Who exactly to blame for the dramatic collapse of the founders of the Theranos blood test? By Elizabeth Holmes, co-founder of the girls ’board she meets 11 cases of wire fraud because of money laundering? Or are there employees in the company who signed various reports indicating that the technology has done well? What about members of Theranos — such as George Shultz, James Mattis, and Henry Kissinger — who were paid thousands of dollars to provide direction to the company? Or is it Ramesh Balwani, a businessman of Holmes and an old friend, who by contrast faces 11 counts of fraud?
Any of these ideas have been investigated in the last few days as Holmes stood up, 11 weeks in a case that has plagued Silicon Valley and beyond. This is the first time he has told his story since Theranos closed in 2018, the same year he was charged with fraud.
Holmes began his testimony Friday afternoon, prompting a large crowd to appear outside the court on Monday and Tuesday morning. Spectators began to stand at 2 a.m. this week, trembling as they waited for one of the smaller seats in the San Jose Courthouse. The crowd was filled with journalists, concerned citizens, and one person who shouted “God bless you, lady!” as Holmes arrived Tuesday. “The crater has never seen such a commercial fraud,” says historian Margaret O’Mara, who compared the incident to the first iPhone release. Holmes benefited from hype when his company began operating in the early 2000s. Now they find themselves in a different kind of hype cycle.
As a young CEO, Holmes often portrays himself as an amazing person. He appeared on the cover of the magazine and received a compliment from Steve Jobs. But in court, Holmes – now 37 years old, and no longer wearing the well-known black turtles – emphasized the aspects of his work that he gave to others.
When asked who was responsible for making sure the blood test worked as promised, Holmes referred to Adam Rosendorff, the director of Theranos lab. The unfortunate alliance with Walgreens went down to Daniel Young, the “most intelligent” worker Holmes supervised. The undisclosed assumption that Theranos sometimes uses third-party weapons was fabricated by the company’s attorney, who Holmes said told him the information was “a trade secret.” Balwani, not Holmes, was in charge of the company’s finances. And the well-known commercial claim that Theranos only used “one drop of blood”? Holmes testified that he did not personally sign any of the advertisements made by Chiat Day, a low-cost advertising company he hired.
Such accusations are common in the criminal justice system, says David Sklansky, a Stanford lawmaker. “Perhaps it is a well-known defense mechanism in cases of high-level fraud,” he said. “Whether it works or not depends on how it looks to the judges.”