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Previously on The Dropout, we heard from two Theranos lab directors, one who voided over 50,000 Theranos tests after a damning government inspection, and another who never met Elizabeth or set foot in the company's lab. She started having real problems with them and doubts and talked to me saying that she wasn't comfortable as their lab director. This week, the government puts its final witnesses on the stand. Among them, a patient who received troubling results from a Theranos HIV test.
It hurts my heart to be honest with you knowing that a patient is walking around with a result such as this, with no clear path of next steps. And a journalist you'll remember from season one, whose damaging interviews with Elizabeth were played for the first time in court. Plus, in a literal final hour shocker, the words many never expected to hear. The defense calls Elizabeth Holmes.
My first reaction was surprised, but as I thought about the reason she might do it is she needs to convince the jury herself. And so it may be her only chance of getting acquitted, even though it runs some very high risks. Did the government bring home its case? Did Elizabeth begin to sway the jury? From ABC Audio, this is the dropout, Elizabeth Holmes on trial. I'm Rebecca Jarvis. Episode 14. The prosecution rests, and Elizabeth speaks.
It has been an absolutely monumental week in the trial of United States versus Elizabeth A. Holmes. The prosecution packed in a final week of witnesses, and most stunningly, we heard from Elizabeth herself. Twice. Once, in the recorded conversations of a testifying journalist, and again, as she took the stand, waking up a very sleepy courtroom just before court closed for the week. Much more on that later. But at the start of the week, it was business as usual, to an extent.
When we'd last left off, investor Alan Eisenman was in the middle of his testimony. Remember, Eisenman lost a little over a million dollars investing his and his family's money in Theranos. And things got really heated while he was on the stand. So heated, Judge Edward Dovella on multiple occasions was forced to step in. It was the most tension we felt in the courtroom at any point during this trial. But before the defense could finish its cross-examination of Eisenman, court had to adjourn.
This week, when Eisenman returned to finish his testimony, things took a very unexpected turn. Let's talk about some of the events that have happened since you left the stand, began defense attorney Kevin Downey. As it turned out, after court, Eisenman had emailed special FBI agent Adelaida Hernandez about a computer hard drive that might have Theranos messages on it.
He concluded his correspondence with, you know that I am a faithful part of your team, and will do all that I can to help your case. It was a message court experts say Eisenman never should have sent to prosecutors. And according to White Collar Defense Attorney Caroline Polisi, the defense had to be licking their chops. That's like a dream scenario.
It's highly inappropriate for a witness, especially a government witness, to talk about his or her testimony with the government in a way that sort of seems nefarious. And I thought the defense did an amazing job. If his testimony had value at one point, this sort of aphogoture moment on the stand really negated that for the jurors.
As Downey pointed out to the court, Eisenman had sent the message to agent Hernandez less than 15 hours after he was specifically instructed by prosecutors not to communicate with them about the substance of his testimony. Justice Attorney Downey explained to the court that instead of replying to Eisenman's email, agent Hernandez called and told him to stop communicating with the government. But Eisenman ignored her.
How long did it take from that call until the next time that you emailed the government down he asked, there were no further emails with anything substantive said Eisenman. How long did it take until you emailed the government after that call asked Downey again? My recollection is that there's an email about travels said Eisenman. In fact, Eisenman had quickly fired off another email to the prosecution again.
Only this time, instead of a call from agent Hernandez, Eisenman got a call from prosecutor John Bostic imploring him to halt all communications. That was the third time the government told you do not communicate with us about the testimony that is ongoing in Judge Davila's court, right? Ask Downey, this communication has nothing to do with the testimony or the case. Eisenman shot back. Is it up to you what stuff has to do with what? Ask Downey? I'm a smart guy.
This has nothing to do with the case. The questioning really illustrated kind of what a pest Eisenman was, like how he was doing to the government exactly what he had been doing to homes and Don Lucas and reaching out when he shouldn't. The standoff concluded with Eisenman blurting out to the court, I have no bias in this case. Judge Davila once again was forced to interject. Sir, sir, there's no question pending. That's stricken. That's stricken.
It had to be extremely embarrassing a total low moment for the government. There was no way that the government could rehabilitate this witness. Before Eisenman's combative testimony finally came to a close, he had one last question for the court. Could he possibly catch a flight home to Houston that night? Judge Davila politely explained that Eisenman might be called back for more testimony, but that the plan might not be clear until the next morning.
Seemingly dissatisfied with this answer, Eisenman continued by sharing with the entire court room a possible itinerary. OK, there's a late flight from 645 from San Francisco. Yes, I apologize. I don't think that will be possible, Dovela responded, explaining to Eisenman that the government would be in touch. This whole exchange went on another four rounds, with Eisenman asking whether he could fly home to Houston that night until Judge Davila finally said, well, all things are possible, sir.
That before the Chicago Cubs win the World Series every now and then, so all things are possible. By about 4pm, the prosecution and defense made up their minds. Eisenman was done. He was dismissed for good. It's unclear whether he made that 645 flight. The government's next witness was a biotech investor named Brian Grossman.
Unlike other Theranos investors we've heard from during this trial, Grossman had something they lacked, experience in biotech more than 20 years analyzing and investing in the industry he told the court. And yet after a thorough review meticulously exploring Theranos' relationship with Walgreens, the viability of its proprietary devices and its financial health, Grossman's firm, partner fund management or PFM health sciences invested in and lost nearly a hundred million dollars with Theranos.
