Elizabeth Holmes knew the machines weren’t working, says former lab director

SAN JOSE, CALIF. – A former laboratory director at Theranos admitted on Friday that he had had numerous opportunities to address his concerns about the company’s technology with former CEO Elizabeth Holmes.

Adam Rosendorff joined Theranos as a lab director in 2013. He said he believes the healthcare startup will become the next Apple. A year later, Rosendorff resigned after becoming uncomfortable and concerned about the high failure rate of the company’s blood testing technology.

Rosendorff has become the government’s most critical witness to date. He said Holmes knew the lab machines were not performing as advertised, but continued with the launch. During cross-examination on Friday, he told jurors he “was becoming frustrated with my inability to explain conflicting results” when he resigned.

It was the fourth week of trial for Holmes, who is battling 12 counts of wire fraud and conspiracy. Prosecutors allege Holmes and Balwani engaged in a decade-long multi-million dollar scheme to defraud investors and patients. Holmes and Balwani have pleaded not guilty. Balwani will be tried separately next year.

Holmes defense attorney Lance Wade cross-examined Rosendorff for three days trying to punch holes in his account of events while he was a lab director. Wade cited multiple emails from doctors complaining that their patients are receiving inaccurate test results and Rosendorff was slow to respond.

In an October 2014 email, a doctor wrote to Theranos customer service to complain that his patient had received a disturbing test result. The doctor asked to speak with Rosendorff.

Rosendorff replied that he would call. But Wade pointed out that a week had passed and Rosendorff forgot to return the doctor’s call.

“Everyone makes mistakes,” Wade said.

“Of course,” Rosendorff replied.

Wade also presented internal emails between Rosendorff, Holmes and his top executive Ramesh “Sunny” Balwani, which showed the leaders were addressing his concerns.

Balwani wrote a long email in October 2014 to the doctor inquiring about the inaccurate test results for his patient. “Despite our best efforts, there will be unexpected results,” Balwani wrote to Rosendorff and Holmes.

“No lab is perfect, is it? Wade asked.

“Yes,” Rosendorff replied.

“Every lab makes mistakes,” Wade said.

Wade also pointed to a May 2014 meeting between Rosendorff and Holmes about the wide range of hCG results he was getting from testing. “She seemed pretty calm about it all, she didn’t seem to share my level of alarm,” Rosendorff said.

However, Wade pointed out an email Holmes sent to Balwani about questionable hCG test results. “How did it happen?” Holmes asked.

Rosendorff was a primary source for former Wall Street Journal reporter John Carreyrou, according to pre-trial testimony. Carreyrou broke the Theranos scandal, revealing major accuracy issues with the company in 2015.

In a court file on Friday, Carreyrou’s lawyer argued that he should not be excluded from attending the trial. Carreyrou appears on Holmes’ witness list but was not subpoenaed. Witnesses are generally prohibited from hearing the testimony of other witnesses in the case.