Theranos’s board member James “Mad Dog” Mattis, a four-star basic and the previous secretary of protection, served among the many firm’s impeccably credentialed supporters — however testifying in Elizabeth Holmes’s trial on Wednesday, he resembled nothing a lot as a nattily-dressed grandfather. At one level, he appeared befuddled when the protection requested him if he remembered dialogue of high-throughput gadgets.
When Mattis first met Theranos’ Holmes in 2011, he advised the courtroom, she pricked his finger to offer him an thought of the blood draw course of. And like a damsel in a fairy story, he fell beneath her spell. On the trial of the US v Elizabeth Holmes, he mentioned he was “taken” with the Theranos gadget. Now “younger Elizabeth,” as Mattis addressed her in an e-mail, faces 10 counts of wire fraud and two of conspiracy to commit wire fraud.
Mattis’ testimony on Wednesday was probably the most damning of the trial to this point. He portrayed Holmes as firmly accountable for Theranos, even telling board members what to debate with the press. He additionally appears to have been misled concerning the capabilities of the Theranos analyzer, known as Edison.
“I’m looking for a technique to make use of your gadget on a swift ‘pilot venture’ or ‘proof of precept to expedite its entry to our forces,” Mattis wrote Holmes in October 2011, when he was the commander of US Central Command. In immediately’s testimony, he mentioned he had needed to see a side-by-side comparability with present blood testing expertise. That by no means occurred.
The small dimension of the analyzer was notably interesting to him, he testified. Sick bays on ships have restricted room, distant places make it arduous to arrange labs, and the thought of having the ability to shortly and precisely run exams to triage wounded troopers was notably interesting. “I used to be a powerful believer in getting this in theater so it might stand and ship,” he mentioned.
Mattis additionally described Holmes as “sharp, articulate, dedicated” and mentioned she was “aggressive” about attempting to work with the Division of Protection. On the time, she didn’t say that Theranos didn’t have the sources to do that, nor did she point out the industrial launch.
To Mattis’ data, the Theranos analyzer was by no means deployed in clandestine operations, on navy helicopters, or anyplace else within the navy. It is a specific downside for Holmes’ protection, as she advised traders Theranos gadgets had been being deployed in Afghanistan.
After retiring from the navy, Mattis visited the Theranos headquarters in late 2013. There he noticed the Theranos analyzer — and didn’t see the commercially-available gear that Erika Cheung and Surekha Gangakhedkar testified Theranos was utilizing for many of its exams.
Holmes invited him to affix the Theranos board to assist her construct a great company tradition — his administration expertise could be useful, she advised him. “It was fairly breathtaking what she was doing,” he mentioned. As a board member, Holmes was not simply his major supply of knowledge on Theranos’ tech, she was his sole supply of knowledge, he mentioned.
Mattis invested $85,000 into Theranos when he joined the board, a major quantity for “somebody who has been in authorities for 40 years,” he mentioned, smiling barely.
At board conferences, Holmes was the first presenter. Her co-defendant, Sunny Balwani, who’s being tried individually, generally gave monetary forecasts, however “Ms. Holmes was in cost,” Mattis mentioned. There have been board conferences the place Balwani wasn’t even current, he mentioned.
This testimony is, naturally, an issue for the protection, which has been attempting to shift blame onto Balwani, amongst others. However it’s in step with media profiles of Holmes in that interval, which offered her as being in full management of the corporate.
Holmes’ media protection was launched straight immediately. First up was a Wall Street Journal article that claimed the Theranos gadgets had been “sooner, cheaper and extra correct than the standard strategies and require solely microscopic blood volumes, not vial after vial of the stuff.” That was in step with Mattis’ understanding of the expertise on the time, he mentioned. The article was additionally featured in a board assembly.
It wasn’t till later that Mattis discovered only some exams had been really run on the Theranos machine. If he’d recognized that third social gathering gadgets had been getting used for many exams, that “would have tempered my enthusiasm considerably,” he mentioned.
Mattis additionally spoke to Roger Parloff for his Fortune article — and earlier than doing so, he requested Holmes for steering about what to say. Parloff’s article claimed that Theranos “doesn’t purchase any analyzers from third events,” which was not true. However the declare was in step with what Mattis understood on the time, he advised the courtroom. He additionally acquired instructions a few New Yorker article: he was to not focus on how the tech labored.
Later, a Theranos lawyer emailed Mattis to inform him to not speak to John Carreyrou, who was reporting his blockbuster story about Theranos; within the e-mail, Carreyrou’s forthcoming story was described as defaming the corporate and exposing commerce secrets and techniques.
After the story got here out, the board of administrators was rebranded because the board of counselors. A slide from that assembly was proven to jurors — and the one a part of it that wasn’t redacted had been the phrases “obligation of loyalty.”
That didn’t cease one other board member, Richard Kovacevich, former head of Wells Fargo, from emailing Holmes and the remainder of the board with questions. “So when blood is withdrawn in venous tubes, do I perceive accurately that the exams are executed on lab-like gear and never Edison and people are despatched to CLIA for testing whereas Edison is barely getting used for the FDA exams?” Kovacevich wrote.
Holmes replied that Theranos was transitioning between regulatory requirements, and Mattis mentioned he understood that Carryerou had basically “caught [the company] in mid-stride.” Holmes didn’t inform the board that third-party exams had been used as a result of Edison didn’t work for all the pieces. “I believed all alongside that we had been doing it on Theranos’ gear,” he testified.
However after some “surprises, disappointing surprises,” Mattis mentioned he started to query if Edison really labored. “There got here a time after I didn’t know what to imagine about Theranos anymore,” he mentioned. He resigned as a member of the board in late 2016, as a result of he understood he was going to be nominated because the Secretary of Protection.
Damaging as his testimony was, it additionally appeared that Mattis was simply confused. He wasn’t completely certain the place he’d met Holmes for the primary time, although he knew it was earlier than or after a speech in San Francisco. He additionally didn’t keep in mind he’d purchased inventory choices within the firm — although the protection displayed the paperwork exhibiting he did. When requested how a lot he made a 12 months as a board member, Mattis mentioned $50,000; paperwork launched by the protection revealed he’d really made $150,000 a 12 months.
However when the protection tried to get him to say that Holmes by no means advised him the tech was prepared, Mattis pushed again. Holmes had advised him the tech was able to deploy within the area for a side-by-side comparability with present blood exams, he insisted.
“I assumed it could be greater than a handful of exams,” Mattis mentioned, “or it could be ineffective to us.”