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Elizabeth Holmes Takes Stand At Theranos Fraud Trial

SAN JOSE (CBS SF) -- For weeks the question swirled around the widely watched Theranos investor fraud trial -- Would founder Elizabeth Holmes, the fallen darling of the Silicon Valley startup community, take the stand in her own defense?

On Friday, near the end of another long day in the courtroom after federal prosecutors rested their case, the question was answered.

A smiling Holmes strolled up to the front of the courtroom, raised her hand and swore to tell the truth.

Displaying the confident demeanor that captivated the tech industry, Holmes testified as to how she pursued her dreams of creating devices to improve health. How she dropped out of Stanford as a sophomore to start a company and "worked all the time" to turn her dreams into a reality.

First she explored developing a pill that would transmit health data and administer doses of medicine and later how that morphed into Theranos.

Asked by one of her lawyers -- "Did you believe that Theranos had developed technology that was capable of performing any blood test?"

Holmes responded, "I did."

Former prosecutor and KPIX 5 legal analyst Michele Hagan said putting Holmes on the stand and now exposing her to what will certainly be a difficult cross examination by federal prosecutors was a major tactical gamble.

"It's a tactical decision to put your client on the stand," she said. "But this kind of defendant you can put on the stand because you know she's persuasive."

"She's giving a pitch to the jury," Hagan said. "She's explaining, telling them what it can do. She's also giving them time to get to know her."

Prosecutors aren't likely to get that chance to question Holmes until after the Thanksgiving holiday weekend.

Holmes attorney Kevin Downey told U.S. District Judge Edward Davila that he expects to continue steering her through her story when she returns to the stand Monday and again Tuesday before the trial breaks until Nov. 29.

In presenting their case, prosecutors called 29 witnesses to support their contention that Holmes endangered patients' lives while also duping investors and customers about Theranos' technology.

Among them was Gen. James Mattis, a former U.S. defense secretary and former Theranos board member, who explained how he was first impressed and ultimately disillusioned by Holmes.

They also presented internal documents and sometimes salacious texts between Holmes and her business partner and former boyfriend, Sunny Bulwani, who also served as Theranos' chief operating officer. In court documents, Holmes' attorneys have asserted she was manipulated by Balwani through "intimate partner abuse" — an issue that is expected to come up during her ongoing testimony next week.

Until she took the stand Friday, Holmes had sat bolt upright in her chair to the far right of the jury through the trial, impassive even when one-time supporters testified to their misgivings about Theranos.

That combination of compelling testimony and documentary evidence apparently proved effective at convincing Holmes to tell her side of the story to the jury of 10 men and four women (including two alternates) who will ultimately decide her fate. If convicted, Holmes -- now 37 and mother to a recently born son -- could be sentenced to up to 20 years in prison.

Witness testimony and other evidence presented in the trial strongly suggested that Holmes misrepresented purported deals with major pharmaceutical firms such as Pfizer and the U.S. military while also concealing recurring problems with the Edison.

But the Edison problems didn't become public knowledge until The Wall Street Journal published the first in a series of explosive articles in October 2015. An audit by the Centers for Medicare and Medicaid Services confirmed those problems the following year.

By then, Holmes and Balwani had raised hundreds of millions of dollars from billionaire investors such as media mogul Rupert Murdoch and the Walton family of Walmart and struck deals with Walgreens and Safeway to conduct blood tests in their pharmacies. Those investments at one point valued Theranos at $9 billion, giving Holmes a $4.5 billion fortune — on paper — in 2014.

Evidence presented at trial also revealed that Holmes had distributed financial projections calling for privately held Theranos to generate $140 million in revenue in 2014 and $990 million in revenue in 2015 while also turning a profit. A copy of Theranos' 2015 tax return presented as part of the trial evidence showed the company had revenues of less than $500,000 that year while reporting accumulated losses of $585 million.

Ellen Kreitzberg, a Santa Clara University law professor who has been attending the trial, said she thought the government had made a strong case.

"There's nothing sort of fancy or sexy about this testimony," she said. "The witnesses were very careful in their testimony. None of the witnesses seemed to harbor anger or a grudge against her. And so because of that, they were very powerful witnesses."

© Copyright 2021 CBS Broadcasting Inc. All Rights Reserved. The Associated Press contributed to this report.

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