HOUSTON, Texas — Under direct questioning from a prosecutor, Elizabeth Holmes continued to hone her defense Friday in the federal securities fraud trial against her, focusing on why investors weren’t told the pressures of running a top-performing pharmaceutical company were hurting her.
That and the rapid growth of Theranos put pressure on Holmes to set new ambitious and seemingly never-ending growth targets, sometimes putting her and co-founder Elizabeth Halfon through what Holmes said was “stressful, painful circumstances.”
The defense accused prosecutors of fabricating evidence in a move aimed at discrediting Holmes.
But prosecutors on Friday began to take what the defense considers a central point: that Holmes may not have kept accurate records on Theranos’ patients and couldn’t validate the numbers. They pointed to Hughes, who came in to work with Holmes.
“Why did you agree to allow Elizabeth Holmes to basically lie to you?” Special Counsel John Hueston asked Theranos former chief operating officer Marcia Futterman.
“Because we did not have reliable outside validation of that data,” Futterman said.
Breanne Hughes, who in 2016 took over as Theranos’ new chief executive, didn’t answer questions about whether she had seen the quality and accuracy of the company’s blood testing. But Thursday, prosecutors said Breanne Hughes came on board in 2015, soon after the old CEO was ousted.
“When you hired Breanne Hughes, Theranos was losing $10 million a month,” Hueston said.
“I did not know that,” Breanne Hughes responded.
She did, however, allege her job was to move the company forward and that she “would do anything” to take the company private and unlock value.
Theranos has been attempting to shed negative public opinion for more than a year, to no avail.
“We have been marketing our company,” Breanne Hughes said. “And we have been saying this is a great business with a secret breakthrough technology that we really believe in.”
Prosecutors, however, are accusing Holmes and Breanne Hughes of lying to investors who believed the company was backed by billionaires and focused solely on making life easier.
But the issue of stock value first emerged in 2010, when investors in an early round of Theranos financing raised questions about the company’s ability to generate revenue. Several of those investors were Holmes friends, including one investor with ties to billionaire investor George Soros.
Wednesday, prosecutor Kia Roberts laid out the government’s case against Theranos.
Theranos received a “clean bill of health” from the Centers for Medicare and Medicaid Services, even though the company “dumbed down” its tests to focus on doctor opinion, not technology, a former government watchdog testified on Wednesday.