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Ex-US defence chief testifies he was deceived by Elizabeth Holmes

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Theranos founder Elizabeth Holmes faces 20 years in prison after being charged with lying to investors and patients about the capabilities of her firm’s blood testing machines and the company’s financial health.

Prosecutors called former U.S. Secretary of Defense James Mattis as a witness against Theranos Inc. founder Elizabeth Holmes to try to show he was deceived in multiple ways — as a military man, a member of the company’s board and as an investor.

The retired four-star general testified Wednesday that he admired Holmes and came to believe in her promise that the Silicon Valley startup would revolutionize blood testing, only to be disappointed later when the shortcomings of Theranos technology were revealed and the company ultimately collapsed.

“There became a point when I didn’t know what to believe about Theranos anymore,” he said.

He said his early enthusiasm led him both to join the company board, which was studded with other luminaries, and to put $85,000 of his own money into Theranos because he wanted some “skin in the game.”

He was asked by a prosecutor if the loss of his investment was “significant.” All told, Holmes is accused of bilking more than $700 million from investors in Theranos, which was once valued at $9 billion before media exposes and regulatory probes reduced the company to virtual rubble.

“For someone who’d been in government service for 40 years, yes,” Mattis said.

Asked how he made the choice to invest, Mattis said Holmes was the “sole source” of his information.

Mattis, who headed the armed forces under former President Donald Trump, is among several high-profile witnesses expected to be called by the government for Holmes’s trial. Former Secretary of State Henry Kissinger, who was also on Theranos’s board, and may testify as well.

Mattis started out by telling jurors that Holmes came across as “sharp, articulate, committed” when he first met her about a decade ago, before he joined the board.

Holmes is charged with lying to investors and patients about the capabilities of Theranos machines and the company’s financial health and faces as long as 20 years in prison if convicted. She has pleaded not guilty.

Mattis recalled that he had his first contact with Holmes while in San Francisco in 2011 or 2012.  “I was backstage for a speech I was going to give” when Holmes pricked his finger for a blood test, he said. “I believe that’s when I first saw the machine, a box-like device,” Mattis testified.

The general said Theranos’s goal of revolutionizing blood-testing with compact equipment had appeal for military applications.

“I’d been rather taken with the idea of just one drop of blood in a remote” area to test for a broad array of problems, Mattis said. It could be most helpful in triage “if it could do what she said she could do.”

Prosecutors told the jury at the start of the trial that Holmes made “grandiose claims” starting in 2009 about how Theranos machines would be on helicopters in various locations around the world and that the company would soon achieve revenue of hundreds of millions of dollars.

Mattis said he was never aware of Theranos analyzers being used for soldiers or in the military, not while he was in the service, or on the Theranos board.

“I’m not aware of it,” he said repeatedly when questioned by a prosecutor.



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