Elizabeth Holmes ‘was in charge’ of Theranos, says General Mattis

Theranos board member James “angry dog” Mattis, a four-star general and former defense secretary, was among the company’s impeccable supporters – but when he testified at Elizabeth Holmes’ trial on Wednesday, he looked like nothing more than a neatly dressed grandfather. At one point, he seemed confused when the defense asked him if he remembered the discussion about high-throughput devices.

When Mattis first met Holmes of Theranos in 2011, he told the court she pricked his finger to give him an idea of ​​the blood draw process. And like a damsel in a fairy tale, he fell under her spell. During the US trial of Elizabeth Holmes, he said he was “taken” with the Theranos device. Now “young Elizabeth,” as Mattis addressed her in an email, faces 10 counts of wire fraud and two of conspiracy to commit wire fraud.

Mattis’ testimony on Wednesday was the most damning of the trial yet. He portrayed Holmes as the ruler of Theranos and even told board members what to discuss with the press. He also seems to have been misled about the capabilities of the Theranos analyzer named Edison.

“I’m trying to find a way to deploy your device for a quick ‘pilot project’ or ‘proof of principle’ to speed up access to our troops,” Mattis Holmes wrote in October 2011, when he was the commander of the US Central Command… In today’s testimony, he said he wanted to see a side-by-side comparison with existing blood testing technology, which never happened.

The small size of the analyzer especially appealed to him, he testified. Hospitals on ships have limited space, remote locations make it difficult to set up labs, and the idea of ​​being able to quickly and accurately perform tests to triage wounded soldiers was particularly appealing. “I believed strongly in getting this into the theater so that it could stand and live up to,” he said.

Mattis also described Holmes as “sharp, articulate, committed” and said she was “aggressive” in trying to cooperate with the Department of Defense. At the time, she didn’t say Theranos didn’t have the resources to do so, nor did she mention the commercial launch.

To Mattis’ knowledge, the Theranos analyzer has never been deployed in clandestine operations, on military helicopters, or anywhere else in the military. This is a particular problem for Holmes’ defense, as she told investors that Theranos devices were deployed in Afghanistan.

After retiring from the military, Mattis visited Theranos headquarters in late 2013. There he saw the Theranos analyzer – and did not see the commercially available equipment that Erika Cheung and Surekha Gangakhedkar testified that Theranos used for most of his tests.

Holmes invited him to join Theranos’ board of directors to help her build a good corporate culture — his management experience would be helpful, she told him. “It was pretty breathtaking what she was doing,” he said. As a board member, Holmes was not only his primary source of information about Theranos technology, she was his only source of information, he said.

Mattis invested $85,000 in Theranos when he joined its board of directors, a significant sum for “someone who has been in government for 40 years,” he said with a slight smile.

During board meetings, Holmes was the main presenter. Her co-defendant, Sunny Balwani, who is being tried separately, sometimes provided financial forecasts, but “Mrs. Holmes was in charge,” Mattis said. There were board meetings where Balwani was not even present, he said.

This testimony is, of course, a problem for the defence, which has tried, among other things, to shift the blame onto Balwani. But it’s consistent with Holmes’ media profiles at the time, which presented her as being in full control of the company.

Holmes’ media coverage was immediately introduced today. The first was a Wall Street Journal article who claimed the Theranos devices were “faster, cheaper, and more accurate than conventional methods, requiring only microscopic volumes of blood, not vial after vial of the stuff.” That was in line with Mattis’ understanding of the technology at the time, he said. The article also came up in a board meeting.

It wasn’t until later that Mattis discovered that only a few tests had been performed on the Theranos machine. If he had known that third-party devices were used for most of the tests, “that would have dampened my enthusiasm considerably,” he said.

Mattis also spoke with Roger Parloff for: to be Fortune article — and before he did, he asked Holmes for advice on what to say. Parloff’s article claimed that Theranos “does not buy third-party analyzers”, which was not true. But the claim matched what Mattis understood at the time, he told the court. He was also given clues about a New Yorker article: he was not allowed to discuss how the technology worked.

Later, a lawyer for Theranos emailed Mattis to tell him not to talk to John Carreyrou, who was… report on his blockbuster story on Theranos; in the email, Carreyrou’s upcoming story was described as defamation of the company and revealing trade secrets.

After the story came out, the board of directors was renamed Council of Counselors. A slide from that meeting was shown to the jurors – and the only part of it that went unedited was the words “duty of loyalty.”

That didn’t stop another board member, Richard Kovacevich, former head of Wells Fargo, from emailing Holmes and the rest of the board with questions. “So if blood is drawn in venous tubes, do I understand correctly that the testing is done on lab-style equipment and not Edison and that it’s sent to CLIA for testing, while Edison is only used for the FDA testing?” Kovacevich wrote.

Holmes replied that Theranos was switching between regulatory norms, and Mattis said he understood Carryerou had essentially “caught” [the company] halfway through.” Holmes didn’t tell the board that third-party testing was being used because Edison didn’t work for everything. “I thought all along we were doing it on Theranos’ gear,” he testified.

But after some “surprises, disappointing surprises,” Mattis said he was beginning to wonder if Edison really worked. “There came a time when I didn’t know what to believe about Theranos anymore,” he said. He resigned as a board member at the end of 2016, because he understood that he would be nominated as defense minister.

As damaging as his testimony was, it also seemed that Mattis was easily confused. He wasn’t quite sure where he’d first met Holmes, though he knew it was either before or after a talk in San Francisco. He also couldn’t recall buying stock options in the company — though the defense showed the paperwork that he had. When asked how much he earned per year as a board member, Mattis said $50,000; defense documents revealed that he had, in fact, been making $150,000 a year.

But when the defense tried to get him to say that Holmes never told him the technology was ready, Mattis pushed back. Holmes had told him the technology was ready to be deployed in the field for a side-by-side comparison with existing blood tests, he insisted.

“I assumed it would be more than a handful of tests,” Mattis said, “or it would be useless to us.”