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Theranos Investor Goes on Witness Stand in Fraud Trial

SAN JOSE (CBS SF) -- A prominent Silicon Valley Venture Capitalist was on the witness stand in the Elizabeth Holmes fraud trial.

Chris Lucas ran the Venture Capital firm Black Diamond Ventures, when it first became interested in Elizabeth Holmes and Theranos in 2005. He said Holmes was 19, passionate, sincere, and worked all the time.

His firm first invested 400-thousand dollars in Theranos, but later Lucas said he was surprised when the company would not disclose financial statements and other company documents, as is routine for startups.

Holmes said it was to protect trade secrets at the time. Later, Lucas and his firm invested another 5 million into the company and saying he knew it was a big risk, but called Theranos exciting.

"I think what this case is showing us is that these investors weren't asking a lot of questions. They were going on the brand and the hype of what the possible return could be, which was huge," said Michele Hagan, former prosecutor and Legal Analyst.

Lucas also testified that venture capitalists often invest in the CEO, not necessarily the
performance of the company at the time.

The Theranos blood analyzer, which promised to do hundreds of blood tests from a single finger
stick of blood, only ever managed to do 12 tests.

But in 2014, when Black Diamond made its largest investment, Holmes was headlining Fortune magazine in a flattering cover story.

"She was not just selling her product, she was also selling herself," Hagan said.

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