James, member of the board of directors of Theranos “Enraged dog” Mattis, a four-star general and former secretary of defense, has been among the company’s impeccably accredited supporters – but testifying in Elizabeth Holmes’ trial on Wednesday, he looked like nothing more than a well-dressed grandfather. At one point, he looked puzzled when the defense asked if he remembered a discussion about broadband devices.
When Mattis first met Theranos’ Holmes in 2011, he told the court, she pricked his finger to give him an idea of the blood test process. And like a young lady in a fairy tale, he fell under her spell. During the United States lawsuit against Elizabeth Holmes, he said he was “caught” with the Theranos device. Now “young Elizabeth”, as Mattis addressed her in an email, faces 10 counts of wire fraud and two counts of conspiracy to commit wire fraud.
Mattis’ testimony on Wednesday was the most damning of the trial so far. He described Holmes as firmly in control of Theranos, even telling board members something to talk about with the press. He also appears to have been misled about the capabilities of the Theranos analyzer, called Edison.
“I’m trying to find a way to use your device on a quick ‘pilot’ or ‘proof of principle’ to speed up its entry into our forces,” Mattis wrote to Holmes in October 2011, when he was in command. of the American central command. . In his testimony today, he said he wanted to see a side-by-side comparison with existing blood testing technology. It never happened.
He was particularly attracted by the small size of the analyzer, he testified. Infirmaries on ships have limited space, remote locations make it difficult to set up laboratories, and the idea of being able to perform tests quickly and accurately to sort out injured soldiers was particularly appealing. “I was a firm believer in doing it in the theater so that he could hold and deliver,” he said.
Mattis also described Holmes as “sharp, articulate, engaged” and said she was “aggressive” about trying to work with the Department of Defense. At the time, she didn’t say Theranos didn’t have the resources to do it, nor did she mention the commercial launch.
To Mattis’ knowledge, the Theranos analyzer has never been deployed in covert operations, on military helicopters, or elsewhere in the military. This is of particular concern for Holmes’ defense, as she told investors that Theranos devices were deployed in Afghanistan.
After retiring from the military, Mattis visited Theranos Headquarters in late 2013. There he saw the Theranos Analyzer – and did not see the commercially available equipment that Erika Cheung and Surekha Gangakhedkar testified that Theranos used it for most of his tests.
Holmes invited him to join the Theranos board to help him create a good corporate culture – his management background would be helpful, she told him. “It was breathtaking what she was doing,” he said. As a board member, Holmes was not only his primary source of information about Theranos technology, she was his sole source of information, he said.
Mattis invested $ 85,000 in Theranos when he joined the board, a significant sum for “someone who has been in government for 40 years,” he said, smiling slightly.
At board meetings, Holmes was the main presenter. His co-defendant Sunny Balwani, tried separately, sometimes gave financial forecasts, but “Ms. Holmes was in charge,” Mattis said. There have been board meetings where Balwani was not even present, he said.
This testimony is, of course, a problem for the defense, which has tried to blame Balwani, among others. But it does match Holmes’ media profiles at the time, which portrayed her as totally controlling the business.
Media coverage of Holmes was introduced directly today. The first was a the Wall Street newspaper item who claimed that Theranos devices were “faster, cheaper and more accurate than conventional methods and only require microscopic blood volumes, not vial after vial of the product.” This matched Mattis’ understanding of technology at the time, he said. The article was also presented at a board meeting.
It wasn’t until later that Mattis learned that only a few tests had been done on the Theranos machine. If he had known that third-party devices were used for most of the testing, it “would have dampened my enthusiasm considerably,” he said.
Mattis also spoke to Roger Parloff to his Fortune item – and before he did, he asked Holmes for advice on what to say. The Parloff article claimed that Theranos “does not buy any analyzers from third parties”, which was not true. But the request was in line with what Mattis understood at the time, he told the court. He also received instructions regarding a New Yorker article: he was not to discuss how the technology works.
Later, a lawyer for Theranos emailed Mattis telling him not to speak to John Carreyrou, who was reporting his success story on Theranos; in the email, Carreyrou’s upcoming story was described as defaming the company and revealing trade secrets.
After the story came out, the board of directors was renamed the council of advisers. A slide from that meeting was shown to jurors – and the only part that was not redacted was the words “duty of loyalty.”
That hasn’t stopped fellow board member Richard Kovacevich, former director of Wells Fargo, from sending questions to Holmes and the rest of the board. “So when the blood is taken from venous tubes, do I understand correctly that the tests are done on lab-type equipment and not on Edison and that these are sent to the CLIA for testing while ‘Edison is only used for FDA testing? Kovacevich wrote.
Holmes responded that Theranos was in transition between regulatory standards, and Mattis said he understood Carryerou had essentially “caught [the company] halfway through. Holmes didn’t tell the board that third-party testing was used because Edison didn’t work for everything. “I always thought we were doing it on Theranos equipment,” he said.
But after a few “surprises, disappointing surprises,” Mattis said he was starting to wonder if Edison was actually working. “There came a time when I didn’t know what to believe about Theranos,” he said. He resigned from his position as a member of the board of directors at the end of 2016 because he knew he was going to be appointed Secretary of Defense.
As damaging as his testimony was, it also seemed like Mattis was easily confused. He wasn’t quite sure where he had first met Holmes, although he knew it was before or after a speech in San Francisco. He also had no recollection of buying stock options in the company – although the defense posted documents showing he had done so. When asked how much he made per year as a board member, Mattis said $ 50,000; documents presented by the defense revealed that he had in fact earned $ 150,000 per year.
But when the defense tried to get him to say Holmes never told him the technology was ready, Mattis pushed back. Holmes had told him the technology was ready to be deployed in the field for a side-by-side comparison with existing blood tests, he insisted.
“I thought it would be more than a handful of tests,” Mattis said, “or it would be pointless for us.”