Theranos founder testifies her deception was for legitimate business reasons

Testifying for a third day in her criminal fraud trial, the 37-year-old entrepreneur parried prosecutors’ claims that she deceived investors and business partners. She sought to show instead that she was promoting and protecting her fast-growing company.

Holmes admitted she didn’t have permission when she applied logos from two pharmaceutical giants on reports to prospective investors conveying support by the drug companies for her startup. “I wish I could have done it differently,” she told jurors. But she said it was intended to reflect the companies’ involvement in validating her technology.

Investors have testified that the purported endorsements of pharmaceutical companies were important in their decisions to buy Theranos shares.

Holmes also offered a benign justification for not telling Walgreens that many of the machines used for Theranos’ commercial roll-out in the drug-store chain were actually made by large, established manufacturers and were modified to process blood samples for certain tests.

“This was an invention that we understood from our counsel we had to protect as a trade secret,” she said.

Had Theranos disclosed it, Holmes said, the companies that made the machines that Theranos was modifying, such as Siemens AG, could steal the idea. “The advice was to keep it confidential so Theranos would have the chance to profit off that invention,” she testified.

The partnership with Walgreens eventually fell apart.

Holmes first took the witness stand late Friday after the government presented 10 weeks of evidence and testimony to make its case that Theranos was a massive fraud before it collapsed in 2018. 

Her central defense, as laid out by her lawyer in September opening arguments to the jury, is that she tried her hardest for 15 years to make the company succeed, but “coming up short is not a crime.”