Elizabeth Holmes pushed for Theranos-Walgreens deal despite test reliability concerns, former scientist claims

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Elizabeth Holmes, the disgraced founder of Theranos currently on trial for charges of criminal fraud, has been accused of prioritizing a business partnership with Walgreens over the well-being of the health care technology company's patients. 

Elizabeth Holmes, founder and CEO of Theranos, left, leaves the Robert F. Peckham Federal Building in downtown San Jose, Calif., on Tuesday, May 4, 2021. (Nhat V. Meyer/Bay Area News Group via AP / AP Newsroom)

According to the Department of Justice, Holmes is accused of defrauding doctors and patients by making false claims about Theranos' ability to provide accurate, fast, reliable, and cheap blood tests and test results and omitting information concerning the limits of and problems with Theranos’ technologies. In addition, she is accused of engaging in a separate, multimillion-dollar scheme to defraud investors after allegedly making misrepresentations about Theranos' financial conditions and future prospects.

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Former Theranos scientist Surekha Gangakhedkar testified on Friday that, despite direct knowledge of the problems with Theranos' proprietary technology, Holmes pushed for a long-term partnership with Walgreens to move forward. 

Gangakhedkar, who joined Theranos in 2005 and reported directly to Holmes, told jurors that she came home from vacation in August 2013 to learn that the company was planning on rolling out its Edison blood-testing devices in Walgreens stores. She testified that she didn't believe the tests were ready to be used for patient use, citing "problems with getting consistent results." However, she said she felt pressured by Holmes to validate the tests even though "in my opinion she was aware" of the accuracy issues.

"I was very stressed and unhappy and concerned with the way the launch plans or the launch was going," she added. "I was not comfortable with the plans they had in place so I made a decision to resign and not continue working there."

In September 2013, around the time when the partnership with the pharmacy chain took effect, Gangakhedkar resigned from the startup. Gangakhedkar, who was granted full criminal immunity by the court in exchange for the testimony, said that she met with Holmes to discuss her concerns.

"At that time she mentioned that she has promised to deliver to the customers and didn’t have much of a choice then to go ahead with the launch," she said.

Gangakhedkar also shared copies of internal documents and several emails from 2013 backing up her claim. When asked by prosecutors why she made copies of internal communications and documents before resigning, Gangakhedkar said she was "scared that things would not go well" and that she was "also worried that I would be blamed."

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The latest allegations come after former Theranos scientist Erika Cheung testified in court last week that the company would frequently cherry-pick data and delete "any two data points that would not hit the metrics we needed." According to Cheung, about one in every four Theranos tests failed in March 2014. 

Cheung, who leaked information about Theranos' tests to the Wall Street Journal in 2015, told jurors she believed that she was being followed at the time by individuals hired by the company. After starting a new job, she said she was served a letter from the firm Boies Schiller Flexner, which claimed she disclosed Theranos' "trade secrets and other confidential information without authorization."

Financial documents made public during Holmes' trial reveal that Theranos paid $150,000 to private investigators for a project titled "E. Cheung & T. Schultz project." In addition to Cheung, Tyler Schultz was another Theranos whistleblower.  

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Holmes has plead not guilty to two counts of conspiracy to commit wire fraud and nine counts of wire fraud. If convicted, Holmes faces a maximum sentence of 20 years in prison, and a fine of $250,000, plus restitution, for each count of wire fraud and each conspiracy count. 

Attorneys for Holmes did not immediately return FOX Business' requests for comment. 

Another Theranos insider the government plans to call on to testify is Daniel Edlin, a project manager who reported directly to Holmes, worked on the Walgreens partnership, and was friends with Holmes’ brother, Christian.

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