Government prosecutors in the trial of Theranos CEO Elizabeth Holmes ended their case on Friday, capping off 11 weeks of testimony from witnesses detailing allegations of fraud against the founder.
The Theranos saga has been widely covered since cracks began to emerge in the glossy image of the blood testing startup in 2015. But the first phase of the trial revealed more startling new details.
Investors, former employees and customers chipped away at the successful startup image that Theranos presented during its meteoric rise, instead painting a picture of a chaotic workplace with a founder desperate to succeed – tolerating little dissent amid rising questions about the company’s technologies.
Holmes has pleaded not guilty to the charges of defrauding investors and patients .On Friday, Holmes took the stand in her own defense, a risky move that opens her to being grilled in cross examination by the prosecution.
Here is what we have learned so far.
Former employees: Concerns fell on deaf ears
Theranos launched in 2003 and claimed that its proprietary Edison machines could perform hundreds of health tests with just one prick of blood. The company gained momentum, forging partnerships with big names such as Safeway and Walgreens to distribute its tests, raising billions in funding. Amid this spectacular rise, four different lab directors at the company said they had voiced grave concerns about its technological abilities operations.
Over six days of questioning, former lab director Adam Rosendorff said he repeatedly expressed doubts about Theranos’ tech to Holmes, but faced “tremendous pressure at the company to show that this technology was successful”.
“I had frequent conversations with Elizabeth about concerns that I had in the laboratory,” he testified. Frustrated and disillusioned, he left the company in 2014, he said, noting that when he left he felt “very skeptical” of the Edison machine.
Lynette Sawyer and Sunil Dhawan, co-directors of the lab in 2014 and 2015, testified to a disjointed lab operation, noting they never met one another in person and rarely visited the lab or met researchers. They alleged their roles consisted primarily filling out paperwork.
“I was very uncomfortable with the lack of clarity about the lab,” Sawyer testified.
A fourth former lab director, Kingshuk Das, testified that the Edison devices were returning unusual lab results – turning up prostate-specific antigens for female patients, for example. “I found these instruments to be unsuitable for clinical use,” Das said of the devices.
When Das questioned Holmes about the inconsistencies, Das said, the founder became defensive and offered “implausible” explanations as to why the machines were malfunctioning.
Investors: Theranos over-promised without showing results
Theranos attracted large amounts of funding in part due to high-profile investors, including former secretary of states George Schultz and Henry Kissinger, media tycoon Rupert Murdoch and former defense secretary James Mattis. Several of those investors told the jury about their initial excitement about the company and their growing reservations as red flags piled up.
Testifying early in the trial, Mattis said he personally invested $85,000 in Theranos, finding the technology “pretty breathtaking”. He was asked to serve on the company’s board, a request he said he questioned as he was “not a medical person” but agreed to (He was paid $150,000 to serve on the board).
Mattis said he ultimately lost faith in the company after the Wall Street Journal revealed Theranos’ testing devices were not actually being used to perform most of the analyses the company offered. “There came a point where I didn’t know what to believe about Theranos any more,” he said.
Former estate attorney and Theranos investor, Daniel Mosley, testified how he became enamored with the company’s mission and convinced a number of wealthy clients and contacts to invest in it. His recruits included Walmart’s Walton family and Michigan’s billionaire DeVos family. Along with his own investment of $6m, Mosley brought an estimated $380m to Theranos.
Several other financial backers of Theranos told the jury they were troubled by the extensive secrecy around the company’s operations, which made it difficult to properly vet whether it was a smart investment. Meanwhile, they reported a pressure to get in on a much-hyped opportunity before it was too late. Lisa Peterson, who handles investments for the DeVos family, said she feared Holmes would ice her out if she asked too many questions about the company.
“We were very careful not to circumvent things and upset Elizabeth,” she said. “If we did too much, we wouldn’t be invited back to invest.”
Drug companies and other business partners: We were manipulated
Among the most shocking allegations in the trial so far was the prosecution’s accusations that Theranos used false and misleading documents implying that external labs had vetted the products – when in reality they had not – to promote its Edison tests to potential partners.
Walgreens CFO Wade Miquelon revealed during his testimony that Holmes had implied drug firms Pfizer and Schering-Plough had validated the company’s blood-testing technology.
Holmes, Miquelon said, shared with investors and potential partners a document carrying the Pfizer logo, purportedly showing the pharmaceutical company’s support. But the document had been forged, the prosecution claims.