As he says, it's no mistake the government chose to make Grossman their last investor witness. In many ways, he was the perfect witness for the government because he did everything correctly and he still lost money. This guy is the real deal. He is incredibly well credentialed, extremely intelligent, very knowledgeable about this space. I mean, he was talking about nucleic acid amplification. He clearly knows his stuff.
Even like some of the other investors that were sort of going along with this theme of the FOMO investor thinking, well, this is the hot new thing in Silicon Valley, let's get in on it. He by contrast was doing a real analysis with due diligence. Grossman testified he and his colleagues first met Elizabeth in Sunny Bellwani at Theranos' offices in Palo Alto in December 2013. Elizabeth recalled the meeting in her SEC deposition. But as usual, had a spotty memory for the details.
You were in discussions with PFM in late 2013 regarding their potential investment? They came to discuss Theranos and our vision and whether they get an understanding of whether it would be the right investment opportunity. Did you present any materials to PFM at that meeting? I don't know. What do you recall telling them about Theranos? I don't recall the discussion very well. Do you remember who FOMO met with?
I believe that Brian Grossman was there as well as members of his team that were doing due diligence. Grossman said he was immediately struck by the company's secrecy. He had to sign documents to get into the building, something he couldn't recall doing for any other public or private company. But Grossman was also struck by what Elizabeth and Sunny said the company could do. But Theranos could run over a thousand tests with their technology, a pretty profound statement as Grossman recalled.
He said he was also told that the technology was disrupting the decade's old blood testing industry, cutting out variability in human error, increasing profitability and lowering costs. Grossman remembered Elizabeth being very clear that Theranos could match every test on the lab core and quest menu of tests. Of course, we now know Theranos' devices could only ever run 12 tests in any given time. Something the SEC also pressed Elizabeth on in her deposition.
It looks like PFM is asking about the number of blood tests that were being processed through the TSPU, beginning in January 1, 2013 for clinical patient testing. Do you see the response here? I do. Okay. Did you ever share the fact that the TSPU was only performing about 12 tests? I don't think so. I don't know.
Grossman also recounted Elizabeth and Sunny sharing now familiar stories, talking up their partnerships with pharma companies and how they'd worked with the military and the Department of Defense, how the technology had been used in the battlefield and on medevacs. Grossman recalled how they talked about a little over $200 million of revenues from the Department of Defense that had sustained the company.
Theranos would also later share financial projections showing the company had an estimated $30 million payment coming from pharma companies in 2014. Something that also turned out to not be true. During her SEC deposition, Elizabeth claimed to not remember reviewing such projections before they were distributed. What about PFM? Did you review financial projections that went out to them at the time that they were sent? I don't think I did.
So you don't remember either reviewing or receiving those projections before they were sent to the P.F.M. I don't. Grossman also detailed what he said Elizabeth told him about Theranos' relationship with Walgreens. The company's plans to roll out their proprietary technology and all the drug store chains 8,100 stores. But Grossman wanted more information before he was ready to invest money on behalf of P.F.M.
So Grossman emailed Elizabeth and Sonny a long list of due diligence questions, broken out into seven different categories. As he told the court, we just wanted to ask the same questions as many ways as we could, so there was no ambiguity. There was absolutely no confusion about what the technology was capable of doing. There were questions about accuracy, speed, comparisons to traditional methods, limitations on the technology, and feasibility of certain tests.
Grossman would meet again with Theranos in January 2014 when he said he was told that the company could get test results back in under four hours in retail stores and within one hour in hospitals. Unlike some other investors, Grossman did actually get to see Theranos' proprietary mini-lab in person. He described it as the size of a PC from five years ago, a big PC, maybe two feet tall by ten inches wide. And according to Grossman, Theranos was emphatic.
This was the entire laboratory shrunk down into a box. Grossman also went to Walgreens to get a blood test, something he said he didn't tell Theranos he was doing. He had a venous draw, not a finger stick, and the results didn't come back in the four-hour window Theranos had promised. But when Grossman raised these issues with Sunny, he says Sunny explained them away. Telling Grossman, his doctor had ordered an unusual test that Theranos wasn't currently offering on finger stick.
What Sunny failed to disclose to Grossman was that some of the tests were run on a third party machine. Grossman said neither he nor his team were ever told Theranos was using third party analyzers to test patients, or that Theranos' own device was only being used for a handful of tests. According to Grossman, that type of disclosure would have raised a whole series of questions about what the technology was capable of doing. Elizabeth was asked about this in her deposition with the SEC.
Did you talk about specifically the technology and blood draw and what was in place at that time versus what was aspirational? Was there a clear delineation between those two? We tried to do that, looking back on it now, especially in the case of PFM. I wish we had done that even more explicitly, including in writing. There's a slide title of new possibilities in lab, and it says, all 1000 plus currently run tests are available through Theranos.
And again, Theranos runs any test available in central laboratories. Was that a true statement in January 2014 that all 1000 plus currently run tests or CPT codes are available through Theranos? I'm not sure how much of that have been operationalized in January 14, because we don't even open for a couple of months at that point. Despite some concerns along the way, Grossman said he believed what he was told by Elizabeth and Sonny and moved forward with the investment.
When problems with Theranos' technology were exposed in 2015, PFM would sue the company. The jury in Elizabeth's criminal trial didn't hear details about that case, but PFM received a $43 million settlement from Theranos with no admission of wrongdoing. This attorney Lance Wade kicked off the cross examination showing jurors a timeline. On it, Wade marked Grossman's initial meetings with Elizabeth and Sonny in December 2013.
