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Most of the 15 witnesses who have testified in the six-weeks-and-counting trial of Elizabeth Holmes had one thing in common: They fell out at some point with the Theranos founder. Some were frustrated employees turned whistleblowers. Others were gullible corporate collaborators burned by their association with her. But for Holmes, the most damaging witness yet may well be a close friend of her brother, a public-policy major from Duke University named Daniel Edlin.
Edlin, who joined Theranos as a product manager and stuck with Holmes long after things turned ugly, completed 2 1/2 days of testimony Wednesday. At times snippy with John Bostic, the sweet-natured prosecutor who questioned him, Edlin provided the closest thing yet to a smoking gun: a damning series of anecdotes that dramatically illustrated the government's allegations of criminal fraud against Holmes.
Just 24 when he joined Theranos in 2011, Edlin had one main credential: his friendship with Christian Holmes, the executive sibling who ran customer service. Theranos hired scientific experts galore. But it also needed glad-handing generalists like Edlin to serve as liaisons between the company's tech nerds and its real-world business partners. Unlike previous company insiders who have taken the stand, Edlin didn't deliver his testimony in scientific jargon or cite reams of technical specifications involving blood-testing parameters. More Duke bro than Silicon Valley pro, he laid out in plain English how Holmes repeatedly misled her partners in five crucial areas. Let's take them one at a time, and keep score as we go:
1. VIP demos
Among Edlin's responsibilities at Theranos was to arrange for business partners, investors, and influential journalists to have their blood tested, to demonstrate the company's cutting-edge devices. This was complicated, given that the devices didn't work.
In his testimony, Edlin explained that he dealt with the problem by staging what amounted to elaborate ruses for VIPs. Theranos analyzers that didn't analyze blood were placed in conference rooms, essentially for show. Rather than displaying the results of a VIP's finger-stick blood sample on a screen — the instant, on-the-spot results that Theranos was promising — the devices were rigged with a "demo application" that blocked any readout, a maneuver known at Theranos as a "null protocol." The VIP was told further analysis was needed, and the blood sample was sent off to a central lab. It was a con game straight out of "The Sting," with corporate CEOs as marks.
Edlin testified that Holmes knew everything was going south. "Very frustrating," she responded to an email chain detailing the company's inability to use a much-ballyhooed device ahead of one VIP visit. In another instance, Sunny Balwani, her business and romantic partner, forwarded her an email that detailed how a thyroid device was a "disaster" and couldn't be used for a demo. Holmes also was copied on a series of emails that laid out how Theranos dealt with a string of inaccurate results from VIP tests — by throwing out the offending measurements.
On cross-examination, Holmes' lead lawyer, Kevin Downey, got Edlin to acknowledge there might be more benign explanations for the rigged tests. Sometimes, for instance, subjects didn't want their blood drawn; they just wanted to see how the machines worked. But on the whole, Edlin left jurors with the impression Theranos intentionally deceived investors, who wound up losing money — the very definition of criminal fraud. Advantage: prosecution.
2. The military
Holmes stands accused of misleading investors and business partners about her failed startup's relationship with the US military. The company claimed its rapid blood tests were already being used in combat zones. In a confidential background document, it asserted that "each Theranos device can run every test currently available through the traditional centralized or hospital laboratory infrastructure."
Why, Edlin was asked, would that be important to the military? "They wanted one device to do all its testing," he replied. "I was told our device was smaller and more portable."
James Mattis, the retired four-star general who invested money in Theranos and joined its board, testified early in the trial that he'd been enticed by the prospect of deploying its rapid blood tests on the battlefield. But in reality, the company's device was never used by the military. It didn't work reliably, and it couldn't stand up to the extreme temperatures often encountered in combat zones.
Bostic peppered Edlin with questions, highlighting the false claims made by the company. Was the Theranos analyzer ever used with deployed soldiers? Was it used in war zones? Was one ever sent to the Middle East? On a medivac or other military helicopter? Over and over, Edlin gave the same response: "Not to my knowledge."
