The federal trial, now set to begin in March 2021, could become a media spectacle given the marquee names on the witness list

Clinical laboratories following the federal criminal proceedings against Theranos founder and former CEO Elizabeth Holmes will have to wait until next year for the case to go to trial. When it does, it could become a media spectacle given the list of prominent witnesses who may be called as government witnesses.

The names, according to a letter that prosecutors sent April 3 to Holmes’ defense team, include former US Cabinet Secretaries Henry Kissinger and James “Mad Dog” Mattis, both of whom sat on the board of the ill-fated diagnostics company. Prosecutors may also call media mogul Rupert Murdoch to testify, the (San Jose) Mercury News reported.

To Fingerstick or Not to Fingerstick

As readers of Dark Daily will recall, Holmes claimed that Theranos had developed ground-breaking blood-testing technology that allowed for a range of blood tests using only 25 to 50 microliters of blood drawn by fingerstick rather than conventional venipuncture. Use of capillary specimens for many clinical laboratory tests was regularly touted by Holmes as one of Theranos’ technology secrets and a key to its plans to disrupt the clinical laboratory marketplace.

However, in “Theranos: Many Questions, But Very Few Answers,” published April 20, 2015, our sister publication, The Dark Report, noted that Theranos had ceased using fingerstick collections in the Phoenix market.

Dark Daily covered the company’s first expansion into an existing clinical laboratory testing market in “Theranos Selects Phoenix Metro to Plant Its Flag and Enter the Competitive Market for Clinical Pathology Laboratory Testing,” May 4, 2015. By then, the company had a stock valuation of $9 billion, and Inc. magazine touted Holmes as, “the next Steve Jobs,” The Washington Post reported.

But then a series of articles by The Wall Street Journal (WSJ) in the fall of 2015 revealed serious problems with Theranos’ management and technology, eventually leading to the company’s downfall.

Charges of Fraud

According to documents filed with the US Department of Justice (DOJ) US Attorney’s Office Northern District of California, on June 15, 2018, a federal grand jury indicted Holmes and Theranos president Ramesh Balwani with 11 counts related to wire fraud. The government alleges one scheme to defraud investors and another to defraud doctors and patients. The defendants each face up to 20 years in prison for each count plus fines and restitution. They have pleaded not guilty.

“Holmes and Balwani used advertisements and solicitations to encourage and induce doctors and patients to use Theranos’ blood testing laboratory services, even though, according to the government, the defendants knew Theranos was not capable of consistently producing accurate and reliable results for certain blood tests,” the government stated in an announcement of the indictment. “It is further alleged that the tests performed on Theranos technology were likely to contain inaccurate and unreliable results.”

Prosecutors later added a 12th felony charge tied to a patient’s blood-test result, as Dark Daily reported in July. That charge was later withdrawn and then restored amid legal wrangling about the composition of the grand jury.

The start of the trial has been delayed twice due to the COVID-19 pandemic. Jury selection is now set to begin March 9, 2021, the East Bay Times reported.

Elizabeth Holmes, founder and former CEO of Theranos, is seen above with her attorneys exiting the Robert F. Peckham US Federal Court in San Jose, California. Jury selection for her trial will begin on March 9, 2021. She has been charged with two counts of conspiracy and nine counts of wire fraud, CNBC reported. (Photo copyright: CNBC.)

Witnesses for the Prosecution

Dark Daily has reviewed the April 3 letter sent by prosecutors to the defense team. It lists witnesses and documents that may be used as evidence in the case. The defense attorneys included the letter in a June 30 filing indicating that they will seek to exclude or limit much of the prosecution evidence.

The April 3 letter “did not identify the particular acts Ms. Holmes supposedly committed and continued to rely on vague themes,” they wrote. “It did not disclose what evidence the government would introduce outside its case in chief. And it did not provide any explanation of which particular acts the hundreds of witness statements and the thousands of pages of discovery it identified would support.”

