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Elizabeth Holmes, founding father of Theranos Inc., exits federal court docket in San Jose, California, on Tuesday, Aug. 31, 2021.
David Paul Morris | Bloomberg | Getty Pictures
SAN JOSE, CALIF. — A hedge fund supervisor who put $96 million into Theranos stated he totally investigated the corporate however was nonetheless misled by CEO Elizabeth Holmes about its blood-testing expertise.
Brian Grossman, chief funding officer at PFM Well being Sciences, instructed jurors in Holmes’ felony trial on Tuesday that in 2014, as a part of his due diligence, he acquired his personal blood drawn from a Theranos machine at a Walgreens pharmacy.
“I had my blood drawn with a venous draw, not a finger stick,” stated Grossman, including that the expertise undermined what he’d been instructed about Theranos.
Grossman stated he met with Holmes and her high government, Ramesh “Sunny” Balwani, at their workplace in Palo Alto, California, in December 2013. He stated Holmes did many of the speaking, and that he and his colleagues have been instructed Theranos may run 1,000 blood checks on its proprietary expertise.
“Ms. Holmes was truly very clear that they may match any check on a Labcorp and Quest menu of checks,” Grossman stated. He instructed jurors that “was a extremely huge assertion about how a lot that they had achieved, the place the expertise was at the moment.”
Earlier witnesses, together with lab affiliate Erika Cheung, have testified that Theranos gadgets could not run greater than 12 totally different checks, contradicting the corporate’s public pronouncements.
Grossman stated that within the assembly he was instructed Theranos was working with the navy and that its expertise was getting used on medivacs within the battlefield.
“What higher software for a expertise like this than in a navy setting underneath harsh situations like one would count on in a spot like Afghanistan or Iraq?” Grossman stated. Theranos indicated that it had “one thing over $200 million in income from the Division of Protection,” he stated.
Daniel Edlin, a former Theranos worker, instructed jurors final month that, to his information, the blood-testing gadgets have been by no means used within the Center East.
‘No ambiguity and no confusion’
Grossman stated that following his preliminary assembly with Holmes and Balwani, he despatched them an e-mail in January 2014, with the topic: “Due Diligence Questions.”
His questions from PFM fell into seven classes. He needed extra particulars on points just like the accuracy and velocity of the checks in comparison with these from conventional distributors, the restrictions of the expertise and whether or not the Walgreens relationship was unique.
“We as a bunch got here up with questions that we needed to raised perceive the enterprise,” Grossman stated. “We needed to ask the identical questions in as some ways as we may so there was no ambiguity and no confusion as to what the expertise was doing.“
PFM then met with Holmes and Balwani a second time. Grossman testified that Holmes left about midway by the assembly. Theranos executives instructed him on the time that it may get check outcomes again in underneath 4 hours in retail shops and inside one hour in hospitals.
Grossman instructed the jury that Holmes by no means instructed him the corporate was utilizing third-party machines to run the blood checks. About his personal expertise at Walgreens, Grossman stated he was stunned to seek out out that the blood was drawn from his arm and stated his check outcomes took longer than 4 hours.
“I requested [Balwani] why I did not obtain a finger stick and why it was a venous draw,” Grossman stated. “I additionally requested him why it took longer than 4 hours to get my check outcomes again.”
Balwani assured him it was as a result of his physician ordered an uncommon check, Grossman stated.
Nonetheless, PFM invested $96.1 million in Theranos in February 2014. That funding included $2.2 million from a family and friends fund, which Grossman stated had cash in it from low-income folks.
PFM ultimately settled its lawsuit towards Theranos after accusing the corporate of securities fraud.
Holmes has pleaded not responsible to 12 counts of wire fraud and conspiracy to commit wire fraud. As a witness to the prosecution, Grossman’s testimony underpins one of many wire fraud counts.
For 11 weeks, Holmes has sat on the protection desk as authorities witnesses have testified. A key query remaining is whether or not the protection will current a case after the prosecution rests.
“We do not even know if there’s a protection case and if there’s what it is likely to be,” Lance Wade, an legal professional for Holmes, stated earlier than the jury entered the courtroom. “We’re nonetheless within the authorities’s case.”
Final week Holmes’ protection workforce offered the federal government a listing of potential witnesses. Nevertheless, Wade stated, “we’re not saying we’re presenting a protection case by giving them a way of the witnesses.”
WATCH: The deposition tapes from the Elizabeth Holmes trial
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