US economy

In trial testimony, Holmes denies trying to control negative reporting on Theranos

© Reuters. FILE PHOTO: Theranos founder Elizabeth Holmes leaves after attending her fraud trial at federal court in San Jose, California, U.S. November 22, 2021. REUTERS/Brittany Hosea-Small/File Photo

By Jody Godoy

SAN JOSE, Calif. (Reuters) -Theranos founder Elizabeth Holmes faced cross-examination by a prosecutor on Tuesday morning at her fraud trial, denying that she tried to control the media from reporting critical accounts of the blood-testing startup before it collapsed.

Prosecutor Robert Leach questioned Holmes about actions Theranos took in response to then-Wall Street Journal reporter John Carreyrou’s reporting about Theranos’ technology. Holmes denied hiring an research firm to look into Carreyrou, but said the company’s response to the story was a “disaster” and admitted trying to quash the story.

Once valued at $9 billion, Theranos vaulted Holmes to Silicon Valley stardom. The company collapsed after the Wall Street Journal published a series of articles starting in 2015 that suggested its devices were flawed and inaccurate. She was indicted in 2018.

Prosecutors say the former Silicon Valley star lied about the effectiveness of the technology at the now-defunct startup, claiming it could run diagnostic tests more quickly and accurately than traditional lab testing.

Holmes, 37, faces nine counts of wire fraud and two counts of conspiracy. She has pleaded not guilty.

On Monday morning, outside the presence of the jury, Leach said he planned to question Holmes on her testimony from Monday that she was abused by former romantic partner and Theranos executive Ramesh “Sunny” Balwani.

Holmes said the relationship had a pervasive impact on her life during the time when prosecutors say she committed fraud, and Leach said he would seek to introduce evidence that showed Holmes was in control of her own life.

Holmes testified last week that Balwani prepared financial projections that were shared with investors.

She said on Monday that she did not question him as she should have, because he had taught her “everything I thought I knew about business.”

Balwani has “categorically” denied the allegations in court filings, calling them “false and inflammatory.” An attorney for Balwani did not reply to a request for comment on Monday.

Balwani, who is also charged with fraud and will stand trial separately, has pleaded not guilty.

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