And then February 2014, when Grossman's firm made the decision to invest. You went through a pretty extensive process by which you considered the investment, correct? Wade asked? Yes, said Grossman. PFM had dedicated about five members, as well as outside experts, regulatory advisors, and lawyers to the due diligence. In turn, Grossman had prepared an analysis of Theranos, an analysis he shared with some of the people who invested in the fund.
And do you have reason to believe that some of the people who invested in that fund made the decisions based upon that analysis? It's possible, said Grossman. Wade reminded the court this was Grossman's career. Wade made many investments in healthcare companies over 20 years, including blood testing giants Quest and LabCore, as well as Walgreens. And sometimes you win, and sometimes you lose, right? Wade asked? Yes, Grossman said.
Wade also brought up the fact that Grossman's team had reached out to Walgreens, and an associate of Grossman's wrote in an email he'd received very good feedback from the drug store chain. Finally, Wade pressed Grossman on his understanding of the technology itself.
Grossman understood Theranos wasn't just using fingerstick testing, but said he also believed when Theranos claimed it was taking micro samples of blood from traditional methods, it meant Theranos was taking much less blood than a traditional venous draw. If you take much less blood, you can't use it on conventional equipment.
As in third party machines, Grossman explained to the court, did you actually understand that Theranos could take much less blood by venous draw and use it on commercial equipment? Wade asked. I would find that very troublesome, because that equipment is FDA approved to be used with the larger venous draws. So I would be concerned that if someone was using a micro sample and using that on conventional lab equipment, that would be concerning to me. It's not how it was approved, said Grossman.
Here's Caroline Polisi. Grossman is such a sophisticated witness that he's not going to let the defense get away with anything. And so you see these really long back and forth, almost painful back and forth about what exactly the defense is implying or trying to say or putting words in his mouth. He was really clear on what he wanted to represent with his testimony and he wasn't going to be outsmarted by the defense here. This is Brad Milky, host of ABC's Daily News Podcast. Start here.
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A quick reminder if you're looking for a daily recap of the day's news, including updates on the Elizabeth Holmes trial, join me over on Start Here, the daily podcast from ABC News. Again, that's Start Here, available wherever you listen. In the countdown to the government's last and final witness, prosecutors called two patients and a doctor who they say had troubling experiences with Theranos' blood tests. The first patient called was Aaron Tomkins.
On May 8, 2015, Tomkins, an uninsured musician working three jobs, including one as a church music director and Phoenix, went to a local Walgreens to have her blood drawn. Tomkins told the court she'd heard about Theranos from a friend who was running a resource center connecting vulnerable people like the homeless to affordable health care. This friend was a big, big supporter of Theranos, according to Tomkins.
Tomkins said she'd also read about Theranos' unfortunate, and as she understood it was about to get a less expensive, reliable blood test that required just a tiny little capsules worth of blood. But instead, Tomkins explained she got the shock of her life. When the Theranos' test results came back as prosecutor John Bostick showed the court, the indicated Tomkins had an abnormal presence of HIV antibodies. In other words, it looked like Tomkins might have tested positive for HIV.
Here's ABC News contributor and board certified emergency physician Darian Sutton. If I receive the results of this test, I'd be concerned that this patient has HIV. And so what I would do then is call the patient to fully interpret the test to make sure that the patient understands the concern and then a range of ways so that the patient can get a confirmation test and you have to communicate that to the patient.
Based on your medical history, are you aware of any reason why HIV antibodies would be present in your blood, asked Bostick? No, said Tomkins. Tomkins, who said she'd never had any symptoms of HIV or AIDS, who'd never been diagnosed with HIV or AIDS before, was surprised by the results of her Theranos blood test. Tomkins testified she called Theranos almost immediately asking to speak with someone in the lab, but the customer service rep said the call couldn't be transferred.
I was quite emotional at the time, said Tomkins, who also said she couldn't recall ever hearing back from Theranos. When I'm looking at results, especially when I'm talking to patients about HIV results, you really have to be a skilled physician and provider to understand these results, to orchestrate the next steps necessary.
And so when I'm looking at this, it hurts my heart to be honest with you knowing that a patient is walking around with a result such as this without any type of indication or interpretation and with no clear path of next steps. It would take three more months before Tomkins was able to get additional testing at the local women's clinic. Those tests came back negative. They said everything was fine. She testified.
After the prosecution wrapped with patient Aaron Tomkins, the defense started their cross. Defense attorney Katie Treps did the questioning. This began by asking about the cost of the Theranos test. Do you recall how much your HIV test cost from Theranos? Up the top of my head, no. I remember it being of lower cost and I remember receiving a refund check in the mail approximately two years later, said Tomkins.
Tomkins had told the government that she tried to speak with someone from Theranos, but never heard back from customer service. But Treps showed that there actually was a follow-up conversation with Theranos. Does this refresher recollection that a Theranos employee walked you through the CDC recommendations on testing for HIV? Tomkins told the court the specifics of that brief conversation were very vague to her, and she was just recalling it.
Treps then went through the CDC guidelines on HIV testing, but Tomkins said she had difficulty understanding the guidance. Treps pointed to the fact that it was recommended someone with Tomkins results should then be tested with an FDA-approved antibody immunosay that differentiates HIV-1 antibodies from HIV-2 antibodies. Do you know from your phone call with Theranos whether HIV testing at Theranos was run on FDA cleared commercially available test methods, Treps asked?
