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Theranos founder Elizabeth Holmes to face cross-examination at fraud trial

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  • PFE

By Jody Godoy

SAN JOSE, Calif., Nov 30 (Reuters) - Theranos founder Elizabeth Holmes is expected to face cross-examination by a prosecutor on Tuesday, in what could be a pivotal moment in the fraud trial of the blood-testing startup founder.

Prosecutors say the former Silicon Valley star lied about the effectiveness of the technology at the now-defunct startup, claiming it could run diagnostic tests more quickly and accurately than traditional lab testing.

Holmes, 37, faces nine counts of wire fraud and two counts of conspiracy. She has pleaded not guilty.

Her somewhat rare decision to take the stand in her own defense exposes her to questioning about her testimony that she did not intend to mislead investors on Theranos' partnerships with pharmaceutical companies including Pfizer Inc.

Holmes denied on the stand that she misrepresented Theranos' work with the U.S. military, which will also be fair game, as will recorded conversations with a journalist who wrote a flattering profile of Holmes and Theranos.

During questioning by her own lawyer on Monday, Holmes testified that she was abused by former romantic partner and Theranos executive Ramesh "Sunny" Balwani and that the relationship had a pervasive impact on her life during the time when prosecutors say she committed fraud.

Holmes testified last week that Balwani prepared financial projections that were shared with investors.

She said on Monday that she did not question him as she should have, because he had taught her "everything I thought I knew about business."

Balwani has "categorically" denied the allegations in court filings, calling them "false and inflammatory." An attorney for Balwani did not reply to a request for comment on Monday.

Balwani, who is also charged with fraud and will stand trial separately, has pleaded not guilty.

(Reporting by Jody Godoy in San Jose; Editing by Noeleen Walder and David Gregorio)