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Elizabeth Holmes testifies in her defense in fraud trial

AILSA CHANG, HOST:

Today in Silicon Valley, Elizabeth Holmes took the witness stand to defend herself against fraud charges. As the CEO of Theranos, Holmes claimed that her groundbreaking technology would revolutionize how blood tests detect disease. Well, the machines did not live up to her promises, and the company imploded. NPR's Bobby Allyn was in the federal courthouse for Holmes's testimony and joins us now from San Jose.

Hey, Bobby.

BOBBY ALLYN, BYLINE: Hey, Ailsa.

CHANG: All right, so tell us what happened in court today.

ALLYN: Yeah. Well, first, long lines. This is one of the most anticipated Silicon Valley trials in years, so people actually started lining up around 3:00 in the morning.

CHANG: Wow.

ALLYN: Remember; this trial has been going on for 11 weeks, and Holmes taking the stand is the main event, so people wanted to see what she was going to say. When the court finally started, she got up to the witness box. She took off her mask. She smiled at the jury, and, you know, she sounded exactly like she has sounded in past interviews - really calm, really focused. And then she went over in granular detail what her blood testing devices were trying to accomplish, the, you know, kinds of talks she had with pharmaceutical companies and outside researchers. But, you know, she focused on assessments that painted the company in the best possible light.

And look, Ailsa; the story of Theranos is actually pretty remarkable - from an idea that she dreamt up in a Stanford dorm room to a $9 billion company - that is, until these bold promises began to unravel.

CHANG: Right. Let's talk about that unraveling, because - can you just, like, remind people what exactly went wrong? Like, what are prosecutors alleging was the crime here?

ALLYN: Yeah. Well, Holmes said her company had developed a way to test for hundreds of diseases with just a tiny little pinprick of blood from the tip of your finger, you know, that, you know, these devices will one day predict what conditions you have before even your doctor knew. That obviously would be pretty revolutionary if true. And for a while, lots of people believed her. I mean, she had this star-studded group of people who were backing this idea, including former Defense Secretary Jim Mattis, who was on the Theranos board of directors. Earlier in the trial, he took the witness stand, and he said, look; I was wowed by Elizabeth Holmes' ambition. But later, he found himself disillusioned by her false promises.

Prosecutors have played for the jury recordings of Holmes really overhyping this company. They displayed on a big screen a letter from the drug company Pfizer affirming Theranos technology. But prosecutors say that document was actually forged. And so prosecutors say Holmes broke the law by defrauding investors and patients, and they say she deserves to go to prison.

CHANG: OK. Well, Holmes herself took the stand today. Can you describe how she is defending herself?

ALLYN: Yeah. Well, we haven't heard a clear defense from Holmes on the witness stand yet. But her lawyers have said in court that the fake-it-until-you-make-it culture that's so big out here in Silicon Valley, that that really forces startups to take big risks and to sometimes make exaggerations. It's the coin of the realm here, to make a bold promise, right? Well, they say Holmes just got in over her head, and the company eventually failed. But her lawyers say that is not a crime.

And, you know, Holmes, in legal filings, has pointed the finger at the No. 2 at the company. It's this guy named Sunny Balwani. It's actually her former boyfriend as well. Holmes' lawyers say he emotionally manipulated her, and that clouded her judgment during the time of the alleged fraud. Worth noting here, Ailsa, that Balwani denies this and that he has also been charged with wire fraud. He's got a separate trial that's going to start in January.

CHANG: OK. Well, Bobby, this has been a really long trial so far - 11 weeks, as you say. What is next?

ALLYN: Yeah, another long line tomorrow and more testimony from Holmes. So far, she's only fielded softball questions from her own lawyers. So soon, prosecutors will have their turn to ask questions. And this is going to be a huge test for Holmes. I mean, as the jury watches on, they're going to, you know, see how she takes these tough, probing questions from prosecutors, and that's going to go to her credibility. I mean, what this all boils down to, Ailsa, is intent. Was she an intentional fraudster, as prosecutors say? Or was she just a failed CEO who has been wrongly accused?

CHANG: That is NPR's Bobby Allyn.

Thank you, Bobby.

ALLYN: Hey, thanks, Ailsa. Transcript provided by NPR, Copyright NPR.