Elizabeth Holmes knowingly lied about Theranos’ blood testing capabilities to $125m investor Rupert Murdoch and the US military – even after the firm’s own lawyers objected to the claims, fraud trial hears
- Elizabeth Holmes has been charged with criminally defrauding investors in her company, Theranos, which she founded in 2003
- She turned the company into a firm valued at $9 billion and made herself the world's youngest self-made female billionaire
- But the technology she promoted - blood tests with a finger prick - did not work, and prosecutors claim that she knew it did not work
- Holmes, 37, pleaded not guilty and her trial began on September 8 in San Jose, California
- Daniel Edlin, a senior project manager at Theranos from 2011 to 2016, began testifying on Friday and was continuing on Wednesday
- Edlin said that a PowerPoint presentation given to investors including Rupert Murdoch contained information that they knew to be untrue
- Theranos lawyers asked Holmes to reword some of the claims about the company's technological prowess, saying they were misleading, but she refused
A senior project manager at the collapsed blood testing company Theranos has told a court in California that claims were made to potential investors and clients - including Rupert Murdoch and the U.S. military - that boss Elizabeth Holmes knew were untrue.
Daniel Edlin worked at Theranos from 2011-16.
He said that Holmes had been warned against making claims to investors about the efficacy of her blood testing technology by the firm's own in-house counsel, but ignored the warnings.
Prosecutor John Bostic showed the jury slides from Theranos' 2011 and 2012 PowerPoints to investors and clients, which were made while Edlin was working there.
Edlin told the jury that he had worked on the team creating the PowerPoints, and they were approved by Holmes before they were presented to the military.
The U.S. military was impressed, and in 2012 entered a 12-month service contract with Theranos.
Edlin said that the phrases in the presentations were similar to those used in binders given to prospective investors, including Rupert Murdoch.
Elizabeth Holmes, founder of Theranos, is seen arriving in court in San Jose on October 12. The trial began on September 8, and is expected to last several more weeks
Homes is seen with her husband Billy Evans (left) and mother Noel (right) on October 12
Holmes is pictured in the lab in a scene from HBO documentary The Inventor: Out for Blood in Silicon Valley
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The media tycoon invested $125m in Theranos, but lost his cash after its failings were first exposed by The Wall Street Journal - one of Murdoch's publications.
In an email from January 2015, Holmes wrote to Murdoch: 'It was wonderful to have you here today. I so look forward to the opportunity to continue our conversations, including one day a more detailed conversation on China.
'It would be an honor to have you be part of our company.'
Murdoch responded: 'Thanks Elizabeth. Enjoyed every minute of it. Any blood results? See you soon, Rupert.'
Rupert Murdoch visited the Theranos campus in 2015. He decided to invest $125 million, and lost his money. The 90-year-old is on the list of possible witnesses for the government
Theranos' headquarters are pictured in Palo Alto, California, in May 2017
The next day, a Theranos scientist emailed Murdoch's blood test results to Edlin and Daniel Young, a Theranos vice president.
'CO2 is run way earlier than usual, so it's a bit high...what do you want to do with it?' the scientist wrote in an email.
'We have no sample for rerun since it was a short draw.'
Edlin testified they couldn't rerun the test because they didn't draw enough blood from Murdoch.
Murdoch is on a list of possible government witnesses to be called during the trial.
Edlin began testifying against his former boss, Theranos founder Holmes, on Friday, and continued on the stand this week. She is facing 12 counts of defrauding investors and faces up to 20 years in prison if convicted.
The presentations claimed that Theranos' blood-testing devices, called minilabs, could run 'any test available in central labs'.
They said all they needed was a drop of blood '1/1,000 the size of a typical blood draw'.
Yet within the company, the claims were known to be suspect.
Holmes left Stanford University to found the company and became the youngest self-made female billionaire, but it emerged that the company's claims were untrue
Both Theranos' spokesperson, Jeffrey Blickman, and in-house attorney, Kate Beardsley, flagged the same language in a draft of Theranos' website as potentially overstating the capabilities of the company's technology.
Beardsley wrote in a four-page email 'please remove 'all tests' and replace with 'multiple or several,'' because 'it is highly unlikely that the lab can perform every conceivable test, both from a logistical standpoint and because the [federal] certification designates specific specialties of tests the lab performs.'
She also questioned phrases like 'highest quality,' 'unrivaled in accuracy' and 'highest levels of accuracy,' and asked her colleagues how Theranos could substantiate its claim that Theranos will 'have results to you and your doctor faster than previously possible.'
Holmes replied in an email: 'They should not use the words 'unrivaled in accuracy' as we've discussed many times.'
Holmes modeled herself on Steve Jobs, wearing his trademark black turtleneck sweater and seeing herself as a visionary following in his footsteps
Yet many of the claims did still make it into the final presentations given to investors and clients.
Theranos never disclosed it was using modified non-Theranos devices to run tests, according to evidence shown to the jury Tuesday.
Edlin told the jury that Holmes was 'very involved and detail oriented' in approving Theranos' marketing materials, and took a hands-on approach.
'Everything in this document was reviewed and approved by Elizabeth,' Edlin said of one presentation to the military.
'She was highly involved; any substantive communication I had with the military, I either discussed it with her at the time or I sent it to her.'
Theranos folded after a 2015 expose in The Wall Street Journal by journalist John Carreyrou.
The case will resume on Friday.
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