Elizabeth Holmes trial: Investor testifies Theranos founder went silent, tried to buy him out
Holmes is accused of defrauding investors and the public about the failed blood-testing startup
Trial under way for Theranos CEO Elizabeth Holmes
Jury selection begins for Theranos CEO Elizabeth Holmes. FOX Business' Lydia Hu with the latest.
A retired Texas-based money manager recounted Wednesday his experience as an investor in the failed medical startup Theranos during the ongoing fraud trial of the company's founder, Elizabeth Holmes.
The money manager, Alan Eisenman, told jurors his initial excitement turned to frustration as the company cut off contact about its operations.
Eisenman said he became interested in Theranos and its blood-testing device after speaking with a family friend who knew Holmes personally and said she was "brilliant," The Wall Street Journal reported.
Eisenman invested more than $1 million in 2006, telling jurors he was intrigued after being told that Oracle co-founder Larry Ellison was also an investor and that Theranos purportedly had contracts with pharmaceutical companies, including Pfizer. Prosecutors say Theranos faked endorsements from Pfizer while touting its business.
SAN JOSE, CALIFORNIA - MAY 4: Theranos founder Elizabeth Holmes leaves the Robert F. Peckham Federal Building with her defense team in downtown San Jose, Calif., on Tuesday, May 4, 2021. (Photo by Nhat V. Meyer/MediaNews Group/The Mercury News via Ge (Nhat V. Meyer/MediaNews Group/The Mercury News via Getty Images / Getty Images)
Eisenman said Holmes was initially open to his requests for information about Theranos, telling him at one point the company was projected to generate $200 million in 2008 and was considering an IPO. But over time, Eisenman said Holmes was less responsive.
In 2010, Holmes emailed Eisenman offering to buy him out of the company after he repeatedly asked for updates on the business.
"We don’t do quarterly calls with our other investors, many of whom invested much greater amounts than you did," Holmes wrote to Eisenman in a 2010 email. "We recognize you have been an investor for some time, and if we proceed with the transaction we are proposing we can provide you with a >5x return on your investment in Theranos," Holmes wrote, according to Bloomberg.
Eventually, she stopped responding to his requests.
"There was no information coming from the company," Eisenman testified. "To me that’s a sign of trouble."
Former Theranos founder and CEO Elizabeth Holmes arrives at the Robert F. Peckham U.S. Federal Court on June 28, 2019 in San Jose, California. (Justin Sullivan/Getty Images / Getty Images)
Eisenman tried to contact Theranos board Chairman Donald Lucas in 2012, only to receive a terse reply from Holmes. The investor said Holmes had "not taken kindly" to his attempt to go over her head for information.
Eisenman said he invested another $100,000 in Theranos in 2013 during a brief thaw in hostilities, but his relationship with Holmes and her then-boyfriend, Theranos President Ramesh "Sunny" Balwani, eventually soured again. He said he lost his money when Theranos shuttered in 2018.
Theranos founder Elizabeth Holmes arrives at the Robert F. Peckham Federal Building to attend a federal court hearing in San Jose, California, U.S. May 4, 2021. (REUTERS/Kate Munsch)
Forbes named Holmes the world’s youngest female billionaire in 2015 during the rise of Theranos, which purported to have developed a machine that could conduct an array of tests with just a few drops of a patient’s blood. The company collapsed after the Wall Street Journal reported the machines could not perform as Holmes claimed.
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Holmes is accused of defrauding investors and the public about Theranos. She faces several charges of wire fraud and conspiracy to commit wire fraud. Prosecutors say Holmes frequently lied about the company’s financials and partnerships.
Prosecutors said they expect to rest their case against Holmes next week.