What Edlin did know was how well informed Holmes was. "I reviewed everything with her," he said.
Downey, on cross-examination, was able to demonstrate that Theranos was sincerely trying to fulfill its promises to the Army, and that its efforts often moved along at a clip consistent with trying to prove out a new technology within a giant bureaucracy. But he did little to puncture Edlin's testimony that Holmes knew about the false claims being made to investors about the deployment of its devices in combat zones. Advantage: prosecution.
3. Big Pharma
In a brief but telling exchange, Edlin explained how Theranos fudged the claims it made in conversations with the drug giant Celgene. Elgin had helpfully separated various types of blood tests into two distinct categories: ones that could run on Theranos analyzers and ones that needed to be analyzed on third-party "kits." A top Theranos official, Daniel Young, advised Edlin to combine the two lists and to tell Celgene that Theranos would be "transitioning" to its own devices for some of the tests. Edlin dutifully crafted a single list — implying that Theranos was able to handle all the tests on its own. Holmes, always on top of the details, emailed: "I am on board with this. Okay to send out with Daniel's comments below." Advantage: prosecution.
4. Rupert Murdoch
A minor preoccupation among the handful of reporters who show up for each court session is the hope that the prosecution will call Rupert Murdoch. The billionaire press lord invested $125 million in Theranos, and The Wall Street Journal, which he owns, played a key role both in hyping Theranos and in taking it down. (An article by an opinion-page writer, timed to the launch of the Theranos-Walgreens partnership, is a key plank in the government's case that Holmes misled the press to woo investors.)
Edlin testified that he helped prepare an investor pitch for Murdoch, who visited Theranos in 2015. Like other VIPs, he had his blood drawn by a Theranos analyzer.
"It was wonderful to have you here today," Holmes emailed Murdoch afterward. "I so look forward to the opportunity to continue our conversation," she continued, adding that it "would be an honor to have you be part of our company."
Murdoch may have failed to display his legendary investing acumen by sinking so much money into Theranos. But give him credit, at least, for having his antenna up regarding his VIP blood test: "Thanks, Elizabeth. Enjoyed every minute of it. Any blood results? See you soon, Rupert." Advantage: prosecution.
5. Sunny and Elizabeth
Contrary to all the pretrial prognosticating in the press, the relationship between Holmes and Balwani, who served as president of Theranos, has played only a minor role in the trial so far. But the government has been nipping away at the question of whether Balwani — who is facing fraud charges of his own — somehow controlled or coerced Holmes. At several points, Bostic asked Edlin about their dynamic. Edlin testified that he knew the two were involved because Balwani had been introduced to him as Holmes' boyfriend before he joined the company.
Edlin added that his office was near those of Balwani and Holmes, which had glass walls. "Did that give you opportunities to see how they worked together?" Bostic asked. "It gave me opportunities to see inside their offices," Edlin replied, to some laughter.
Edlin testified that Balwani often deferred to Holmes, "who had the final decision-making authority." Asked whether he ever saw Balwani overrule Holmes, Edlin paused long enough to count to 10.
"I can't recall a specific moment," he finally responded. "I can't think of one off the top of my head."
This exchange is relevant only to the extent to which Holmes' lawyers attempt to deploy a "Svengali defense," arguing that Balwani seduced Holmes into a life of crime. So far, despite its pretrial briefs that cited Balwani's supposed coercion as part of an argument to separate their trials, the defense has barely discussed the relationship. But with Edlin, the prosecution scored a preemptive point by shooting down the argument before the defense could even raise it. Advantage: prosecution.
None of these wins for the prosecution mean its case is now a slam dunk. The defense repeatedly raised plausible alternative explanations for Edlin's anecdotes of deception, hoping to raise a reasonable doubt in the minds of the jurors. But the damage was done. It took perhaps the least technically credentialed witness so far to break through all the scientific mumbo jumbo and deliver a clear and compelling picture of what happened at Theranos: Holmes told tall tales, and investors and patients paid the price.
Elizabeth Holmes trial
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