“Pfizer did not write this,” prosecutor Robert Leach said in opening arguments for the trial. “Pfizer did not put its logo on this. Pfizer did not give its permission to put its logo on this. Pfizer did not make the conclusions in this report.”
Trusting such reports, Miquelon said, Walgreens made a $140m deal with Theranos in 2013 and launched testing in 40 stores across Arizona and California. That partnership fell apart over the next year and Walgreens ultimately sued Theranos in 2016, settling for $25m.
Meanwhile, scientists at the pharmaceutical companies Holmes claimed had endorsed Theranos, told the jury they had repeatedly expressed doubts. Former Schering-Plough director Constance Cullen said when vetting Theranos technology in 2009, she found Holmes to be “cagey” and indirect in answering technical questions. She was left “dissatisfied” and ceased responding to emails from Holmes.
Similarly Shane Weber, a former Pfizer scientist, said he was left feeling unsettled by an interview with Holmes in 2008 to assess a potential partnership. “[Theranos] provided non-informative, tangential, deflective or evasive answers”, Weber wrote in a report referenced during the trial, testifying that he recommended Pfizer halt potential partnerships with the company.
Holmes stayed silent in the court room during prosecutors’ presentation of the case, writing notes by hand in a notebook, flanked occasionally by supporters including husband, Billy Evans, and her mother.
She took the stand on Friday, laying out the trajectory of the startup, and testifying that she believed Theranos had developed technology capable of running any blood test.
“We worked for years with teams of scientists and engineers to miniaturize all the technologies in the laboratory,” she said, testifying for about five hours before the court closed for the day.
Holmes’s decision to testify is a risky one, since it means she’ll face cross examination from the prosecution.Holmes’s legal team is expected to argue in the coming weeks that Holmes made decisions in good faith and did not purposely deceive investors and customers.
“Theranos failed for a lot of reasons, but it failed in part because it made mistakes,” Lance Wade, a defense lawyer for Holmes, said during opening statements. “Ms Holmes made mistakes, but mistakes are not crimes. A failed business does not make a CEO a criminal.”
Early court filings indicated the defense may also use an argument that Sunny Balwani, Holmes’s former boyfriend and Theranos co-executive, abused and controlled her, influencing her to commit fraud. Balwani faces his own trial on charges similar to Holmes’s in 2022.
Holmes faces a maximum of 20 years in prison. Jurors could come to a verdict before the year’s end.
Legal teams for Elizabeth Holmes and Sunny Balwani did not respond to the Guardian’s request for comment.
Chinese hackers could target heavily encrypted datasets such as weapon designs or details of undercover intelligence officers with a view to unlocking them at a later date when quantum computing makes decryption possible, a report warns.
Analysts at Booz Allen Hamilton, a consulting firm, say Chinese hackers could also steal pharmaceutical, chemical and material science research that can be processed by quantum computers – machines capable of crunching through numbers at unprecedented speed.
In a report titled “Chinese threats in the quantum era”, the consultancy says encrypted data could be stolen by “Chinese threat groups”. It says quantum-assisted decryption will arrive faster than quantum-assisted encryption, giving hackers an edge.
“Encrypted data with intelligence longevity, like biometric markers, covert intelligence officer and source identities, social security numbers, and weapons’ designs, may be increasingly stolen under the expectation that they can eventually be decrypted,” the report says. It says “state-aligned cyber threat actors” will start to steal or intercept previously unusable encrypted data.
However, it adds there is a “very small” likelihood that quantum computing could break the latest encryption methods before 2030. The analysts say quantum computing’s advantages over classical computing – the computing used in everything from laptops to mobile phones – are at least a decade away.
“Although quantum computers’ current abilities are more demonstrative than immediately useful, their trajectory suggests that in the coming decades quantum computers will likely revolutionize numerous industries – from pharmaceuticals to materials science – and eventually undermine all popular current public-key encryption methods,” the report says.
Quantum computing is viewed as an exciting development. For example, experts say it could predict accurately what a complex molecule might do and thus pave the way for new drugs and materials.
China is already a strong player in the field, and Booz Allen Hamilton says it expected the country to surpass Europe and the US – where IBM recently made the most powerful quantum processor – in quantum-related research and development.
