Cheung, a lab worker, joined Theranos from undergraduate in 2013 and described being excited about working for a blood testing startup, despite being secretive about its technology and capabilities during the interview process. She said she was “starstruck” by Holmes, who was upheld in the media as the rare female founder of a billion-dollar startup.
But the company’s fascination soon led to a red flag regarding the company’s testing practices. Those concerns included questions about the accuracy of some tests, such as those performed on Cheung’s blood samples, which determined a vitamin D deficiency, which she said she did not have. She said that at the time the company was able to process some of the tests offered using its own technology, and instead use a combination of third-party machines and contractors.
Cheung left the company after about six months, testifying that she was “uncomfortable processing patient samples” and did not feel that the company’s technology was “enough” to function.
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 she intentionally defrauded investors, patients and doctors in her The company was misled about the capabilities of proprietary blood. test technology. Holmes, who has pleaded not guilty, faces up to 20 years in prison.
The trial will take place over several months in the San Jose federal courtroom on Tuesday, Wednesday and Friday. The case was adjourned last Friday – the anticipated second day of the trial – before it even got through the testimony of a first witness. A juror, who has been vaccinated and reported no symptoms, informed the court of a possible exposure to someone who tested positive for COVID-19, leading Judge Edward Davila to delay. Out of an abundance of caution”. The juror received two negative tests and was present on Tuesday; Another juror was pardoned for financial hardship after being unable to change his schedule at work to accommodate jury duty.
The jury tasked with deciding the fate of Holmes, who founded Theranos in 2003 at the age of 19, now has eight men and four women. There are four options left.
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 Dennis Yam). Spivey served as corporate controller for Theranos from 2006 to 2017 and reported directly to Holmes for a large portion of that time.
According to Spivey’s testimony, in 2009 the company’s financials were so dire that it had to pick and choose which vendors to pay.
Theranos reported no revenue in the years that followed, and at one point in 2013, the company was burning $2 million per week. By 2015, the company had accumulated hundreds of millions of dollars in losses. Meanwhile, Holmes’ salary jumped from $200,000 to $400,000 during that time, Spivey testified.
In an cross-examination, Holmes’ attorney, Lance Wade, asked whether Spivey was aware of other companies struggling during the financial crisis around 2009; Spivey said she didn’t know but confirmed that Theranos was there. Wade also suggested the company was spending heavily on research and development and questioned Spivey whether the company was able to make payroll, which it was, she said.
Prior to Yam’s testimony, Holmes’ attorneys attempted to prevent Yam from addressing certain expenses by Holmes on company money, including $2,000 worth of jewelry purchases and private jet flights. When asked about the purpose of the private jet and who had access to the flights, Spivey couldn’t remember.