Elizabeth Holmes, founder of Theranos Inc. , from Federal Court in San Jose, California, on Tuesday, August 31, 2021.
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San Jose, Khalif. The manager of the hedge fund that invested $96 million in Theranos said he investigated the company thoroughly, but CEO Elizabeth Holmes continues to mislead about the blood test technology.
Brian Grossman, chief investment officer at PFM Health Sciences, told jurors in Holmes’ criminal trial Tuesday that in 2014, as part of due diligence, his blood was drawn from a Theranos machine at a Walgreens pharmacy.
“My blood was drawn through the venous tract, not the finger stick,” Grossman said, adding that the experience undermined what he was told about Theranos.
Grossman said he met with Holmes and its chief executive officer, Ramesh “Sunny” Balwani, in their office in Palo Alto, California, in December 2013. He said that Holmes did most of the talking, and that he and his colleagues had been told that Theranos could run 1,000 blood tests on its own technology.
“Ms. Holmes was actually very clear that she could match any test on the Labcorp and Quest list of tests,” Grossman said. He told the jurors that “it was a really big statement about how much they accomplished, and where the technology was at the time.”
Previous witnesses, including lab colleague Erica Cheung, testified that Theranos devices could perform no more than a dozen different tests, contradicting the company’s public statements.
Grossman said he was told at the meeting that Theranos was working with the military and that his technology was being used in battlefield medical aircraft.
“What better application of technology like this than in a military environment under extreme conditions like one would expect in a place like Afghanistan or Iraq?” Grossman said. Theranos noted that he had “more than $200 million in revenue from the Department of Defense,” he said.
Daniel Edlin, a former Theranos employee, told jurors last month that, to his knowledge, no blood testing machines were used in the Middle East.
No wear, no wear
Grossman said that after his initial meeting with Holmes and Balwany, he sent them an email in January 2014, titled: “Due diligence questions.”
His questions from the PFM fall into seven categories. He wanted more detail on issues such as the accuracy and speed of tests compared to those from traditional vendors, technology limitations and whether the Walgreens relationship was exclusive.
“As a group, we came up with questions that we wanted to better understand the work on,” Grossman said. “We wanted to ask the same questions in as many ways as possible so there was no ambiguity or ambiguity about what the technology was doing.“
Then the PFM met with Holmes and Bloane for the second time. Grossman testified that Holmes left about midway through the meeting. Theranos executives told him at the time that test results could be obtained in as little as four hours in retail stores and within one hour in hospitals.
Grossman told the jury that Holmes never told him that the company uses third-party machines to run blood tests. About his own experience at Walgreens, Grossman said he was surprised to learn that blood had been drawn from his arm and said his test results took more than four hours.
“I asked [Balwani] “Why didn’t I get the finger stick and why was it an IV aspiration,” Grossman said. “I also asked him why it took more than four hours to get my test results back.”
Al-Balwani assured him that the reason was because his doctor ordered an unusual test, Grossman said.
However, PFM invested $96.1 million in Theranos in February 2014. That investment included $2.2 million from the Friends and Family Fund, which Grossman said contains money from low-income earners.
PFM eventually settled the lawsuit against Theranos after the company was accused of securities fraud.
Holmes has pleaded not guilty to 12 counts of fraud and conspiracy to commit telephone fraud. As a witness in the prosecution, Grossman’s testimony supports one of the phone fraud charges.
For 11 weeks, Holmes sat at the defense table as government witnesses testified. The main question remains whether the defense will present the case after the prosecution’s break.
“We don’t even know if there’s a defense case and if what there might be,” Holmes’ attorney Lance Wade said before the jury entered the courtroom. “We are still on the issue of the government.”
Last week, Holmes’ defense team presented the government with a list of potential witnesses. However, Wade said, “We’re not saying we’re giving a defense case by giving them a sense of witness.”
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