This week in the criminal trial of Elizabeth Holmes, jurors heard how the billionaire family of former Education Secretary Betsy DeVos eagerly poured nearly $100 million into failed blood-testing startup Theranos after a visit to its Palo Alto headquarters.
The DeVos family, whose fortune stems from multilevel-marketing company Amway, is one of several big name investors who backed Theranos. Media tycoon Rupert Murdoch, another potential government witness, is also reported to have sunk $125 million into Theranos.
The DeVos family invested in the startup in 2014 through its family office, RDV Corp, after a family member had her blood drawn. Lisa Peterson, a managing director at RDV who helped vet the deal, testified about the investment – and due to a juror conflict and a plumbing issue, she was also the only witness introduced this week.
Holmes, once hailed as the next Steve Jobs, is facing a dozen federal fraud charges over allegations that she knowingly misled investors, doctors, and patients about her company’s blood testing capabilities in order to take their money. Holmes has pleaded not guilty and faces up to 20 years in prison.
Here are the highlights from week eight of the trial:
Holmes targeted wealthy families
Peterson testified that she requested to work on the Theranos deal after first hearing about the company from RDV CEO Jerry Tubergen, who had met with Holmes and her brother at a conference. Tubergen’s excitement about Holmes was evident in an email sent to members of the DeVos family. “This morning I had one of the most interesting meetings I can recall with the women [sic] profiled in the attached Fortune magazine article,” Tubergen wrote in the email, which was shown in court.
Peterson testified that Holmes handpicked wealthy families to invest and that “she was inviting us to participate in this opportunity.” In an email sent to DeVos family members, Tubergen wrote that heirs to the Walmart fortune were also investing in the round: “Walton family for sure (I’m thinking nice synergy there).” (The Waltons reportedly invested $150 million in the company.)
Peterson said she did due diligence on the deal, including compiling a memo with information from two binders Theranos sent, notes from a call with Holmes, and online research. According to her memo, Holmes was looking for long-term investors interested in its mission to “‘do well and do good’ over the course of multiple generations.”
Holmes’ attorney, Lance Wade, repeatedly questioned the thoroughness and adequateness of Peterson’s due diligence process in what became an increasingly tense exchange, which is set to continue when court resumes next week. He quizzed her on whether her due diligence was “exhaustive,” “thorough,” “adequate,” as well as questioned why she hadn’t visited a Walgreens or hired regulatory or medical experts. In her testimony, Peterson said she trusted the information Theranos and Holmes provided – including a report with Pfizer’s logo on it, which appeared to validate the startup’s technology. Jurors learned last week that was not the case.
Peterson, Tubergen, and three DeVos family members flew to Theranos’ headquarters in October, 2014 before investing $100 million, double the amount they’d originally anticipated. Peterson said while there, Cheri DeVos had her blood taken by finger stick.
Emails shown in court reveal a sense of urgency to move quickly and not miss the opportunity to invest. Bryan Tolbert, who testified the previous week, also spoke of a time crunch: He was given a very limited window of time to make a decision in late 2013. Tolbert’s and the DeVos’ investments mark two of the six wire fraud counts including in the 12 criminal charges that Holmes is facing.
Jurors gets a closer glimpse of Elizabeth Holmes
While it is still unclear if jurors will hear from Holmes herself once the defense gets its turn to introduce witnesses, they are getting a closer look at how she presented herself and the company in her own words.
Last week, the jury heard audio clips of Holmes from an investor call – the first time they’d heard her infamous voice. This week, they saw TV interviews Holmes gave after the initial Wall Street Journal investigation into Theranos.
Clips from “Mad Money” and “The Today Show” showed how Holmes presented the company publicly. “I’m the founder and CEO of the company — anything that happens in this company is my responsibility,” she said, in the April 2016 Today Show clip. The comment potentially contradicts her defense, which has pointed the finger at others for the company’s failings.
A long delayed trial can’t catch a break…
The pandemic, and Holmes’ pregnancy, have dealt the trial several delays. This week, there was another unexpected holdup: a pipe burst near the San Jose federal courthouse, leaving the building without water. The court was ordered to vacate the building.
The incident came as Judge Edward Davila tacked on extra court days to move things along as the trial – initially projected to span three to fourth months – is about to enter its third month. When soliciting concerns from jurors about the schedule additions, one alternate juror said he’d try to accommodate it if he was the only one experiencing difficulties, but noted it is “getting hard on my work schedule.”
The judge informed jurors that he’d like to further stretch the number of hours they’re spending in the courtroom where possible to keep things progressing ahead of the holidays. With the pool of jurors down to 14 from 17 at the start of the trial, experts say the longer the trial takes, the more life issues may creep in.
…and neither can reporters covering the trial
The Holmes’ trial has been hit by another looming drama: tension over loud typers.
Judge Davila has repeatedly expressed frustration on behalf of one or more members of the jury about loud keyboard strokes emanating from the small but mighty group of reporters who show up with their laptops day in and day out. The typing apparently grows increasingly noticeable when reporters are documenting the same juicy bits in tandem. On Tuesday, the judge once again warned reporters that only “silent keyboards” are allowed in the room. The judge said if he received another complaint, he’d have to send “anyone who wants to type” to the overflow room. He specified that it is not fair to the government or Holmes if the jury cannot concentrate.
It marks yet another hurdle for reporters covering the high-profile trial given that cameras and recording devices are not permitted. And while the judge asked reporters to police themselves, a US marshal stood in the corner of the courtroom at various points throughout the day to scope out the noisy typer, or typers.