“Chinese threat groups will likely soon collect encrypted data with long-term utility, expecting to eventually decrypt it with quantum computers,” the report says. “By the end of the 2020s, Chinese threat groups will likely collect data that enables quantum simulators to discover new economically valuable materials, pharmaceuticals and chemicals.”
Good news for those in the UK with primary school-aged kids and wondering what to do when the next bout of home-schooling hits: design a logo for the first UK satellite launches.
2022 could be a big year for launching satellites from Blighty’s shores as the first launchers gear up for a historic blast-off. Assuming the facilities have been built and all the necessary consents given and boxes ticked.
There are currently seven possible spaceport sites across the UK, from Cornwall in England through Llanbedr in Wales and up to the Western Isles in Scotland. Cash has been lobbed Cornwall’s way to support a horizontal launch by Virgin Orbit from Spaceport Cornwall and more toward Scotland for Orbex’s ambitions to launch vertically from Sutherland.
Should all the approvals happen and construction be completed, there is every chance the UK might host its first launch at some point in 2022.
Hence the need for a logo and thus a competition aimed at inspiring kids to consider a career in the space industry. And, of course, it is all worthy stuff: “Logo designs,” intoned the UK Space Agency, “should reflect how data from small satellites can help inform solutions to climate change as well as generate a source of pride in the UK’s space ambitions.”
What, we wondered, could possibly go wrong?
We put this question to Rob Manuel, one of those behind web stalwart b3ta.com. B3ta has a long history of (among other things) image challenges, the results of which tend to pop up, often unattributed, in timelines around the world. Now heading into its third decade, the site continues to push out a weekly Friday newsletter to email subscribers.
In terms of how to engage participants, Manuel said: “If anyone asks me, and they rarely do, I encourage competitions to be as open as possible – publish the results as they’re coming in. Try and create a buzz that something is happening rather than everything going in the bin.”
“As for things going wrong,” he went on, “well, there’s always an element who’ll want to subvert it.”
The competition is open to children aged 4-11 and will run until 11 March 2022. There are two age categories (4-7 and 7-11) over 12 regions in the UK. Designs can be drawn, painted, or created on a computer and either submitted on the logoliftoff.org.uk site or via post. Some basic questions also need to be answered, and children can work on their own or in a team of up to four.
We asked the UK Space Agency if it would take Manuel’s advice and post entries ahead of the competition close. We will update should it respond. ®
The Galway tech start-up was one of two winners at the sport-focused pre-accelerator programme.
A start-up developing real-time video analytics for sports has been named ‘most investable’ at SportX, a new pre-accelerator in Ireland for founders with sports and wellness business ideas.
RugbySmarts took the title at the inaugural SportX showcase last week, securing a cash prize.
The Galway-based start-up aims to automate and simplify sports analytics using AI, machine learning and computer vision, helping coaches to improve player and team performance with a platform that could also be transferred to other sports.
RugbySmarts was founded last year by CTO William Johnstone, who has previously worked with Connacht Rugby, and CEO Yvonne Comer, who is a former Ireland international rugby player.
Meanwhile, the award of ‘best impact on sport’ was given to TrojanTrack. This start-up, founded in 2021 by Dublin-based Stephen O’Dwyer, is looking to combine quantitative biomechanical analysis with deep neural network tech in the equine industry.
The aim is to gain feedback on a horse’s injury or gait imbalance without using invasive technology, such as motion-tracking software that requires markers to be attached to the animal’s skin.
‘Next-gen sports-tech entrepreneurs’
SportX was launched earlier this year by advisory firm Resolve Partners, Sport Ireland and ArcLabs – the research and innovation centre at Waterford Institute of Technology.
The aim of the pre-accelerator programme was to build on tech and business ideas for the sport and wellness industries, giving founders access to academic, clinical and commercial resources.
The six-week programme involved workshops and engagement with advisers, entrepreneurs, subject experts and investors. Participants also had the opportunity to pitch to the US-based Techstars Sports Accelerator.
At the SportX showcase last week, nine teams had five minutes each to pitch their business ideas to a panel of judges.
The two winners were selected by the panel, which featured Gary Leyden of the ArcLabs Fund 1 GP, Sport Ireland’s Benny Cullen and Niall McEvoy of Enterprise Ireland.
At the launch of SportX earlier this year, Leyden said the goal of the programme was to find “the next generation of sports-tech entrepreneurs who can leverage the amazing enterprise and sports-related supports within the south-east of Ireland”.
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