Elizabeth Holmes, the founder of Theranos Inc., arrives at the Federal Court in San Jose, California on Wednesday, October 6, 2021.
David Paul Morris | Bloomberg | Getty Images
San Jose, California. — As Theranos’ troubles increased in 2014, the blood testing startup hired a dermatologist who was not certified by the laboratory science or pathology committee as the laboratory director.
According to court testimony in the criminal trial of Theranos founder Elizabeth Holmes on Thursday, Sunil Dhawan was appointed as a temporary role by company president Ramesh “Sunny” Balwani.
Dhawan is a long-term dermatologist in Balwani. He was called as a witness by prosecutors who tried to prove that Holmes defrauded millions of dollars from investors while deliberately misleading patients and doctors in the company’s blood testing technology. Holmes faces 12 counts of wire fraud and conspiracy, and he pleaded not guilty.
Davan testified that Balwani, who was in a relationship with Holmes at the time, told him that “the time commitment is very small.” In an email in November 2014, Balwani also told him, “This will mainly be an on-call consulting role,” said Dhawan, who meets federal and state requirements to become a laboratory director.
In the San Jose courtroom, Assistant U.S. Attorney Jeff Schenk asked Davan, “Did he describe to you what Theranos did?”
In response, Davan said that he searched Google to learn about Theranos’ technology, and added that he “had a brief conversation” with Balwani.
Davan testified that from November 2014 to the summer of 2015, he only went to the laboratory twice and worked a total of 5 to 10 hours. He told the jurors that he had never seen any employees, doctors or patients.
Dhawan was hired to replace Adam Rosendorff, who resigned in 2014 due to dissatisfaction with inaccurate and erroneous blood test results. Unlike Dhawan, Rosendorff is a pathologist certified by the committee, and he spends every day in the laboratory.
Schenk continued, “Didn’t you ever talk to Theranos employees who work in the lab?”
“During that time, I don’t remember any conversations,” Davan said.
Dhawan added that he did not meet with Holmes until September 2015. He told the jurors that when the regulator planned to audit the laboratory that month, he was more involved in the company’s work.
During his cross-examination, Lance Wade, the defense lawyer representing Holmes, asked Dhawan about the importance of Balwani in the company.
“Do you know that he is one of the two top executives in the company?” Wade asked.
“My assumption is that he is an executive,” Dawan said.
“He manages the laboratory from an operational perspective, right?” Wade asked.
Dhawan replied: “I cannot comment on this because I have never been told that he is in the management laboratory, but I assume he is.”
Balwani was charged with the same crime as Holmes. He also pleaded not guilty and will stand trial alone next year. Dhawan’s testimony continued on Friday.
Sunny Balwani, the former president and chief operating officer of Theranos Inc., left the federal court in San Jose, California on October 2, 2019.
Michael Short | Bloomberg | Getty Images
Earlier Thursday, Nimesh Jhaveri, a former Walgreens executive, made his position clear.
Jhaveri said that the goal of Walgreens’ cooperation with Theranos is to allow customers to obtain laboratory results with just a few drops of blood. Jhaveri said that it would be “extraordinary” to provide a more effective and painful process than traditional laboratories.
“It is changing the laboratory environment,” Jhaveri said. “Real magic requires less blood, which is very interesting for us at Walgreens.”
Walgreens invested $140 million in this failed company. Clinics with blood testing technology have been extended to 40 pharmacies in Arizona and one pharmacy in California. In August 2014, one year after the collaboration, Walgreens reduced its launch target of 500 Theranos health centers to 200.
“Cost is an obstacle, training our team members is an obstacle, and hiring a phlebotomist is an obstacle,” Jhaveri said. “The entire operating model is not perfect, which is why we decided to reduce the number.”
Jhaveri said he told Balwani that if they plan to expand, they need to develop detailed plans to improve the patient experience. During the cross-examination, Javier told the jurors that he had very little contact with Holmes and only met her two or three times.
Jhaveri said that when the Wall Street Journal reporter John Carreyrou first broke the news that Theranos misled customers and investors in terms of the accuracy of its tests, Walgreens “taken a step back.” In 2016, Walgreens began to shut down the Theranos service in its pharmacy.
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watch: Former employees and patients testify at Elizabeth Holmes trial