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Former Theranos product manager Daniel Edlin testifies in criminal trial of Elizabeth Holmes

CNN logo CNN 10/20/2021 By Sara O'Brien, CNN Business
Elizabeth Holmes, founder of Theranos Inc., arrives at federal court in San Jose, California, U.S., on Wednesday, Oct. 6, 2021. Holmes has pleaded not guilty but faces as long as 20 years in prison if convicted of fraud and conspiracy charges. © David Paul Morris/Bloomberg/Getty Images Elizabeth Holmes, founder of Theranos Inc., arrives at federal court in San Jose, California, U.S., on Wednesday, Oct. 6, 2021. Holmes has pleaded not guilty but faces as long as 20 years in prison if convicted of fraud and conspiracy charges.

To many people a decade or so ago, Elizabeth Holmes was the founder of high-flying blood-testing startup Theranos. To Daniel Edlin, she was the sister of his Duke University college buddy, Christian.

Edlin met Holmes through Christian and later joined Holmes' brother working for Theranos as a senior product manager in September 2011. He was entrusted with key assignments, including the company's critical Walgreens partnership, organizing tours of its headquarters for investors, board members, business partners and other VIP guests, and working with military officials about possible use of its technology.

Now, Edlin is testifying in the criminal case against Holmes over allegations she knowingly misled patients, doctors and investors with claims that her startup's technology could reliably and accurately test for a range of conditions using just a few drops of blood taken by finger stick. (Holmes has pleaded not guilty and faces up to 20 years in prison.)

Edlin, who was first called Friday as a witness for the government and resumed testifying Tuesday, said he was at times asked by Holmes to make changes ahead of tours of the Theranos headquarters, including hiding certain areas of its research and development lab from important visitors. He said partitions were sometimes used to conceal areas where Theranos' devices were located.

On one occasion in 2013, Edlin said he helped set up a display of about 10 to 15 Theranos miniLab devices, one of its blood analyzer machines, in a room adjacent to the clinical lab ahead of a tour. The display was then taken down soon after the tour ended. He testified that he learned in 2016 that the miniLab device had never been used for patient blood testing. (Edlin also said he did not recall ever giving a tour of the clinical lab itself, which is where patient samples were tested.)

As the Wall Street Journal would reveal in a series of reports beginning in October 2015, Theranos' claims about its technological capabilities were vastly overstated. The company was relying on blood testing devices manufactured by third-parties rather than its own devices, which were only being used on a fraction of tests, with questions about their accuracy and reliability. Edlin's testimony suggests the company may have tried to give high-profile visitors a very different impression.

Edlin was also involved in the company's communications with the US Department of Defense -- a relationship that the prosecution has zeroed in on as one of the ways Holmes allegedly misled investors and business partners. Former executives for Walgreens and Safeway testified they'd been told Theranos had been doing work with the Defense Department and that its devices were in use in medical evacuation units. But former Defense Secretary and Theranos board member James Mattis testified he was unaware of its devices ever having been deployed in such a manner.

In Tuesday's testimony, Edlin said he worked directly with Holmes to support the relationships with the military and Defense Department. He said "the end goal" for these discussions "was to start a research program that would compare Theranos' testing to the testing available to the military at that time." Edlin testified that Holmes was "highly involved" with these communications.

"I'd say any substantive communication I had with the military, I either discussed with her ahead of time ... or email drafts were reviewed and approved before I sent them back out," he said.

Edlin testified that the research program discussions went on for "months, if not years" and that Theranos sent three devices to a warehouse in Kentucky for the military to use for evaluation purposes. "I recall the devices were sent, received, but then no additional action was taken," Edlin testified.

Edlin testified that, to his knowledge, Theranos devices were never used in a war zone and were not sent out to the Middle East for research or clinical use.

(Wade Miquelon, the former Walgreens CFO, previously testified he recalled being told the company's technology was being used in military evacuation helicopters in Afghanistan.)

On Friday, Edlin said he had initially been excited to join Theranos. He and several other friends from Duke took part in a group interview before being offered jobs, and he stayed at the company for more than five years. He left the company in December, 2016, more than a year after the Journal began publishing stories raising concerns about the company's technology.

Edlin testified that he left Theranos in part because he "no longer believed based on what I was seeing that the company was capable of standing behind the claims it had been making about its technology."

Edlin, who reported to Holmes for a time, also shed light on what it was like to work for her and Theranos. He said information was siloed inside the company and that he was instructed by Christian, Holmes and former COO Ramesh "Sunny" Balwani not to share details about what was being worked on outside of the team directly involved because it was considered confidential. (Balwani is facing the same charges as Holmes, has pleaded not guilty and is set to go to trial in early 2022.)

Edlin also testified that Holmes was "in the office all the time, really. From early morning until late in the evening."

Holmes' attorney Kevin Downey, who began cross examining Edlin before the day recessed Tuesday and is expected to continuing his questioning of the former employee for much of the day Wednesday, established that restricted flow of communication inside the company was at times associated with "protecting Theranos' trade secrets."

A recurring topic in the trial so far has been the nature of the relationship between Holmes and Balwani, who were romantically involved. Earlier in the trial, unsealed court documents revealed that Holmes' attorneys may seek to defend her by pointing the finger at Balwani. The documents disclose that Holmes may claim she experienced psychological, emotional and sexual abuse by Balwani, which ultimately rendered him — not Holmes — in control.

The prosecution appeared to be probing Edlin, who said he was aware the two were dating and living together, for information about the power dynamic between the two.

In terms of who was in charge at Theranos, Edlin said he said Balwani would defer to Holmes on certain things. "Generally, Elizabeth was the CEO and she had, kind of, the final decision-making authority," he testified.

When asked if Edlin ever saw Balwani overrule a decision Holmes made at Theranos, Edlin testified: "I can't recall a specific moment."

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