In a surprise decision, US prosecutors have told the disgraced blood testing entrepreneur and former CEO of Theranos that she will be the trial witness in a federal fraud case against her and two of her former colleagues.
Elizabeth Holmes, who built Theranos into a Wall Street darling, crashed and burned in 2016 after a US Securities and Exchange Commission investigation uncovered the fact that the company’s blood-testing machines were unreliable and it was using an unapproved method to extract blood from the patients.
Prosecutors have now filed documents in New York federal court that designate Holmes, Elizabeth Pao, Theranos’ chief legal officer, and Sunny Balwani, its former chief technology officer, as witnesses in their upcoming trial against Theranos and Theranos’ current CEO, Diana Zollicoffer.
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The filing says Holmes can testify about her role in the company from 2011 to 2016.
Holmes’ decision to take the stand is a huge embarrassment for the company. That’s because prosecutors may be able to obtain testimony about an email sent by Holmes that prosecutors say shows her knowing that the company would likely have to shut down its blood-testing business or be referred to the SEC.
“I need to think very hard about whether I can control my emotions. There will be alot for the company to be embarrassed about,” the email stated, according to the motion. “I need to be strong so we get through this situation. I just can’t destroy the company over this mistake. If it gets shut down after this, even if it’s by mistake, I’m going to be responsible for it. You can blame everything on me. If it’s in the public eye, I’m going to be blamed and charged. All my decisions will be used against me.”
A spokesperson for Theranos did not respond to a request for comment.
The company would soon be in big trouble. At a hearing in October 2016, US district judge Vince Chhabria concluded that the firm had gone “bankrupt as a public company” and ruled that Theranos be dismissed from the NYSE.
In the days following the federal civil charges, Theranos was forced to cut ties with nearly all of its former employees. The firm’s CEO, Holmes, eventually resigned as executive chairman in November 2016.
After more than five years of being mocked on late-night television and skewered by the New York Times, the Wall Street Journal and others, the firm filed for bankruptcy in 2017.