Elizabeth Holmes knew machines weren’t working, says ex-lab director

SAN JOSE, CALIF. — A former lab director at Theranos acknowledged on Friday that he had plenty of opportunities to address his concerns about the company’s technology with former CEO Elizabeth Holmes.

Adam Rosendorff joined Theranos as a lab director in 2013. He testified that he felt the healthcare start-up would become the next Apple. A year later, Rosendorff quit after growing uncomfortable and concerned with the high failure rate of the company’s blood-testing technology.

Rosendorff has emerged as the government’s most critical witness yet. He said that Holmes knew the lab machines were not working as they advertised but pushed ahead with the launch. Under cross-examination on Friday, he told jurors he was “becoming frustrated in my inability to explain discrepant results” when he quit.

This was the fourth week of trial for Holmes, who is fighting 12 charges of wire fraud and conspiracy. Prosecutors allege Holmes and Balwani engaged 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 defense attorney for Holmes, Lance Wade, has been cross examining Rosendorff for three days trying to poke holes in his recounting of events while he was lab director. Wade cited several emails from physicians who complained about their patients receiving inaccurate test results and Rosendorff was slow to respond.

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

Rosendorff replied that he would call. But Wade pointed out that a week went by and Rosendorff forgot to return the doctor’s call.

“Everyone makes mistakes,” Wade said.

“Sure,” Rosendorff replied.

Wade also presented internal emails between Rosendorff, Holmes and her top executive Ramesh “Sunny” Balwani which showed that the executives were addressing his concerns.

Balwani wrote a lengthy email in October 2014 addressing the physician who was inquiring about the inaccurate test results for his patient. “Despite all of our best efforts, there will be results that are unexpected,” Balwani wrote to Rosendorff and Holmes.

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

“Yes,” replied Rosendorff.

“Every lab makes some errors,” Wade said.

Wade also pointed to a May 2014 meeting Rosendorff had with Holmes 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 level of alarm,” Rosendorff said.

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

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

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