Theranos investor Betsy DeVos’ rep says Elizabeth Holmes misled them

Elizabeth Holmes, founder and former CEO of Theranos, arrives for a hearing Monday, November 4, 2019, at the US District Courthouse inside the Robert F. Beckham Federal Building in San Jose, California.

Yichuan Cao | NurPhoto | Getty Images

San Jose, Khalif. A representative of the Betsy DeVos family office told jurors in Elizabeth Holmes’ criminal trial that the former CEO of Theranos provided misleading financial statements and details about the company’s technology in the investment application.

DeVos, the former Trump administration secretary of education, invested $100 million in Theranos in 2014. Lisa Peterson, who oversees private equity investments in RDV Corp., made a statement. She took over the Theranos deal, testifying on behalf of the family on Tuesday.

Peterson said Holmes “was personally choosing five or six private families to invest in her company” and “was inviting us to share in this opportunity.”

She told jurors that Theranos shared financial projections, showing the company would generate $140 million in revenue in 2014 and $990 million in 2015. Peterson said she didn’t know Theranos had no revenue in 2012 and 2013.

Holmes also said that blood tests are being done on home-grown Theranos technology, when in fact the company was using third-party systems.

Investors dumped more than $900 million into Theranos, a then-roaring blood-testing startup led by a charismatic Stanford dropout who promised to change the future of healthcare. In addition to DeVos, media mogul Rupert Murdoch, the Walton family and the Cox family from Atlanta have put in money.

Holmes is on trial over allegations that he misled investors, patients and doctors about the capabilities of Theranos’ blood-testing technology. Holmes, her co-conspirator and company chief Ramesh “Sunny” Balwani each face up to 20 years in prison if convicted. Both pleaded not guilty, and Balwani will be tried separately next year.

Peterson said she was asked to work on the Theranos deal because she had previous experience in healthcare and it “pricked her curiosity.” The DeVos family had planned to invest $50 million in Theranos, but Peterson told jurors that they decided to double their investment after meeting with Holmes.

Peterson said she initially thought “this would be a game changer in healthcare.”

Peterson said the false statements from Holmes did not stop after the investment. For the first time at the trial, jurors were shown video footage of Holmes, in which prosecutors played three clips from her 2015 interview with CNBC’s “Mad Money.”

In the interview, Holmes defended her work and Theranos after an investigation in the Wall Street Journal about technology errors. Holmes, in a clip that went viral, paraphrased late Apple co-founder Steve Jobs.

“This is what happens when you work to change things, and first they think you’re crazy, then they fight you, and then all of a sudden you change the world,” Holmes told CNBC reporter Jim Kramer.

Prosecutors also played an April 2016 interview on “The Today Show” in which Holmes told Maria Shriver that she was “shattered because we didn’t find these issues and fix them faster.” Later in the clip, Holmes said “Anything that happens at this company is my responsibility at the end of the day.”

Peterson testified that after that interview, she and Dan Mosley, another Theranos investor, met with Holmes and other Palo Alto employees to ask, “What’s going on?” It was the first time they had met with Holmes since the investment was made, according to Peterson.

“[Holmes] “We greatly underestimated what was going on in the press,” Peterson said. “A lot of the correspondence we’ve received from the company has been downplaying what we saw in the news.”

Jury surveys

Separately at the trial, federal prosecutors renewed their struggle to prevent juror questionnaires from being opened, because they say the majority of jurors have expressed concern about the matter.

Several media companies, including CNBC’s parent company NBCUniversal, require the judge to issue pretrial jury questionnaires, which include information on their exposure to the media, views on topics such as health care and investment and their religious beliefs.

“During the interviews, all but two of the jurors expressed some level of concern about their family’s privacy, privacy, safety or security or said that disclosure of certain information in their completed questionnaires would cause personal embarrassment,” the government said.

Holmes now wants to prevent the release of juror questionnaires, changing her previously neutral position on the issue.

“Disclosure would distract jurors and expose them to outside information and influences, and the potential for post-verdict harassment would threaten to distort their decisions as they deliberate this case,” Holmes’ attorneys wrote in the lawsuit file.

In early October, the court interviewed every juror and alternate juror about any potential personal information disclosure concerns.

“Ms. Holmes is concerned that this case has cast a shadow over these proceedings,” according to a file. Her lawyers added that jurors “may not be able to fairly rule Ms Holmes’ innocence or guilt.”

The 12-person jury that decides Holmes’ fate consists of eight men and four women. Two alternate jurors remained.

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