(CN) — The trial of Elizabeth Holmes packed a little sizzle on its eighth day as the government shared text messages between the disgraced former CEO and her right-hand man Sunny Balwani bragging about securing a $100 million investment from media tycoon Rupert Murdoch.
The text exchange revealed to the jury in court showed the extent to which the pair were excited to be attracting huge investments from some of the richest and most famous business people on the planet.
Balwani: "They're not investing in our company, they're investing in our destiny."
Holmes: "Rupert in for 100."
Balwani: "Awesome."
The text exchange also featured celebration over a $150 million investment from Alice Walton, one of the children of Walmart founder Sam Walton.
"We can never forget this year,” Holmes later texted. "We can never forget this tiger.”
"I know, I am focused on it,” Balwani replied. “We will execute this year.”
The texts also provided insight into the relationship between Holmes and Balwani, which will be an important element of the trial. Holmes met Balwani when she was still a teenager and he was 37 and later brought him in to help her with the business side of her blood testing company.
But as the company descended into penury and disgrace, their relationship soured and the defense team, led by attorney Lance Wade, has telegraphed they will attempt to lay much of the blame for the company’s problems at Balwani’s feet.
It is clear from the testimony of former Theranos employees, including Adam Rosendorff, the former lab director at the company, that Balwani was more feared than loved.
Rosendorff left the company in 2013, right as it was going live with its supposed state-of-the-art portable blood testing device called the Edison. Right as he was leaving, Balwani sent the lab director an email criticizing him and Rosendorff said after he quit he refused to shake Balwani’s hand.
Balwani will go on trial after the government tries to make the case that Holmes had personal involvement in a scheme to defraud both the investors who poured money into Theranos and patients who relied on tests while making critical personal medical decisions.
Rosendorff said he sent Holmes an email detailing his concerns about the effectiveness of the suite of tests the Edison was supposed to perform, which went farther than some previous testimony in implicating Holmes in charting the company’s course during the turbulent period at the heart of the case.
But Holmes also sent an email to Rosendorff encouraging him not to do anything “you’re not completely confident in.” So far, none of the employees who have testified — including whistleblower Erika Cheung — have said Holmes personally pressured them to lie, manufacture results or manipulate financial information of the company, but the government has many more witnesses to call.
Wade began his cross-examination of Rosendorff on Tuesday after the U.S. Attorney John Bostic meticulously walked Rosendorff through his time at Theranos. Rosendorff, like many other former employees, detailed his journey from bright-eyed excitement and belief in the mission to disappointment and disillusionment, culminating in voluntary resignation.
But Wade, as he has with the previous employees, had Rosendorff laboriously recount the assay process — how blood tests went from the research and development phase of the company to the clinical phase.
He then turned to Rosendorff’s responsibility at the lab director.
“Did you run lab tests that you knew at the time were inaccurate?” he asked.
“No, I ordered the lab to discontinue testing and I raised concerns to management,” Rosendorff replied in an exchange that grew testy.
“And you were never told by Ms. Holmes to report an inaccurate result, correct?” Wade asked.
Rosendorff agreed.
Rosendorff also conceded he was responsible for the company’s quality control policies and that Holmes suggested they withdraw blood from the veins to run tests, as opposed to finger pricks, which was what Rosendorff wanted at the time.
Wade’s style in questioning Rosendorff was much more badgering than with previous witnesses, particularly Cheung, who likely provoked jury sympathy with her difficulties at Theranos right out of college and her story of being silenced.
Rosendorff on the other hand was a seasoned professional who agreed to take authority over the clinical lab portion of the company and it could foreshadow the fact that Wade and Holmes’ legal team will likely try to blame much of the failure of the company on him and Balwani.
The cross-examination was cut short in the afternoon and is slated to resume Wednesday, with Wade saying it could go all day — showing how critical the former lab director’s experience at Theranos is for both the prosecution and the defense.
Murdock and Walton are both included on the witness list provided by the prosecution, though it's unknown if either will end up testifying.
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