SAN JOSE, California – A key whistleblower against Theranos, the blood testing startup that collapsed over the scandal in 2018, testified Tuesday at the fraud trial of company founder Elizabeth Holmes.
The whistleblower, Erika Cheung, worked as a laboratory assistant at Theranos for six months in 2013 and 2014 before reporting laboratory testing problems at the company to federal agents at the Centers for Medicare & Medicaid Services in 2015. Her first day Testimony revealed to a jury what fans of the Theranos saga probably already knew: the company’s celebrated blood-testing technology didn’t work.
In a packed courtroom, Cheung said she had turned down other job offers outside of college to join Theranos because she was dazzled by Holmes’ charisma and inspired by her success as a woman in technology. Ms Holmes said Theranos machines, called Edison, could quickly and inexpensively discern whether people have a variety of health problems using just a few drops of blood.
“She was very articulate and had a strong sense of conviction about her mission,” Cheung said of Ms. Holmes.
But Ms Cheung’s excitement faded after witnessing actions she disagreed with in Theranos lab, she said. In some cases, outliers were removed from blood tests to ensure Theranos technology passed quality control testing. Ms. Cheung was also alarmed when she donated her own blood to Theranos and tests on the company’s machines said she had a vitamin D deficiency, but traditional tests did not, she testified.
Ms Cheung, who saw a menu of around 90 blood tests offered by Theranos, said that despite Ms Holmes’ promises about the Edison machines, they could only process a handful of the tests listed. The rest had to be done with traditional blood analyzers or sent to a diagnostic company, he said.
Finally, Ms. Cheung resigned due to her concerns about Theranos testing services.
“It made me uncomfortable to process patient samples,” he said. “I didn’t think the technology we were using was adequate enough to engage in that behavior.”
During Ms. Cheung’s testimony, Ms. Holmes’s attorneys objected to a wide variety of emails and other internal communications submitted by the prosecution as evidence. The two sides discussed the rules of arguments that could be used and the relevance of Ms. Cheung’s testimony.
“The CEO is not responsible for all communications that occur within a company,” said Lance Wade, an attorney representing Ms. Holmes.
John Bostic, a U.S. Attorney and Assistant United States Attorney, argued that the documents showing Theranos’s internal issues were relevant to the case, regardless of whether Ms. Holmes’s name was on them.
Mr. Wade replied that Ms. Cheung had been an entry-level employee and hardly interacted with Ms. Holmes.
“As far as we know, the interview you just heard was the longest conversation you had with our client,” he said.
Regardless, Ms. Holmes sat quietly in a gray blazer and black dress, watching the procedures from behind a medical mask.
Ms. Cheung’s 2015 letter to the Centers for Medicare & Medicaid Services describing problems with Theranos tests prompted a surprise inspection by the agency that led the company to close its labs. Tyler Shultz, another young Theranos lab employee, also shared details about lab problems with The Wall Street Journal, which published company exposures. Mr. Shultz is also listed as a potential witness at the trial. (An earlier version of this article misspelled his name as Schultz.)
Since her role in the disappearance of Theranos, Ms Cheung has become an advocate for ethics in technology. She has given a TED talk on speaking truth to power and helped found Ethics in Entrepreneurship, a nonprofit organization that provides ethics training and workshops to startup founders, workers, and investors.