James Mattis testifies in opposition to Elizabeth Holmes-Theranos in fraud case
Former US Secretary of Defense James Mattis on September 03, 2019 in New York City.
Steven Ferdman | Getty Images
SAN JOSE, CALIFORNIA – Former Secretary of Defense James Mattis testified Wednesday that as a board member at Theranos he was “frankly amazed,” which was initially possible but later became disaffected with the company.
“We have put our reputation on the line, and given my background, I pay close attention to reputational risk,” said Mattis on the witness stand during the trial of former Theranos CEO Elizabeth Holmes.
Mattis, a retired four-star general, served on Theranos’ board of directors from 2013 to December 2016 and was the first high-profile witness since the trial began last month. The jury listened attentively to his testimony, which lasted three hours.
“Looking back now, I am disappointed with the transparency of Ms. Holmes,” said Mattis, adding that “we have been denied fundamental questions.”
Mattis was the seventh witness the government is supposed to testify as a witness on the case. Holmes is battling 12 referral fraud and conspiracy charges related to misleading investors and patients. She pleaded not guilty.
“I wasn’t a medic”
Mattis said she met Holmes after an event in San Francisco where she stabbed his finger to demonstrate her blood testing technology.
He said his first impression of the CEO was “sharp, articulate, dedicated” but was initially reluctant to accept Holmes’ invitation to join the board.
“I asked her why, I’m not a medical professional,” Mattis said. He recalled Holmes telling him she wanted him on the board “to help her build a corporate culture by building elite teams, how to get engagement out of people, it was about management, it was about people” .
Mattis eventually agreed to participate, testifying that he went to a bookstore “and brought two books and two brochures to train me as a board member.” Mattis announced that he has invested $ 85,000 in Theranos and received $ 150,000 for serving on the board.
“Was that a significant investment for you?” asked John Bostic, a US assistant attorney.
“For someone who’s been in government for 40 years, yes,” Mattis said.
Other high-profile government officials on the board were former Foreign Ministers Henry Kissinger and George Shultz.
During the cross-examination, defense attorneys pointed to an email dated February 2015 in which Holmes wrote to Mattis that she and Ramesh Balwani, her top manager and at times romantic partner, would rather be paid in stock options than a salary.
“At the time, I thought she had a lot of confidence in her company,” said Mattis.
Holmes attorneys also noted that board members were cultured and knowledgeable enough to express their views and ask questions if they had concerns. Mattis agreed.
The defenders also discussed Holmes’ eventual need for a security team. “You thought it was necessary to give her that kind of security?” asked Kevin Downey, a Holmes defense attorney.
“Secretary Shultz called me with concern that her public profile might pose a threat to her,” Mattis recalled. Mattis introduced Holmes to his longtime bodyguard.
“I gave in to her, I thought she had good judgment and Secretary Shultz probably knew more about the civilian world and what the threats to people who land on the cover of a magazine were,” Mattis said.