One section, with the heading “False and misleading representations made to Theranos’ Board of Directors,” includes the following former board members as possible witnesses:

  • Riley Bechtel, former chairman of the Bechtel Corporation, a large engineering and construction company.
  • David Boies, a prominent attorney who also served as the company’s legal counsel.
  • William Frist, a former US Senator from Tennessee who also served as CEO of Hospital Corporation of America.
  • Henry Kissinger, US Secretary of State and National Security Advisor in the Nixon and Ford Administrations.
  • James Mattis, former US Secretary of Defense in the Trump Administration and a lieutenant general in the US Marine Corps.
  • Sam Nunn, former US Senator from Georgia.
  • William Perry, US Secretary of Defense in the Clinton Administration.
  • Robert Shapiro, an attorney best known as a member of the defense team in the O.J. Simpson murder trial.
  • George Shultz, US Secretary of State in the Reagan Administration and US Secretary of the Treasury in the Nixon Administration.

The letter also indicates that some of these former board members could be called to testify about alleged efforts by defendants Holmes and Balwani to conceal a romantic relationship, as well as alleged efforts by the defendants to avoid subjecting Theranos technology to “meaningful comparative tests.”

Murdoch, executive chairman of News Corp., is one of six potential witnesses who may be called to testify about “threats, influence, or vilification of journalists in response to negative coverage with Theranos.” News Corp. is the parent company of The Wall Street Journal.

Another section relates to alleged “false and misleading representations made to journalists.” It references articles published in Wired, Fortune, CNN, The Economist, Medscape, and The New Yorker.

Other sections of the letter offer a broader picture of the government’s case against Holmes and Balwani. It lists potential witnesses and documents related to the following subjects, though some names have been redacted:

  • False and misleading representations directed at insured patients.
  • False and misleading representations directed at doctors.
  • False and misleading representations made to Walgreens.
  • False and misleading representations made to Safeway.
  • Fostering culture of secrecy and forcing employees and others to sign non-disclosure agreements.
  • Restricting access to laboratory areas within Theranos.
  • Harassing, threatening, or otherwise influencing doctors or patients who had negative experiences with Theranos.
  • Blaming and vilifying competing companies.
  • Threatening or intimidating employees and former employees.
  • False and misleading representations made to FDA, CMS, CDPH, and other regulatory organizations.
  • Violations of industry standards and government regulations or rules regarding research and development procedures, medical devices, and clinical laboratory practices.
  • Altering or tampering with third-party medical devices.
  • Multiplexing test results and disregarding outliers to mask inconsistency.
  • Improperly setting and altering reference ranges.
  • Withholding critical test results and other important information from doctors and patients.
  • Decommissioning Theranos’ Laboratory Information System (LIS) database.
  • Obtaining personal benefit from position at Theranos.

One interesting aspect to the rise and fall of Elizabeth Holmes and Theranos is that the clinical laboratory and anatomic pathology professions were never fooled by all the publicity and news coverage of the company. Pathologists and clinical laboratory scientists knew that, over the 10-plus years of Theranos’ existence, its scientific team had never published any research findings of significance in a respected, peer-reviewed journal.

That was strong evidence that Theranos had no new break-through, disruptive, diagnostic technologies that would allow it to perform multiple tests on a single drop of blood that was collected by a fingerstick procedure.

Since the collapse of Theranos and the downfall of Elizabeth Holmes, many in the clinical laboratory profession have hoped that federal prosecutors would prosecute her under the full extent of the law.

—Stephen Beale

Related Information:

Theranos Founder Elizabeth Holmes’ Fraud Case: Mattis, Kissinger, Murdoch are Possible Witnesses

Theranos: A Fallen Unicorn

US v. Elizabeth Holmes, et al.

Theranos Founder Elizabeth Holmes’ Twice-delayed Trial To Start in March: Judge

Theranos: Feds Throw Molotov Cocktail Case at Elizabeth Holmes Over Grand Jury Request

Theranos Founder Holmes Hit with 12th Fraud Charge—Again

Theranos: Deadlines Set after Elizabeth Holmes Claims Coronavirus Changes May Have Violated Her Rights

Theranos Destroyed Patient Test Data, Prosecutor Alleges

Theranos Founder Elizabeth Holmes’ Trial Delayed Again by Coronavirus

Theranos Founder Holmes, on Firm’s Reported False-Negative Pregnancy Test: ‘How Did That Happen?’