By Joel Rosenblatt | Bloomberg
Theranos Inc. founder Elizabeth Holmes may have been convicted of cheating investors, but Erin Tompkins still thinks she got away with a crime.
Tompkins is especially invested in the outcome of the Theranos saga because she was one of the tens of thousands of people whose blood was tested by the company. But even more so because Tompkins was among just of a handful of customers who testified against Holmes, only to see the founder of the startup acquitted of all charges that she defrauded patients.
Tompkins returned to the witness stand this week to tell her story of getting a botched blood test from Theranos that falsely indicated she was HIV-positive.
But this time she was testifying against Holmes’s alleged co-conspirator, former Theranos President Ramesh “Sunny” Balwani, and she’s hoping the government will get a better outcome in the second trial than the first.
“I feel like I belong to a group of people who were on the receiving end of a crime,” Tompkins said outside the federal courthouse in San Jose, California, shortly after finishing her testimony.
“Despite the dedication and support of prosecutors, patient witnesses have been treated as peripheral” compared to the investors, Tompkins said. “We were defrauded because we trusted them with our blood and however many dollars for the test. But we weren’t robbed of millions of dollars.”
Whether prosecutors can make the patient fraud charges stick this time is another matter.
Prosecutors made a special point of highlighting patient victims when Holmes and Balwani were indicted in 2018, accusing them of soliciting patients even though they knew Theranos machines couldn’t produce reliable results. The misrepresentations “endangered health and lives,” the Justice Department said at the time.
Ahead of Holmes’s trial, legal experts predicted the patient witnesses, ordinary people suffering from a variety of medical conditions, would pack more of an emotional punch than well-to-do fund managers recounting how Holmes lied about the startup’s prospects to drum up investments.
On the stand, one woman broke down in tears while she told of getting a test result that led her to believe she was headed for a fourth failed pregnancy.
But prosecutors came up short in the end because they failed to connect Holmes directly enough to the inaccurate test results.
“They didn’t really prove that these patients were persuaded to get these blood tests by something she said or did, or even the advertising,” said Susanna Stefanek, an editor at Apple Inc. who served on the Holmes jury. “The connection between Elizabeth Holmes and the patients was not that strong to us.”
At Balwani’s trial, which began March 22, prosecutors are recycling many of the same witnesses — including patients and doctors — from the Holmes trial. But like at the first trial, the testimony related to patients is getting smaller play than the investor piece of the case.
Prosecutors better be asking sharper questions and more clearly connecting dots if they hope to prevail this time on the patient fraud charges, said Michael Weinstein, a former federal prosecutor turned white-collar defense lawyer at Cole Schotz in New Jersey.
The government needs to show a tight link between Balwani’s knowledge of what was going on inside Theranos and his alleged misrepresentations that caused patient suffering, Weinstein said.
“The government wants to show there was an inconsistency between what he was learning internally versus what he was saying externally,” he said.
Read More: The Spectacular Rise and Fall of Elizabeth Holmes and Theranos
Overall, the government may have a stronger hand this time because Balwani, while Holmes’s second in command, was more involved in the day-to-day management of the lab at Theranos, where the testing technology was developed and was later deployed with patient blood samples.
Jurors at Balwani’s trial have heard from a lab director, a regulator and a patient who didn’t testify in the Holmes case.
But just like Holmes, Balwani is mounting a vigorous defense. He claims prosecutors have cherry picked the few instances in which Theranos tests resulted in error, which happens to some degree in all laboratories.
His lawyer, Jeffrey Coopersmith, on Wednesday elicited testimony to that effect from Mark Burnes, a Phoenix doctor who acknowledged that a blood testing competitor of Theranos, Lab Corp., also makes testing errors, though rarely.
Under cross-examination Burnes also testified that he had used Theranos tests for a year before encountering the single error he testified about.
“For those other patients there were no other issues, is that correct?” Coopersmith asked. “I didn’t find any tests that were concerning,” Burnes replied.
Coopersmith and Abraham Simmons, a spokesman for the U.S. Attorney’s Office in San Francisco, both declined to comment.
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