I assumed all the equipment was FDA-approved, said Tomkins. Later in a motion, Elizabeth's counsel said they wanted the judge to scrap Aaron Tomkins' testimony regarding her HIV test results. Prosecutors didn't call Tomkins' doctor who would have been a person qualified to offer that opinion to the jury, defense attorney Amy Saharia told Judge Davila.
Saharia added that this report has offered essentially an opinion that she received inaccurate test results without a person qualified to offer that opinion to the jury. The government countered that the patient was qualified to talk about her experience with the Theranos test and present to the jury the results that she obtained. The prosecution argued that the testimony of Tomkins was admissible, and the count based on her was still a valid count.
Bostic admitted the test results did not say Tomkins had HIV. We don't know yet how Judge Davila will rule on the defense's motion. Next the government called Dr. Mark Burns, who's been running his own medical practice in Arizona for almost 30 years. Dr. Burns estimated he'd done over 10,000 PSA tests to test for prostate cancer and had treated about 200 patients with prostate cancer.
Prosecutor Jeffrey Schenk began by asking Dr. Burns about his patient, Dr. Merrill Ellsworth, a now retired dentist. Ellsworth was going on a missionary trip leaving the country for two years and his church recommended getting a PSA test ahead of time. Dr. Burns testified that he recommended a Theranos test because it would be cheaper. Ellsworth, who also took the stand briefly, testified he paid for the test out of pocket. On May 14, 2015, Ellsworth went to Walgreens to have his blood drawn.
What came back was a PSA result markedly higher than his previous levels. Prosecutor Schenk showed the jury a copy of the patient's test results on which Dr. Burns had written across very significant rise, recheck, maybe lab error. Here's ABC News' Dr. Darian Sutton. It is not common for someone to have a high value like this without cause or without reason.
For example, if I received a patient who had a high value at this level, I'd wonder does this patient have an inflammation of their prostate or an infection of their prostate? But in this case, the patient was asymptomatic and what would be concerning is if this could be a sign for possible prostate cancer and that could lead the patient to additional testing, imaging, and also prostate biopsy, which may be completely unnecessary given this abnormally high value is false.
Ellsworth testified that four days later, he got another Theranos PSA test. But this time, the result was much lower in the normal range. According to Dr. Burns, this result was much more consistent with his patient's previous tests. But given the significant variability, Dr. Burns followed up with Theranos and spoke to a regional lab director. I asked that they would repeat the test a third time and I'd feel a little bit more comfortable if the third test was in an expected range.
And then I asked, since it seemed to be a lab error or discrepancy with their lab, I asked if they'd assume the cost for repeat testing as opposed to the patient paying for it again. And they agreed to that. The executor shank then showed the jury a set of emails, an internal discussion at Theranos about Ellsworth's issues. Theranos VP Daniel Young wrote to a group, I see three results, two low and one high. Do you know what's going on here? But apparently, no one did.
Young's colleague wrote back, we don't know why the first sample came back so high. It was actually rerun and confirmed high originally. A sample mix up is possible. On June 11, 2015, Ellsworth took another Theranos PSA test and his results were elevated again. Dr. Burns testified he was becoming more concerned. He called Theranos again and requested his patient have a fourth test run in the traditional method, meaning not finger poke. Theranos meantime continued to discuss the issue internally.
Shank showed the court the email sent after Dr. Ellsworth's latest test. PSA from visits one and three were run on Edison. Visit two was run in Phoenix. This meant Ellsworth's problematic first and third tests were shipped to Palo Alto and run on Theranos's Edison device, whereas his second normal test was run on FDA approved third party machines in Phoenix. This was news to Dr. Burns.
On June 30, 2015, Ellsworth got a fourth PSA test done, but this time a phlebotomist came to his office to do a venous draw. The result came back low and in the normal range. This one was processed in Arizona using the traditional method and Dr. Burns felt reassured. ABC's Dr. Sutton says it's a red flag even rerunning a test twice, let alone four times. Having four tests to confirm, is excessive in my opinion personally.
If I'm ordering beyond a second test, I have extreme questions about the validity of the lab orchestrating the tests and it makes it very difficult as a physician. That is extremely concerning. Less than a year later on March 29, 2016, Dr. Burns received a fax from Theranos which read, this report contains corrected results. It was Ellsworth's first and third PSA tests. The two tests Theranos had run on the Edison that both returned concerning elevated PSA levels.
Next to the values, it read, void. In the cross-examination, defense attorney Katie Treffs asked about when Dr. Burns first learned about Theranos. Is it fair to say that you were excited? I was very much interested in this way of testing Dr. Burns replied, Treffs went on. Is it true that patients of yours had tested Theranos for approximately a year before Mr. Ellsworth's test? Yes, I believe that's true.
Dr. Burns said, and with the exception of Dr. Ellsworth's PSA test, did you have any issue with Theranos' tests up to 2015? No, said Dr. Burns. Treffs pointed out that once Dr. Burns brought the issue to Theranos, they investigated. He then asked, over the course of your career, have you primarily used other lab companies other than Theranos, Cleveland Clinic, I've used lab core and occasionally Sonora Quest? Dr. Burns said, and have you had any other testing issues with those other labs?
