mattis, who served on the board of the blood testing startup from 2013 to 2016, is the first of his well-known associates and the seventh overall witness to testify. Mattis, during cross-examination, said he personally assisted Holmes with security by recommending his former chief bodyguard in response to security concerns over his growing public profile raised by another powerful Holmes ally, former Secretary of State George Shultz.

In his early interactions with Holmes, Mattis sometimes referred to her as “young Elizabeth,” according to displayed emails in the courtroom. In his testimony, he said that she struck him as “sharp, articulate, engaged”. He admitted he was impressed with her but “it didn’t take the place of proving himself on the device.”

Mattis testified that he was primarily interested in the device for military use because he believed that one relatively small device could perform all of the tests the company claimed to be able to do. “It wouldn’t have interested me if it wasn’t,” he said. Mattis also said he joined the board because he found Holmes’ mission “breathtaking” and “a very laudable project” if he reduced the cost of health care.

During Mattis’ cross-examination, Holmes was still sitting in the courtroom with a blue mask covering her face, frequently blinking.

Mattis’ testimony comes as the government continues to build its case against Holmes in an attempt to convince jurors that she intended to mislead investors, patients and doctors about her company’s capabilities and its proprietary blood testing technology in order to take their money.

Holmes faces a dozen federal fraud and conspiracy charges, and up to 20 years in prison. She pleaded not guilty.

The defense, for its part, argued that Holmes was an ambitious young CEO whose company failed, but that failure is not a crime.

Once hailed as the next Steve Jobs, Holmes catapulted his startup to a $ 9 billion valuation on the promise that his technology could effectively test conditions like cancer and diabetes with just a few drops of blood taken from a finger prick. . Lending the star power to his company was a board of directors filled with military and intelligence professionals.

Holmes has secured key business partners such as Walgreens and Safeway, and has been hailed on magazine covers as the richest self-taught woman. Then things fell apart after a Wall Street Journal investigation into Theranos’ technology and testing methods attracted further scrutiny.

Put your reputation on the line

Mattis, a four-star general, first met Holmes in 2011 at a Marine Memorial event before retiring from the Marine Corps in 2013. At a later event where Mattis was giving a speech in San Francisco, Holmes pricked his finger backstage. “I believe that’s when I first saw the machine, a box-like device sitting on a bench right there, and [she] explained the speed and what it could do, ”he testified. He finally threw his weight behind the startup’s attempt to use its technology on the battlefield.

During cross-examination by Holmes’ defense attorney Kevin Downey on his knowledge that Theranos technology could only perform a limited number of tests when he joined the board, Mattis said that he thought it was more advanced. He said he believed he could be deployed in the field and perform “more than a handful of tests.” He noted that otherwise it “would have been unnecessary for us.”

During a subsequent redirect questioning by Bostic, Mattis stressed his desire to have the Theranos devices field tested as part of a side-by-side comparison project to see if they worked before joining the board of company administration.

“What I wanted to do was before I put my reputation on the line… I wanted to know it was working,” Mattis said. “I needed the data, and the best way to do that is to put [the technology] alongside what we were doing, that it would maintain itself and deliver faster and more accurate results. ”

Mattis said this did not happen until he retired from the military and then joined Theranos ‘board of directors at Holmes’ invitation. He said he asked Holmes why he was chosen for the board. “I was not a doctor.” He said he was told he could help with “how to build elite teams, how to get people engaged.”

Mattis testified that he felt that Theranos had 2,000 tests available, which he believed to be tests performed on Theranos proprietary blood analyzers, but he later learned that the company largely used machines. other companies.

Slides of an 89-page PowerPoint presentation from a board meeting – Mattis’ first as a board member – were shown in the courtroom. One slide, titled “Validation of Theranos,” claimed that its lab infrastructure had been validated against guidelines from the FDA and the World Health Organization, for example, and included a quote from John Hopkins Medicine that its technology “is new and strong”.

“So it wasn’t just Elizabeth talking about it. It was third parties, respected third parties,” he said, later noting that he took Holmes’ claims of effectiveness at face value. of technology.

“We were in the room with her, but I took in good faith that what we were being told was correct, and I assumed that when we say these are the results of Theranos, it was from the Theranos machine. “, did he declare. “Looking back, that probably wasn’t correct.”

According to the indictment, Holmes and COO Ramesh “Sunny” Balwani, who is on separate trial on the same counts and who has also pleaded not guilty, allegedly told the investors that Theranos had a profitable and income-generating business relationship with the United States. United States Department of Defense and that its technology had been deployed on the battlefield. “In truth, Theranos had limited income from military contracts and his technology was not deployed on the battlefield,” the indictment said.

Mattis resigned from Theranos’ board of directors in 2016, before joining the cabinet of former President Donald Trump. “Secretary Mattis was struck by the promise of technology and was looking for a technological solution to save lives on the battlefield,” Pentagon spokesman Dave Eastburn said. CNN Affairs in 2018. “He resigned his position on the board of directors of Theranos on December 16 before his confirmation.”
The trial, which began two weeks ago with opening statements, is expected to resume on Friday.
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