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SAN JOSE, California — In the seventh week of the fraud trial of Elizabeth Holmes, founder of the failed blood test startup Theranos, testimonies have turned from science and into fake demonstrations and misleading marketing controversies.
Jury members in previous weeks former Theranos lab workers detailing blood test technology and retail partners The person who testifies about how the venture has failed to meet deadlines or achieve agreed-upon goals.
This week, prosecutors focused on the alleged deceptions of Ms. Holmes, attempting to expose the allegation that Theranos deliberately misled its investors, trading partners and the United States military. Ms. Holmes has faced electronic fraud and conspiracy to commit electronic fraud 12 times.
Here are the key takeaways from the week’s trades.
fake demos
This week’s star witness was Daniel Edlin, a college friend of Ms. Holmes’ brother, senior product manager at Theranos. Mr. Edlin said Theranos sometimes hides failures or doesn’t try to analyze a blood sample during tech demonstrations.
In some cases, Theranos media magnate also removed the anomalous results before sending reports to investors testing the company’s technology, such as Rupert Murdoch, he said. Mr. Murdoch had his blood drawn at a show in January 2015. Later, he emailed Ms. Holmes: “I enjoyed every minute of it. Any blood results?”
According to an email sent to Mr. Edlin, Mr. Murdoch’s test results came with several problems. Mr Edlin said a Theranos executive had instructed Mr Murdoch to remove some of the results before submitting his report. He said he copied Miss Holmes to the e-mail.
Misleading marketing materials
Other questions were related to Theranos’ marketing. In emails shown to jurors, the startup’s attorney, Kate Beardsley, flagged the draft website copy as potentially misleading. One example was language that claimed Theranos’ machines could run “any test found in central laboratories” using only “1/1,000 the size of a typical blood draw.”
However, similar language was reflected in the investor presentations, the documents showed. Mr. Edlin stated that Ms. Holmes was “very involved and detail oriented” in reviewing and approving all marketing and investor materials.
On cross-examination, Ms. Holmes’ attorney pointed out cases where Theranos promoted transparency in marketing language. In a November 2013 email he wrote that a line acknowledging that Theranos uses venous draws, the typical method of blood testing that it promises to disrupt using a single drop of blood, should be moved from the footnote to the main text.
Prosecutors said this was still misleading, as Line Theranos said the use of venous withdrawal was “rare.” Earlier testimonies showed Theranos used venous shots in about 40 percent of its tests for Walgreens.
‘He was the CEO’
To convict Ms. Holmes, the government will have to prove that it’s the decision maker – not Theranos’ former chief of operations and ex-boyfriend Sunny Balwani.
Their relationship is key. Ms. Holmes’ lawyers stated in the files that they could claim that Mr. Balwani had abused Ms. Holmes. Facing a separate lawsuit next year, Mr. Balwani denied these allegations.
This week, Mr. Edlin said he saw that Mr. Balwani had suitor Mrs. Holmes because of disagreements.
“He was usually the CEO, so he had the final decision-making authority,” he said.
Because of his friendship with Mrs. Holmes’ brother, Mr. Edlin also knew about the secret romantic relationship of Mrs. Holmes and Mr. Balwani. Mr. Edlin said Ms. Holmes and Mr. Balwani were “much more relaxed” and “social” after hours, but “nothing particularly stood out” in their dynamics.
‘tangential, diverting, evasive’
On Friday, prosecutors handed over a key point made at the start of the case.
Shane Weber, a scientist at Pfizer, said that after examining the Theranos data and interviewing Ms. Holmes in 2008, she was not impressed. Mr. Weber wrote in emails presented as evidence to his colleagues that the results in Theranos’ reports were “incredible” and that the company’s responses to questions were “uninformative, tangential, misleading or evasive”. He recommended that Pfizer not work with Theranos.
It’s built on testimony last week, when executives from Walgreens stated that Theranos used a 55-page verification report to request an investment from the retailer. The report featured the logos of pharmaceutical companies, including Pfizer, and implied that they supported Theranos’ technology.
Mr Weber said Theranos and Pfizer had no meaningful business after 2010, when Ms. Holmes sent the report to Walgreens and others. Despite the hints in the report, Pfizer said it never confirmed Theranos’ technology and came to the opposite conclusion.
Elizabeth Holmes speaks
On Friday, the judges heard Ms. Holmes’ voice for the first time. Bryan Tolbert, an investor of Hall Group, which invested $7 million in Theranos between 2006 and 2013, recorded a phone call he had with investors in 2013.
During the first six weeks of the trial, prosecutors tried to connect Ms. Holmes to the problems at Theranos by discussing her emails, text messages, and conversations. But hearing him describe Theranos’ military work, technology, and plans to transform the healthcare system may resonate more with jurors.
Mr Tolbert said these words, which many prosecutors have tried to show were false or misleading in their previous statements, were key to his decision to invest in Theranos. In another part of the call, Chris Lucas, a venture capital investor who introduced the Hall Group to Theranos, talked about Ms. Holmes’ control over the company. “He has a solid grasp on the company,” he said. “Make no mistake.”
After the first recording was played, Miss Holmes briefly broke her gaze to look in the direction of the jury.
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