Yes, he said. Treffs asked Dr. Burns in his experience how frequently lab errors with PSA tests occur. He said it was rare. Are you aware of research that shown that the rate of lab errors can vary from 0.1 to 3 percent? I have not seen that, Dr. Burns said. Did patients of yours go to Theranos after the incident with Ellsworth? Possibly, I don't recall. Okay, and did the government ask you at any point for the full list of patients of yours that were tested at Theranos? No, Dr. Burns responded.
And with that, Treffs had no more questions. As Attorney Caroline Polisi thinks, the government made a strong choice having these patient test results play towards the end of the case after the investors. Obviously, this case has been charged as a conspiracy to commit wire fraud against both Theranos investors and patients. So obviously, the investors are one class of victims, but they're not the most sympathetic, right? Oh, oh, boohoo.
You're millionaires and billionaires, and you may be lost a couple million dollars here and there on a risky investment. Well, that's not super relatable to jurors, to real world people that are trying to relate to what happened in this case. It's the doctors and the patients who relied on the tests from Theranos' technology to form their medical decisions that are extremely sympathetic.
There was meant to be an additional patient, witness BB, but after the government failed to include his blood test in a pretrial list of tests, his testimony was deemed inadmissible for the test. This change also impacted the total number of counts against Elizabeth. She now faces 11 instead of 12. For its final witness, the government called Roger Parloff to the stand. He's someone you first met in season one of The Dropout. Roger, hi, it's Rebecca Jarvis.
Parloff's work has been referenced throughout this trial. He wrote the star-making fortune cover story about Elizabeth that was included in so many of those investor binders and presentations. But the court finally heard from him directly, and more strikingly, heard excerpts from his nearly 10 hours of recorded conversations with Elizabeth, like this one. All of this is stuff you can do. It's so incredible.
In her own voice, the jury got to hear Elizabeth make claims about test capabilities, relationships with pharmaceutical companies, her work with the military. Many claims we now know to be exaggerated are untrue. I think our biggest sort of point on that is our whole business is about eliminating the need for people to do venipunk sure and let's just, they want to, in which case they can, but this, I mean, everything that we do is about eliminating that.
Parloff began his testimony telling the court he was approached by attorney David Boyz to write an article about Theronauts. Elizabeth described the same in her SEC deposition. Did you reach out to him, Mr. Parloff? Maybe you think he is David, you should have to hit him. David Boyz, yes. David's PR person told me that it was going to be a cover story and that it was going to be a big piece on Theronauts.
Boyz may have laid the initial groundwork, but as Parloff testified and told us in our 2019 interview, the information, what he wrote in his article, it all came from one source. Who did you have the most interaction with as you were putting this story together? It sounds like Elizabeth. Yes, and there were multiple phone calls between us after that multiple, um, emails. And was David present during any of your conversations with Elizabeth Holmes?
No. Did you go through the facts of the story with David Boyz or his PR person? No, I wouldn't have gone through it with them. I, you know, there's a fact-checking process and I went through that with Elizabeth. Were any of the facts that were stated in the article, things that Elizabeth directly contradicted in your conversation?
No. After an initial call with Elizabeth, Parloff traveled to Theronauts' headquarters in Palo Alto, describing to the court what he saw there, a conference room that had once been Facebook's CEO Mark Zuckerberg's office. Parloff saw inside the company's R&D lab, but he was not permitted to see the commercial lab. He toured Theronauts' manufacturing facility in Newark, California and visited a soothing wellness center at Walgreens, complete with an aquarium.
He showed the court a presentation thereinoscentum, one we've seen time and time again. He described how Elizabeth went through it with him point by point in person on April 7, 2014. It contained details that would eventually make it into his article, like her description of the signature nano-tainer. What did Miss Holmes tell you about this container or the sample size as the prosecutor? She said it was about 1,000th of the size of what a normal blood draw might take, answered Parloff.
Elizabeth even sent Parloff that now infamous doctored Pfizer document. The government shared 16 different clips of Parloff's recorded exchanges with Elizabeth. In one over a phone call, Parloff asked Elizabeth why Theronauts is only advertising 200 tests on its website when she claims the company can actually run a thousand tests on its proprietary machines. What is the difference between the 200 that are listed and the 1,000 you feel comfortable you can do? Yeah, absolutely.
So this gets into some of what we were talking about before in terms of when we do venipunkshers and those types of things. So it's more that we have operationalized a certain set of tests expecting a certain set of ordering patterns with certain sets of inventory and workflows for those tests that are most commonly done. And so those ones on the website are the ones that are most commonly done. Actually, okay. And so those are the ones that we brought up first.
We are adding to it and in fact, before the article comes out, we may have a new batch that is going on the website. The SEC later asked Elizabeth a similar question, but she gave a strikingly different answer in her deposition. What is the statement that Theronauts currently offers more than 200 and is ramping up to offer more than 1,000 of the most commonly ordered blood diagnostic tests all without the need for a syringe? Was that statement correct? Reading it now, I don't think it is.
In another clip, Parlov compares Theronauts' capabilities to industry leader Quest. Elizabeth tells Parlov her company can do all the same tests on their own proprietary device, which she calls a platform. When I looked at Quest, obviously they have many different kinds of chemistry going on. They do about 600 tests in this regional hub lab. Does your platform replace all of those? Our platform can yield, let me think what the best way to say is, we can do all of those tests.
