SAN JOSE, Calif. — James Mattis, the retired four-star Marine Corps general and former defense secretary, testified on Wednesday at the fraud trial of Elizabeth Holmes, the founder of the blood testing start-up Theranos, that she misinformed him before and during his time on the company’s board of directors.
Mr. Mattis, who served on the board for several years, said he had supported the start-up’s mission of cheap, fast and easily accessible blood tests but lost faith after The Wall Street Journal exposed major issues with the technology in 2015. It became clear to him, he said, that Ms. Holmes had not been forthcoming with Theranos’s directors about the problems.
“We were unable to help her on the fundamental issues that she was grappling with if we only saw them in the rearview mirror,” Mr. Mattis said. He resigned from the board in late 2016 after President Donald J. Trump tapped him to become defense secretary.
Two years later, Theranos collapsed amid lawsuits, fines and financial troubles, and federal prosecutors charged Ms. Holmes and her business partner, Ramesh Balwani, with a dozen counts of fraud and conspiracy to commit wire fraud. Both have pleaded not guilty. If convicted, they face up to 20 years in jail.
Mr. Mattis is the most prominent person to take the stand thus far in the high-profile jury trial, which began in August. Other potential witnesses include Rupert Murdoch, the media mogul, who invested in Theranos; David Boies, who was the company’s outside lawyer; and Bill Frist, a former senator and Theranos board member.
As Mr. Mattis spoke, Ms. Holmes sat upright in her seat and stared in his direction.
Mr. Mattis testified that he met Ms. Holmes after a speech he delivered in 2011. He was excited by the prospect of the military’s using Theranos’s blood analyzers, which Ms. Holmes claimed could perform thousands of different tests faster, cheaper and more accurately than traditional lab tests, using only a finger stick of blood. Mr. Mattis was also impressed by Ms. Holmes personally, he said, describing her as “sharp, articulate, committed.”
Mr. Mattis said he had pushed the military to do a test program of Theranos analyzers to see how they performed alongside its existing systems before joining the board. “I wanted a comparative study on Theranos from Day 1 so we could bring it online,” he said. But no test materialized.
When Mr. Mattis joined the board, he invested $85,000 in Theranos as a show of support, which he said was a significant sum “for someone who had been in government service for 40 years.” He also recused himself from any military contracts for ethical reasons.
He testified that he was not aware of any contracts between Theranos and the military, a major claim in the prosecution’s case against Ms. Holmes. She had told investors that Theranos devices were used on battlefields in Afghanistan.
Mr. Mattis said Ms. Holmes had been his primary source of information about Theranos and its technology. Prosecutors showed a presentation she had made to the board that said 10 of the 15 largest pharmaceutical companies had validated the start-up’s machines, alongside endorsements from researchers at Johns Hopkins University and the logos of the Food and Drug Administration and the World Health Organization.
Such presentations gave Mr. Mattis confidence in Theranos’s technology, he said, because “it wasn’t just Elizabeth talking about it.”
After The Journal reported that Theranos was performing only a few blood tests on its own machines while doing the rest with traditional blood analyzers, the board scrambled to gauge the report’s accuracy, according to emails introduced as evidence.
Ms. Holmes emailed that Theranos was making a transition to a different “framework” for its laboratory. Mr. Mattis said he was confused and concerned, but supported Ms. Holmes because he thought the problem was just a matter of messaging.
“I thought it was something we could fix if we got the truth out there,” he said.
Over time, Mr. Mattis said, he lost hope as he learned that the problems went deeper — that Theranos’s machines just did not work.
“There just came a point when I didn’t know what to believe about Theranos anymore,” he said.
Growth Capital For Online SaaS and App Businesses | Clearco
This is how you fund your business without giving up any Equity Click Here To Learn How!!
