Start to finish, Thursday was an absolute show of stamina on the part of Elizabeth Holmes as she attempted to convince the jurors in her case against SEC fraud charges to believe she could be held solely responsible for the missteps that led to Theranos Inc.’s implosion.
Holmes was cross-examined by the SEC for close to 12 hours Thursday. While she did not win over the jurors, she continues to take the stand Monday and will be on the stand again Tuesday. The former Palo Alto, Calif., company co-founder is being charged with 10 counts of securities fraud in the alleged misrepresentations she and other directors and executives made while the company was going public on NASDAQ in 2015.
On Friday afternoon, Holmes’s interview of former Theranos board member Jon Brynjolfsson was expected to be completed.
Brynjolfsson, one of the co-authors of “The Second Machine Age,” revealed Monday that he raised the issue of Holmes’s eligibility for class action lawsuits after a Theranos board meeting in 2014. Brynjolfsson said he brought up the possibility of the plaintiffs’ bar being able to bring these cases based on Theranos’s non-compliance with rules on blood tests.
Brynjolfsson said that he initially told Holmes, “You know what, maybe not, if we had more time, we can talk about this.”
Holmes, who has said she had no role in that discussion, responded: “I can’t deal with this right now, please remind my board.”
After this exchange, Brynjolfsson then said that he presented a second PowerPoint to Holmes, but this time, he asked the board about his concerns. According to Brynjolfsson, he said that “all our money is on you, and we don’t know the test for Theranos at this point” and concluded that the company might have to be dissolved.
Theranos executive Mary Thomas, who said in an interview that she saw the slide with Brynjolfsson’s notes and agreed that “those charts can go on there,” responded to Brynjolfsson’s question to the board: “Do you all agree with me that there’s a possibility of the non-compliance with these rules and if that’s the case then you probably should take your exit pill.”
The board later voted to liquidate Theranos at a special board meeting which took place on Nov. 13, 2014.
Holmes claims that Brynjolfsson’s claims were “intentional.”
As the trial began Monday, Theranos’s motion to have the non-disclosure agreement included in evidence was denied. However, the issue of a company representative appearing on the stand to discuss Theranos’s non-disclosure agreement is still up in the air.
The highly anticipated testimony of Holmes and Theranos’s ex-chief technology officer, Ramesh Balwani, who wrote much of the company’s purported technology, has not yet been scheduled. Both Holmes and Balwani recently testified before the House Energy and Commerce Committee on their actions.