We can provide data back to clinicians for all the same tests. There is an in-person recording between the two where Elizabeth briefly touts her international work. Are you doing stuff for a city? Already? We have done work overseas for pharmaceutical companies and a little bit with foreign governments in the past, but right now we better work it out for us here. In another recording, Elizabeth defers to secrecy, scurting around why Parlov can't use certain words in his article.
OK, we're recording you can. Is the sensitivity around, and that this can be off the record, obviously? Is the sensitivity around the word device the regulatory sensitivity around the word device? Or is it that you don't want, is it more in the nature of a trade secret that you don't want them to know you're at the analyzer phase yet? That's right, it's more in the context of the trade secret. We're still filing a lot of patterns around it.
The fact that we have a single device that can perform any test is a big deal. Parlov told the court one crucial exchange regarding third party analyzers wasn't recorded, but he described it. The question I asked was, just to be clear, you don't keep a Siemens analyzer, for instance, on hand for overflow, do you? And she said, uh-uh, or mm-mm. It was a nonverbal response, but it meant correct. We don't do that. Of course, that wasn't true, Theranos was using third party analyzers.
But Parlov didn't know that, and it would go into his article. The profile said Theranos, quote, does not buy any analyzers from third parties. Something the SEC later grilled Elizabeth about. Did you tell Mr. Parlov that most of Theranos' tests were run on commercially available analyzers? I don't think so.
Are you worried that if Mr. Parlov wrote an article mentioning only Theranos' manufactured devices that people would be given an inaccurate impression of how Theranos was conducting its patient testing? Not at the time, because at the time I thought it was all about the aspiration and the vision, looking back at it now, I absolutely wish we handled our communications differently. According to Parlov's testimony, when Fortune published his article, Elizabeth seemed thrilled.
Did she provide you with any reactions or feedback to the article, Bosticast? Yes, she praised it effusively, and I believe she linked to it on her website, explained Parlov. Elizabeth appeared to have read the misleading claims and flagged no issues whatsoever. At any point did Ms. Holmes complain about any of the content in the article? No. At any point after the article was published, did Ms. Holmes contact you to ask for a correction of any of the facts in the article?
No. Parlov said the same thing in our 2019 interview. They never got back to me and said, there's a mistake here. On the contrary, George Schultz sent me a note saying how much he appreciated the fact that I had spent so much time in gotten it right.
Parlov told the court after his profile ran, he continued speaking with Elizabeth, her potential follow-up articles, including attending a Theranos demonstration at the Boy Schiller Law Offices, where two devices were used to run a potassium test and an Ebola test separately. Parlov said he was a little surprised that they needed two machines because he thought one could do everything. In another recording, you can hear Elizabeth directing Parlov how to report this.
You can also say that we created a lab in the last three hours at Boy Schiller to do your Ebola test. David will be proud. The only thing that I want to not be explicit about in this piece, I don't want to explicitly say that the exact same system is running both the clinical chemistry and the DNA and the immunochemistry and the other stuff. If that makes sense. So you don't want people to know that it's really the exact same machine, just with different reagents or whatever. Exactly.
And so you will be able to say you saw systems and as long as there's only the S next to that, it will be ambiguous as to whether it was one or multiple and that's fine. As Parlov told the court, he would soon come to know the truth that many of the things Elizabeth told him would turn out to be wrong if not outright lies. He'd eventually run a corrected version of the article and suffer extreme remorse as he described to us in 2019. Look, I made a lot of mistakes.
I got caught up in this woman's story. I began to drink the Kool-Aid. So yeah, I've learned some rough lessons. Is there a particular question you wish that you asked Elizabeth that you didn't? I think I asked the right questions. I just got the wrong answers. That's what I think at this point. I mean, I do think I was credulous and I was taken with her story and I didn't pursue certain leads that I could have, but I think I asked her the right questions.
When it came to the cross-examination, defense attorney John Klein pointed out Parlov's legal chops, a law degree from Yale, a clerkship with a U.S. district judge who was sort of like Judge Davila, five years practicing law after that. That combined with his subsequent 26 years as a journalist prepared him, Klein, said, to ask questions. I suppose so. Yes, Parlov replied.
You understood at the time that there were limits on what you could be told and what Theranos would be comfortable with you publishing because of intellectual property concerns. That's right, Parlov said. Prosecutor Klein pressed Parlov in a statement that he had the impression that Theranos devices were in actual use in Afghanistan, but that Elizabeth told him she couldn't discuss it on the record. Parlov answered, that may be right. That must be what I said.
It was a pretty strong inference he added. I mean, she was stating, don't tell General Mattis about the deployments in Afghanistan. Klein countered. She never actually told you that there was a use in Afghanistan. Did she? Parlov replied. I thought she did. It might have been a very strong impression. I'm not certain. On redirect, prosecutor Bostek pointed out Elizabeth said in a recorded interview Theranos' devices might have use in the military.
When all was said and done, Parlov's testimony, coupled with the interview tapes, offered jurors an incredibly compelling glimpse into Elizabeth, according to Caroline Polisey. But will it be enough for the government? This be the smoking gun in the case. It's not a crime to lie to reporters. However, the idea is that, well, Elizabeth Holmes used these really flattering reports to then pass off to investors as representations about what was happening at the company at that time.
So it was kind of a backhanded way of making false representations to her investors without actually making false representations to her investors. And I think absolutely any juror will be persuaded and feel as though it's a smoking gun. It's incredibly offensive. And I think that jurors will recognize that and that will absolutely play into their assessment of whether or not she had the capability to defraud investors.
