Elizabeth Holmes, founder of Theranos Inc., will appear in federal court in San Jose, California on Wednesday, October 6, 2021.
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SAN JOSE, CALIF. – When Theranos’ problems increased in 2014, the blood testing startup hired a dermatologist with no qualifications in laboratory science or pathology to lead the laboratory.
According to a court testimony on Thursday in the criminal case against Theranos founder Elizabeth Holmes, Sunil Dhawan was temporarily hired by Ramesh “Sunny” Balwani, the company’s president.
Dhawan was Balwani’s longtime dermatologist. He has been called as a witness by prosecutors trying to prove that Holmes extorted millions of dollars from investors while knowingly misleading patients and doctors about the company’s blood testing technology. Holmes, charged with twelve wire fraud and conspiracy charges, has pleaded not guilty.
Dhawan testified that Balwani, who was then romantically involved with Holmes, told him that “the time required is very little”. In an email dated November 2014, Balwani also informed him that “this will mainly be an on-demand advisory role,” said Dhawan, who met federal and state requirements as a laboratory manager.
In the San Jose courtroom, Jeff Schenk, a US assistant attorney, asked Dhawan, “Did he describe to you what Theranos did?”
In response, Dhawan said he had searched Google to find out more about Theranos’ technology, adding that he had “had a brief conversation about it” with Balwani.
Dhawan testified that he only went to the laboratory twice between November 2014 and summer 2015 and worked a total of five to ten hours. He told the jury that he had never met staff, doctors or patients.
Dhawan has been hired to replace Adam Rosendorff, who resigned in 2014 due to mounting frustration over the inaccuracies and incorrect results of the blood tests. In contrast to Dhawan, Rosendorff was a state-certified pathologist who spent every day in the laboratory.
Schenk continued: “You haven’t spoken once to a Theranos employee who worked in the laboratory?”
“I don’t remember a conversation in this long time,” said Dhawan.
Dhawan added that he didn’t meet Holmes until September 2015. He told jurors that he became more involved with the company this month as regulators planned to scrutinize the lab.
In his cross-examination, defense attorney Lance Wade, who represents Holmes, asked Dhawan about Balwani’s importance to the company.
“You understand that he was one of the two top managers in the company?” asked Wade.
“My guess was that he was a top manager,” said Dhawan.
“He ran the lab from an operational perspective, right?” asked Wade.
Dhawan replied, “I can’t comment on this because I was never told he was in charge of the lab, but I assumed he was.”
Balwani was charged with the same crimes as Holmes. He also pleaded not guilty and will be tried separately next year. Dhawan’s testimony will continue on Friday.
Sunny Balwani, former President and Chief Operating Officer of Theranos Inc., leaves federal court in San Jose, California on October 2, 2019.
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“The real magic”
A former Walgreens executive Nimesh Jhaveri took the stand on Thursday.
Jhaveri said Walgreens’ goal in partnering with Theranos is to enable customers to get their lab results with just a few drops of blood. Providing a more efficient and less painful process than traditional labs would be “exceptional,” said Jhaveri.
“It changed the lab environment,” said Jhaveri. “Less blood was required was the real magic; it was so fascinating to us at Walgreens.”
Walgreens invested $ 140 million in the failed company. Blood testing technology clinics have been introduced in 40 drugstores in Arizona and one in California. In August 2014, one year after the partnership began, Walgreens reduced its rollout target from 500 Theranos wellness centers to 200.
“Cost has been an obstacle, training our team members has been an obstacle, hiring phlebotomists has been an obstacle,” said Jhaveri. “The entire operating model was not perfected, so we decided to reduce the number.”
Jhaveri said he told Balwani that if they want to expand, they need a detailed plan to improve the patient experience. On cross-examination, Jhaveri told the jury that he had minimal contact with Holmes and only met with her two or three times.
Jhaveri said Walgreens “took a step back” when former Wall Street Journal reporter John Carreyrou first broke the story that Theranos was misleading customers and investors about its test accuracy. In 2016, Walgreens began unplugging Theranos services in its drugstores.
SEE: Former staff and patients testify against Elizabeth Holmes