Updates to our Terms of Use

We are updating our Terms of Use. Please carefully review the updated Terms before proceeding to our website.

Monday, May 13, 2024 | Back issues
Courthouse News Service Courthouse News Service

Lawyers for Elizbeth Holmes attack gullibility of investors

Investors are one of those the U.S. government has claimed were defrauded by Elizabeth Holmes but they have struggled to make themselves sympathetic to a jury as attorneys for Holmes have shown they signed papers acknowledging the risk involved with their investments.

(CN) — Attorneys for Elizabeth Holmes continued to verbally joust with a wealthy Houston, Texas-based investor on Monday as the trial of the former leader of the-now defunct blood analyzer company Theranos entered its second month. 

Alan Eisenman has proved a combative witness as he will often refuse to answer questions and repeatedly assert his central theme of how Theranos betrayed him and squandered his $1.2 million investment in the company. 

At one point, U.S. District Court Judge Edward Davila stopped the proceedings to lecture Eisenman on how he had to restrict his answers to the questions asked by Kevin Downy, attorney for Holmes. 

“You have to wait to answer until the question is completed,” said a noticeably irked Davila. “Then you must give a thoughtful answer only to the question that was asked.”

Downey was trying to get Eisenman to admit that he signed a document in 2010 that spelled out the fact that Theranos “was an early-stage life sciences startup that carried immense risk.”

Eisenman refused to acknowledge the document, saying it was boilerplate language and belied what Holmes and her business partner and sometimes romantic partner Sunny Balwani were telling Eisenman about their company. 

“It contradicts everything I was led to believe prior to this,” he said. 

Downey also got Eisenman to admit he had an opportunity sometime in 2015, to cash out his initial investment at a profit of approximately $4 million, but not only held onto his shares but bought more. 

But Eisenman said that Theranos just mentioned offhand the opportunity to sell and never brought it up again. Also, the offer to buy back shares came just before concerns began to arise about the viability of the company’s vaunted technology in the press, the witness said.

He further said that he made both investments, one in 2010 and the other in 2013 when there was a barrage of newspaper articles that spoke to the efficacy of Theranos technology and its ability to transform the blood-testing industry. 

Eisenman has been the most vociferous and combative witness in the trial that has sometimes slogged through meticulous details surrounding the technology of assays, or blood tests. 

“It’s something everyone signs if you want to invest in a nonpublic company,” he said at one point. 

“I am just asking if you remember signing this document that acknowledged Theranos had a limited financial and operating history?” Downey replied. 

“My understanding was that if you wanted to invest in the company you had to sign this,” Eisenman said. 

“Did someone hold a gun to your head and make you invest?” Downey retorted. 

The defense is clearly trying to show the jury that these investors who were purportedly tricked by the nefarious tactics of Holmes were actually sophisticated investors who realized they were getting into a speculative business that carried a high risk of failure. 

It’s not clear where the jury stands on the issue, but Eisenman did not exactly go to extreme lengths to make himself endearing to the jury with his imperious style. 

Toward the end of the testimony, Downey revealed an email Eisenman sent to lawyers with the Department of Justice where he talked about trying to help assist their case. 

“You know that I am a faithful part of your team, and will do all that I can to help your case,” Eisenman wrote in the email. 

“Faithful is a subjective clause,” Eisenman said in explanation, adding that he merely wanted to serve justice in the case. 

“I have no bias in this case,” he declared peremptorily before leaving the stand, prompting laughter in the overflow room, where many reporters have decamped to cover the trial in more comfortable seating and away from the U.S. Marshalls who are on notice to requisition the laptops of loud typers. 

Follow @@MatthewCRenda
Categories / Business, Criminal, Health, Securities, Trials

Subscribe to Closing Arguments

Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.