The government will rest next week

Read Time:3 Minute, 40 Second


Elizabeth Holmes, founder and CEO of Theranos

Mike Black | Reuters

San Jose, California. -On Wednesday, the government unexpectedly announced that it may put the case on hold in the criminal fraud trial against former Theranos CEO Elizabeth Holmes next week.

“The government is likely to rest next week,” Assistant U.S. Attorney Jeffrey Schenk said, adding that the government does not have enough witnesses to fill this week.

The announcement was made a day after Theranos investor Alan Eisenman (Alan Eisenman) testified, he was the government’s 24th witness in the case. Eisenman, who the government said he was a key witness, testified that he suspected he had not received accurate information about the company’s technology.

“I suspect things are not as they communicated,” said Eisenman, a retired financial planner from Texas, who invested nearly $1.2 million in Theranos in 2006. Eisenman’s investment supports a charge of wire fraud in this case. Holmes pleaded not guilty to all 12 charges of wire fraud and conspiracy to commit wire fraud.

He and his wife jointly invested US$900,000, and he invested US$90,000 for each of his three children. Eisenman said that David Harris, a financial adviser to the Holmes family, introduced him to the company.

“He told me Elizabeth was very smart,” Eisenman said. “She is going to drop out of school to start a company, and part of her job is on the way.”

Eisenman’s primary source of information was Holmes, and he testified that in addition to quarterly conference calls with other investors, they also had frequent one-on-one conversations. But in mid-2010, these calls “dropped to zero.”

Eisenman said that he knew Theranos was an early seed-stage startup, but “understanding this technology is of great significance to an early-stage company.” He testified that Oracle founder Larry Ellison (Larry Ellison) was very impressed by his involvement in the company. He was told that Theranos had signed contracts with six international pharmaceutical companies including Pfizer and Novartis.

“This is an impressive list of companies,” Eisenman said. “For me, this adds an additional seal of approval to an investment.”

Eisenman recalled that Holmes said that she expects 2007 revenue to be between US$50 and 60 million and that in 2008 it is estimated to be US$200 million. Eisenman testified that when he invested, Holmes told him, “They are discussing with Morgan Stanley about an IPO in the next 12 years.” 18 months. “This is another reason that forced me to invest,” he said.

Eisenman told the jurors that after a series of conversations about liquidity incidents that had never happened before, he became increasingly frustrated.

“All investors want to exit at some point,” Eisenman said. “If a company says something and it changes, that’s okay, but if it keeps changing year after year, it raises suspicion.”

Eisenman said: “I tried to obtain information about the company, which made me very frustrated.” “And not only the amount of information is limited, the company has not provided me with any information. This is a sign of trouble.”

In November 2012, Eisenman wrote to Holmes. The email begins with: “Elizabeth, you have been communicating with investors for more than two years…”

Nevertheless, in 2013, Eisenman considered another investment in Theranos after receiving an email about fundraising. The email read: “As we launch consumer healthcare this year, we are rapidly scaling up to build a national footprint.”

Eisenman said that he believes the recent fundraising activities are to help Theranos market grow. He recounted a conversation with Ramesh “Sunny” Balwani, the company’s president and chief operating officer.

“In retrospect, after a period of very strong hostility, the call was extremely friendly,” Eisenman said. “They are raising funds, and when you raise funds, sometimes you pretend to be different.”

Eisenman said his relationship with Balwani was controversial before he started negotiating to invest more money in the company.

“[Balwani] Eisenman said: “He was hostile for a long time. Not only was he unresponsive, but he was actually aggressive in his communication with me. This is a 180-degree change.”

Despite his frustration with Holmes, Balwani Eisenman invested another $99,990 in Theranos.

“This is what we call the seat at the table,” Eisenman told the jury.

His testimony continued on Monday.


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