With Parlov's testimony concluded, the prosecution's case after 31 days and 29 witnesses was done. In painstaking detail, the government alleged time and time again Elizabeth lied about her relationships with the US military and her technology's use on the battlefield. She continuously hid the fact that Aranose was running tests on third party devices, and she brazenly sold investors with those doctored pharmaceutical reports. Irrefeutable points, according to the prosecution.
Perhaps most of all, the government painted a clear picture. It was Elizabeth, not anyone else at Aranose, who was always leading the charge. Hey, Prime Members! Are you tired of ads interfering with your favorite podcasts? Good news! With Amazon Music, you have access to the largest catalog of ad free top podcasts, including with your Prime Membership. To start listening, download the Amazon Music app for free or go to Amazon.com slash ad free podcasts.
That's Amazon.com slash ad free podcast to catch up on the latest episodes without the ads. It's better all here! AT&T customers, switching to T-Mobile has never been easier. We'll pay off your existing phone and give you a new one free, all on America's largest 5G network. Visit T-Mobile.com slash carry your freedom to switch today.
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ABC court producer Miles Cohen was in the courtroom and described the scene. There was this buzz in the courtroom. This was the end of a very long day, but everyone seemed to perk up. The audience, the jury, even the judge looked excited to see what was going to happen. I mean, the person next to me went, oh my god. Santa Clara University professor Ellen Kreitsberg says it's surprising, but perhaps all part of a greater plan.
Well, my first reaction was surprised, but as I thought about the reason she might do it is she needs to convince the jury herself. She is apparently very likable and very persuasive. And her one hope in this case for an acquittal is really to be able to talk to the jury over several days. The defense indicated they were going to have her on the stand for a long time and be able to respond to some of these accusations herself.
And so it may be her only chance of getting acquitted, even though it runs some very high risks. After Judge Davila established Elizabeth was vaccinated, she removed her mask, revealing a smile underneath. That really set the tone for the rest of her testimony. She was conversational up there, clearly rehearsed, but composed. And it looked like while she was giving her answers, she would look at the jury. And she would look at the judge. Defense attorney Kevin Downey began the examination.
You could hear a pin drop in the courtroom. His first question. Did you found Theronose? Yes, Elizabeth said, adding she'd worked there from 2004 to 2018. Did you believe that Theronose developed technology that was capable of running any blood tests Downey continued? I did, Elizabeth replied, explaining that in 2009 or 2010, her team had a breakthrough. How many small sample assays or blood tests did Theronose develop and validate in its research laboratory while you were at the company?
Over 300, Elizabeth said. And how many small sample assays did Theronose offer in its clinical laboratory? Over 70 or so, she responded. And asked how many of those assays were offered, where the analysis was performed on a miniaturized Theronose device. Elizabeth answered 12. It was a clear contrast to the hundreds so many have testified she previously claimed.
In a parent anticipation of how the jurors might interpret this discrepancy, Downey asked, when she spoke publicly about the capabilities of Theronose's technology, was she always limiting her comments to what was available in Theronose's clinical lab? No, she replied. He put right out there this idea that she was clearly aware that it could only run up to about 12 tests.
And when she talked to investors, she was talking about the potential for the future or test they could run on third party machines. And so they're starting to lay the groundwork in that answer about what the lab could do and what her vision was for the lab in the future. And that's going to be part of the theme. Downey then said he wanted to take a step back to ask Elizabeth about her background.
He focused on a series of scene-setting questions, when and where she was born, where she attended college, what she studied. Then Downey focused in on Channing Robertson, a highly credentialed professor whom Elizabeth had met in her first year as a student at Stanford. And how did you come to meet Dr. Robertson? Downey asked, when I got to Stanford I went through the handbook of professors looking for every professor who was involved in both health technology as well as traditional technology.
And there was only three or so of them. So I showed up at his office and asked if I could take his class. It's a story Elizabeth elaborated on to Glamour Magazine when she was celebrated as one of their women of the year in 2015. This used to be my advisor's office and I would sit here, literally here in the hallway waiting for him to come back to his office to try to convince him to let me into his graduate research program.
And I think I probably spent the equivalent of months just sitting on the floor here. Elizabeth confirmed she took Professor Robertson's class and also went to work in his research lab, which specialized in micro-fluidics, the handling of small volumes of liquid. In addition to Dr. Robertson's lab, Elizabeth also told the jury she worked at the Genome Institute in Singapore, studying tests to detect SARS.
In her time there, she said she began to develop an idea based on her experiences, miniaturizing the technologies she was surrounded by to the point that they could be put in a pill that someone could swallow and do testing through the pill while it's going through your body or in a patch that someone could wear. As Elizabeth explained to the court, when she returned home from Singapore, she set to work at her parents' home in Houston on a patent application for the idea.
Downey showed the jurors the application, which Elizabeth submitted in September 2003. The invention was still just an idea. When Elizabeth returned to Stanford her sophomore year, she discussed the patent with Professor Robertson. And what was his reaction asked downy? I think he was a bit skeptical at first. He said it was something that had not been done before, and he encouraged me to continue my research, Settle As Elizabeth.
Dr. Robertson discussed this in his 2018 deposition for a civil lawsuit. She came back from having worked a summer in Singapore at the Genomics Institute. When she came back in the fall of her sophomore year, she showed me a patent application that she had written and wanted me to read it and provide her with some feedback.
