(CN) — The last former Theranos lab director slated to testify in the Elizabeth Holmes trial finished his testimony Wednesday, telling the jury that Holmes and her business partner Sunny Balwani ascribed testing problems to quality control when he frequently asserted it was the devices themselves.
“The instruments weren’t performing from the very beginning,” testified Kingshuk Das during his testimony in the trial.
Das was hired at Theranos in 2016 and stayed at the company until it eventually went bankrupt in 2018, serving as the lab director in place of Adam Rosendorff, who testified in late September.
The most damaging part of the testimony offered by Das was his assertion that Holmes suggested that they tell federal regulators overseeing blood analysis laboratories that the problems with Theranos devices had more to do with quality control problems than the devices themselves.
But Das said he disagreed with Holmes’ proposal and pointed out the testing data was flawed independent of different quality control processes.
“The instruments were not suitable for clinical use,” he said.
But cross-examination revealed that Das was not pressured to lie by either Holmes or Balwani and that Holmes often exhorted the lab director to behave with integrity and honesty rather than participate in any company-wide fraud.
“They supported your decision to void all the Edison 3.5 tests correct?” Wade asked.
“Yes,” Das replied.
At one point, Holmes’ attorney Lance Wade walked Das through an incident where a subordinate employee was behaving unscrupulous and Das sought to have that employee dismissed.
“You understood that Ms. Holmes wasn’t going to tolerate any integrity issues either correct?” Wade said.
“Yes,” Das replied.
Perhaps the most surprising revelation is that Das actually left Theranos in 2018 with a positive view of both Holmes and Balwani and continued to wish them well. While one executive with Walgreens also indicated he continued to support Holmes after the issues with Theranos testing devices became public, most of the former employees are clearly embittered from their time at the foundering company.
Wednesday also featured some combative testimony with yet another well-heeled investor peeved that his investment went south. Alan Eisenman, a Houston-based wealth manager, talked about how he invested significant money in the early stages of the company and then even upped his ante after Holmes’ and Balwani’s behavior began to arose his suspicions.
At one point, tired of being badgered by Eisenman, Holmes offered to buy him out at five times his initial investment and he refused, according to emails shown in court. Instead, Eisenman took it as a sign the company was beginning to mature into profitability.
Kevin Downey, another attorney for Holmes, showed several documents that Eisenman signed that apprised investors of the risk involved in a speculative company like Theranos that was operating without FDA approval. It also said early investment was no guarantee of the ability to participate in the firm’s initial public offering.
“That’s boilerplate,” Eisenman said.
U.S. Judge Edward Davila, who is presiding over the slow-moving trial, had to repeatedly remind the witness to restrict their answers to Downey’s questions as the two men engaged in a sharp disagreement regarding whether the boilerplate language was sufficient warning about the precarity of his investment.
Before Eisenman even entered the courtroom there was a conversation about his utterance right outside the courtroom regarding his desire to see Holmes go to jail. Davila said it wasn’t a big deal given investors in failing prospects often desire to see those responsible go to jail.
The prosecution also indicated it would rest its case sometime next week, finally giving the defense an opportunity to mount its case. So far, the government appears to have an uphill battle to prove fraud beyond a reasonable doubt.
While the circumstantial evidence that all was not well at Theranos in 2012 and 2013 — when Holmes and Balwani were claiming otherwise — is solid, the prosecution has not yet produced a smoking gun tying Holmes directly to a fraudulent scheme.
There are troubling incidents of Holmes misrepresenting the financial condition of her company, but even those lack specificity. Also, prosecutors claimed Theranos forged a document to make it appear as though Pfizer had written glowing reviews about Theranos technology, but prosecutors have been unable to tie Holmes directly to the document and the document itself contains indications that it was created by Theranos, raising questions about whether it was intended to deceive.
Nevertheless, Holmes’ fate rests with a jury who might see the testimony of several jilted investors and former employees as sufficient for a guilty conviction. Holmes will get the opportunity to make her case beginning next week at the earliest.
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