(Bloomberg) -- Theranos Inc. founder Elizabeth Holmes is being cross-examined by a federal prosecutor for the first time Tuesday at her criminal fraud trial in San Jose, California.
Holmes, 37, spent four days answering questions from her defense lawyer, culminating Monday in a tearful description of a decade of alleged abuse by her former boyfriend, Ramesh “Sunny” Balwani, who was her second-in-command at Theranos. Holmes also said she’d been raped while a student at Stanford.
Prosecutors spent 10 weeks laying out the case against her, claiming the startup she founded was built on lie after lie. Theranos, which peaked at a valuation of $9 billion, collapsed in 2018. Holmes is accused of deceiving investors, board members and companies about the capabilities of Theranos blood-testing devices. She faces as long as 20 years in prison if convicted.
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(12:45 p.m. NY)
A federal prosecutor began his interrogation of Holmes by asking her about efforts to control a visit by a Wall Street Journal reporter to a wellness center in Arizona for a story he was writing about Theranos technology.
“I don’t remember that,” Holmes said.
Holmes was shown excerpts of a text exchange with Balwani about journalist John Carreyrou, whose reporting for the Journal starting in 2015 helped trigger the downfall of Theranos. In one text, Balwani wrote: “Seems like this guy is looking to write something negative.”
Holmes was asked about an opposition research firm, Fusion GPS, that also figured into a controversy over a dossier compiled on Donald Trump while he was running for president in 2016.
“I can’t tell from these text messages,” Holmes said in response to a question about whether she hired Fusion GPS to do research on Carreyrou.
Prosecutor Bob Leach then asked, “You wanted to get ahead of the story, didn’t you?”
“We wanted to make sure our trade secrets weren’t disclosed,” Holmes said.
Holmes also acknowledged she made a mistake.
“I think I mishandled the entire process of the Wall Street Journal reporting,” Holmes said.
(12:30 p.m. NY)
Before the jury arrived, a lawyer for Holmes and a prosecutor sparred over whether the government can introduce evidence that the Theranos chief executive officer had a high-flying lifestyle while she and Balwani were romantically involved.
Now that Holmes has accused Balwani of abuse and “put the entirety of her relationship at issue,” the prosecutor argued to U.S. District Judge Edward Davila, it’s fair game for jurors to learn about her use of “jets, hotels on the company’s dime,” as well as trips to Mexico and a home she and Balwani owned together through an LLC.
Holmes’s attorney said introducing such evidence would run afoul of the judge’s earlier order to avoid making “appeals to class prejudice” by detailing specific purchases, brands of clothing, hotels and other personal items.
The judge on Tuesday urged the prosecution to stay within a “territorial border,” but said the government should be able to explore “independence issues” of Holmes’s decision making.
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