Elizabeth Holmes trial: Former Defense Secretary James Mattis testifies

Elizabeth Holmes trial: Former Defense Secretary James Mattis testifies

Mattis, in a San Jose federal courtroom, described believing so much in the promise of the company’s mission to test for a range of conditions with just a few drops of blood that he invested $85,000 in the startup. But he testified that at a certain point, following growing scrutiny of the company’s testing capabilities, “I didn’t know what to believe about Theranos anymore.”

“I couldn’t see why we were being surprised by such fundamental issues,” Mattis said during questioning by federal prosecutor John Bostic.

Holmes surrounded herself with a remarkable roster of high-profile men during her tenure as CEO, including media mogul Rupert Murdoch, once reportedly the company’s largest investor; David Boies, the prominent attorney who was an investor, board member and legal defense for Holmes and Theranos for a time; as well as former Secretary of State Henry Kissinger. All have been listed as witnesses the government may call.

Mattis, who served on the board of the blood-testing startup from 2013 to 2016, is the first of her well-known associates and the seventh overall witness to testify. Mattis, during the cross examination, testified that he personally helped Holmes with security by recommending his former chief bodyguard in response to concerns raised by another powerful Holmes ally, former Secretary of State George Shultz.

During the cross examination of Mattis, Holmes was sitting still in the courtroom with a blue mask covering her face, blinking frequently.

Mattis’ testimony comes as the government continues to mount its case against Holmes in an effort to convince jurors that she intended to mislead investors, patients, and doctors about the capabilities of her company and its proprietary blood testing technology in order to take their money.

Holmes faces a dozen counts of federal fraud and conspiracy charges, and up to 20 years in prison. She has pleaded not guilty.

The defense, for its part, has argued that Holmes, who founded Theranos in 2003 at age 19 with the lofty mission of revolutionizing blood testing, was a young, ambitious CEO whose company failed but that failure is not a crime.

Once hailed as the next Steve Jobs, Holmes catapulted her startup to a $9 billion valuation on the promise that its technology could efficiently test for conditions like cancer and diabetes with just a few drops of blood taken by finger stick. Lending star power to her company was a board stacked with military and intelligence professionals.

Holmes secured key retail partners such as Walgreens and Safeway, and was lauded on magazine covers as the richest self-made woman. Then things came crashing down after a Wall Street Journal investigation into Theranos’ technology and testing methods prompted broader scrutiny.

Mattis, who first met Holmes in 2011 at a Marine Memorial event, threw his weight behind the startup’s attempt to get its technology used on battlefields. Under cross examination by Holmes’ defense attorney, Kevin Downey, about his knowledge that Theranos’ technology could only run a limited number of tests when he joined the board, Mattis indicated he thought it was further along. He indicated he believed that it could be deployed in the field and run “more than a handful of tests.” He noted that otherwise it “would have been useless to us.”

According to the indictment, Holmes and chief operating officer Ramesh “Sunny” Balwani, who faces a separate trial on the same charges and has also pleaded not guilty, allegedly represented to investors that Theranos had a profitable and revenue-generating business relationship with the United States Department of Defense and that its technology had been deployed to the battlefield. “In truth, Theranos had limited revenue from military contracts and its technology was not deployed in the battlefield,” the indictment stated.

Mattis resigned from the board of Theranos in 2016, before joining former President Donald Trump’s cabinet. “Secretary Mattis was struck by the promise of technology and was looking for any technology solution to save lives on the battlefield,” Pentagon spokesperson Dave Eastburn told CNN Business in 2018. “He resigned his position on the Theranos board on Dec. 16th prior to his confirmation.”The trial, which kicked off two weeks ago with opening statements, is set to resume Friday.

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