Elizabeth Holmes knew machines did not work, says ex-lab director

SAN JOSE, CALIF. – A former laboratory manager at Theranos admitted Friday that he had many opportunities to share his concerns about the company’s technology with former CEO Elizabeth Holmes.

Adam Rosendorff joined Theranos in 2013 as laboratory manager. He testified that he believed the healthcare startup would be the next Apple. A year later, Rosendorff quit after feeling uncomfortable and concerned about the high error rate in the company’s blood test technology.

Rosendorff is the government’s most critical witness to date. He said that Holmes knew the lab machines were not working as advertised but were driving the launch forward. During cross-examination on Friday, he told jury that he was “frustrated with my inability to explain conflicting results” when he stopped.

Elizabeth Holmes, founder of Theranos Inc., arrives in federal court in San Jose, California, USA on Wednesday, September 22, 2021.

Davie Paul Morris | Bloomberg | Getty Images

This was the fourth week of negotiations for Holmes, who is fighting 12 charges of wire fraud and conspiracy. Prosecutors accuse Holmes and Balwani of participating in a decade-long, multi-million dollar scheme to defraud investors and patients. Holmes and Balwani have pleaded not guilty. Balwani will be tried separately next year.

A Holmes defense attorney, Lance Wade, cross-examined Rosendorff for three days to plug holes in his account of the events while he was the lab manager. Wade cited several emails from doctors complaining that their patients were getting inaccurate test results, and Rosendorff was slow to respond.

In an email from October 2014, a doctor wrote to Theranos customer service complaining about his patient who had received a worrying test result. The doctor asked to speak to Rosendorff.

Rosendorff replied that he would call. But Wade pointed out that a week had passed and Rosendorff had forgotten to call the doctor.

“Everyone makes mistakes,” said Wade.

“Sure,” answered Rosendorff.

Wade also presented internal emails between Rosendorff, Holmes, and their top manager Ramesh “Sunny” Balwani, showing that executives were addressing his concerns.

Balwani wrote a long email to the doctor in October 2014 inquiring about his patient’s inaccurate test results. “Despite all our best efforts, there will be unexpected results,” wrote Balwani to Rosendorff and Holmes.

“No lab is perfect, is it?” asked Wade.

“Yes,” answered Rosendorff.

“Every lab makes some mistakes,” said Wade.

Wade also referred to a meeting Rosendorff had with Holmes in May 2014 about the wide range of hCG results he was getting from the tests. “She seemed pretty calm about the whole thing, she didn’t seem to share my concern,” said Rosendorff.

However, Wade pointed to an email Holmes sent Balwani about the questionable hCG test results. “How did this happen?” asked Holmes.

Rosendorff was a primary source for former Wall Street Journal reporter John Carreyrou, according to earlier testimony at the trial. Carreyrou broke the Theranos scandal and revealed major accuracy issues with the company in 2015.

In a lawsuit on Friday, Carreyrou’s attorney argued that he should not be excluded from attending the trial. Carreyrou is on Holmes’ witness list but has not been summoned. Witnesses are usually prohibited from hearing testimony from other witnesses in the case.

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