Former Theranos employee describes being dazzled by Elizabeth Holmes, quickly concerned about the startup’s capabilities

Cheung, a lab worker, joined Theranos in 2013 after graduation and described being excited to work for the blood test startup despite being secretive about his technology and capabilities during the interview process. She said she was “dazzled” by Holmes, who had been held up in the media as a rare woman founder of a billion dollar startup.

But the company’s appeal soon gave way to red flags about the company’s testing practices. Those concerns included questions about the accuracy of some tests, such as those performed on Cheung’s blood samples that determined a vitamin D deficiency that she said she did not have. She said the company at the time was only able to process some of the tests it offered using its technology, and instead used a combination of machines and third-party contractors.

Cheung left the company after approximately six months, testifying that she was “uncomfortable processing patient samples” and did not feel that the company’s technology was “adequate” to perform the task.

Cheung was the second former employee to take the stand Tuesday in the long-awaited trial of Holmes, who faces a dozen counts of federal fraud and conspiracy charges over allegations that she knowingly misled investors, patients and doctors about the company’s capabilities. proprietary blood of your company. test technology. Holmes, who has pleaded not guilty, faces up to 20 years in prison.

The trial is scheduled to take place over several months in federal court in San José on Tuesdays, Wednesdays and Fridays. The case was postponed last Friday, the second day of early trial, before it reached the first witness testimony. A member of the jury, who is vaccinated and did not report symptoms, informed the court about the possible exposure of someone who tested positive for Covid-19, prompting Judge Edward Dávila to ask for the delay “as a precaution.” The jury received two negative tests and was present on Tuesday; Another juror was excused for financial hardship after failing to change his work schedule to accommodate jury duty.

The jury charged with deciding the fate of Holmes, who founded Theranos in 2003 at age 19, now consists of eight men and four women. Four substitutes remain.

Cheung’s testimony is scheduled to continue on Wednesday. She has expressed her experience as a whistleblower, even giving a TED talk in which he describes the experience of advising regulators. “I was scared, I was terrified, I was anxious … fortunately it triggered an investigation that revealed that there were huge deficiencies in the laboratory and prevented Theranos from processing patient samples,” she said in a TED talk.

According to a court document filed last week, Theranos spent more than $ 150,000 on a private investigator to spy on Cheung and another whistleblower.

His testimony followed that of the government’s first witness, So Han Spivey (who also goes by the name Danise Yam). Spivey served as Theranos corporate controller from 2006 to 2017 and reported directly to Holmes for much of that time.

According to Spivey’s testimony, the company’s financial situation was so dire in 2009 that it had to choose which suppliers to pay.

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There were years after that during which Theranos reported no revenue, and at one point in 2013, the company was burning $ 2 million a week. By 2015, the company had racked up hundreds of millions of dollars in losses. Meanwhile, Holmes’ salary jumped from $ 200,000 to $ 400,000 during that time, Spivey testified.

During questioning, Holmes’s attorney, Lance Wade, asked if Spivey was aware of other companies struggling at the time of the financial crisis around 2009; Spivey said he didn’t know, but claimed Theranos did. Wade also suggested that the company was spending a lot on research and development and questioned Spivey on whether the company could make payroll, which it was, he said.

Prior to Yam’s testimony, Holmes’s attorneys attempted to prevent Yam from tackling certain Holmes expenses with the company’s penny, including the purchase of $ 2,000 jewelry and private jet flights. When asked about the purpose of private jets and who had access to the flights, Spivey couldn’t remember.

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