During the course of time period, she said she wanted to start a company to begin to explore ways of putting together ultimately a product which would embody many of the aspects contained within this patent application. Elizabeth explained that she continued to work in Professor Robertson's lab in her sophomore year. She spent almost all my time on that, she testified, which she told the jury was one of the reasons she decided to drop out of Stanford in March 2004.
Elizabeth said Professor Robertson was supportive of the decision, and she began trying to build a prototype of her new invention. Then, Elizabeth started a company, calling it real-time cures. She hired a handful of employees, including two students from Professor Robertson's lab. Robertson himself also joined as Elizabeth's first board member. Down he asked Elizabeth how she financed her company in those early days.
I started with talking to my parents, and they let me take the money that they had saved for me to be able to go to college to work on my patent. And then, I went to try to raise or borrow money Elizabeth explained. Elizabeth told Glamour about this as well. My family was amazing, I'll be grateful all my life, I called them and informed them that I would believe in Stanford.
And they let me take the money that they both had saved working all their lives for my brother and I to be able to go to college and put it into starting the company. Down he focused a great deal on Elizabeth's invention, how it might work, the prototyping she and her colleagues were doing in the lab. Did you ultimately develop this into an actual product he asked? Yes, said Elizabeth. By this point, it was 2005, and Elizabeth had changed the name of her company from real-time cures to Theranos.
And to build that product, did you go out and try to raise some additional money to try to finance that research and the employees and the office and all of the things that it takes to run a business? I did, she said. But Elizabeth told the court she tried to raise money from venture capitalists, including Don Lucas, who she was introduced to by someone who had gone to college with her dad. Elizabeth said Lucas had lots of due diligence questions for her at the time.
She'd sent him a list of every expense at the company. Lucas not only decided to invest in Theranos, but also became the chairman of Elizabeth's board, a role he took on from 2005 to 2013, Elizabeth told the jury. Downey focused on other investors at the time too, and what Elizabeth told them. Now, we've heard some testimony in the case about relationships with pharmaceutical companies, he said.
Were you talking to investors about the potential for Theranos to market its products to pharmaceutical companies? Elizabeth said she was, and that she offered to put potential investors in touch with the people Theranos was working with at the pharmaceutical companies, including at Pfizer. Downey showed the jury a picture of Theranos' first device, the Theranos 1.0.
According to Elizabeth, she discussed the product in 2006 and 2007 with pharmaceutical companies including Pfizer, Blacksau Smith Klein, Novartis, and Bristol-Meyer Squib. Did you ultimately succeed in signing a contract with Blacksau Smith Klein? Yes. And did you also, in 2006, enter into an agreement with Pfizer related to their use of Theranos' technology? Yes. Elizabeth confirmed she talked about these agreements with investors when she was raising money for the company in 2006.
Elizabeth also said she conducted a demonstration of her technology for Novartis. After the presentation, she emailed her team a message that was shared with the court. In it, Elizabeth wrote, We nailed this one, you all did an incredible job in making this happen. This is the Theranos way. With the wind seemingly in her sales in late 2006, Elizabeth raised another round of financing. Don Lucas, Chris Lucas, and Larry Ellison invested. It was also when Alan Eisenman got involved.
Before the defense could go on, the clock ran out, and court had to adjourn for the weekend. When court finished, the tone of the courtroom had changed. I saw many people in the courtroom, and it turned to each other, and tried to break it down and just look at each other and disbelief as to what they just heard. Elizabeth left the courthouse hand in hand with her partner, Billy Evans. Is this finally your chance to tell your side of the story?
When asked if she thought she'd be acquitted, she turned and gave what looked like a slight nod to the reporter. Next week, Elizabeth returns to the stand. Ellen Kreitzberg says Elizabeth's former boyfriend and Theranos co-sony Bellwani may take center stage in her testimony. We do know, based on what she has to raise, is she's going to blame Sunny in certain ways for what was happening at Theranos and some of the problems at the lab.
So the defense is clearly going to raise the issue of it was Sunny's fault. He was the one who knew what was going on, and either didn't tell Elizabeth Holmes clearly what the problems were or misrepresented them. What we don't know yet is whether in addition to that defense, she's going to raise the intimate partner abuse issue, because she can raise that first defense without going into intimate partner abuse.
We won't know until she develops her direct examination whether she's actually going to insert that into the trial. Sunny denies all allegations of abuse. Tune in next Tuesday to hear how it all unfolds. Elizabeth Holmes and Sunny Bellwani did not respond or declined to comment for this podcast. Some material including port depositions were edited for clarity and time. The dropout Elizabeth Holmes on trial is written and reported by Victoria Thompson, Taylor Dunne, and me.
Victoria's the executive producer, Taylor and I are producers. For ABC audio, Susie Lewis producer and Madeline Wood and Marlowe Milwaukee are associate producers. Mia Athan and Miles Cohen are our court producers. For ABC's business unit, our associate producer is Victor Ordoniaz and our production assistant is Lane Wint. Mixing and scoring is by Susie Liu and Evan Viola. Evan also composed the music for the dropout. Our artwork is by Teddy Blanks at Chipson Y and Sedgwick Hansdad.
For ABC audio, Liz Alessie is executive producer. Special thanks to Josh Cohen, Elizabeth Russo, Ian Rosenberg, Eric Abram, and Stacia Dichichico. With hundreds of doors across Houston, you can get expert care everywhere. That's the difference between practicing medicine and leading it. Houston Methodist, leading medicine.