The reporter recalls the pivotal story of Elizabeth Holmes’ stardom
San Jose, California. — The Fortune Magazine reporter whose cover story helped turn Elizabeth Holmes into a sensation in Silicon Valley Thursday described how he ended up looking like a pawn in the entrepreneur’s promotion of what she called revolutionary blood testing technology.
Roger Barloff’s appearance on the witness stand was a pivotal moment in Holmes’ 10-week criminal fraud trial. Federal prosecutors are preparing to conclude their case, which aims to prove that Holmes defrauded investors, retailers and seasoned patients when she was CEO of Theranos, a startup she founded in 2003 when she was just 19.
After the prosecutors rest from their case, Holmes’ lawyers will have their turn to say that while Holmes made mistakes in pursuit of her bold ambitions, she committed no crimes.
Holmes, now 37, may take a stand in her own defense; She faces up to 20 years in prison if convicted by a jury. She’s already had an amazing meltdown since Barloff’s story was published in June 2014 on the cover of Fortune magazine.
This article, with the headline, “This CEO Is Abroad for Blood,” propelled fundraising efforts that once estimated Holmes’ fortune at $4.5 billion — just a few years before the scandalous collapse of Theranos in 2018.
Barloff testified that he began working on the story in April 2014 shortly after contacting a representative of David Boyce, a prominent attorney who worked for Holmes and became a member of Theranos’ board of directors.
Jurors have already heard and seen evidence that Holmes used Barloff’s article to portray herself as a visionary in the mold of Apple founder Steve Jobs. Holmes has repeatedly promised that her breakthrough would come through a blood test device called the Edison, which she likened to a laboratory in a zipped box that could screen hundreds of potential health problems by taking a few drops of blood with a finger prick.
Prosecutors used Barloff’s testimony to play back excerpts from about 10 hours of recordings he kept of his interviews with Holmes, with the goal of supporting their claims that she was running a complex scam rather than a startup.
The recordings capture Holmes making statements about business relationships and blood test successes that weren’t true at the time she was doing, based on evidence already presented at trial. It also emailed Parloff documents that made it appear as if Theranos technology had been approved by big drugmakers like Pfizer that had already rejected Holmes’ initiatives.
The audio excerpts also show how persuasive Holmes can be.
“It sounds amazing,” Barloff told Holmes during one of the recorded conversations about her and Theranos’ development. “It’s one of those special things.”
As it did during most of the trial, Holmes stared steadily forward during the more than three hours of Barloff’s testimony.
Filled with glowing quotes from healthcare professionals and famous Theranos proponents like former US Secretary of State Henry Kissinger, Barloff Holmes’ article helped lure billionaire investors.
“It was a very compelling story,” said Daniel Moseley, an estate planning and trust attorney who earlier testified about his pivotal role in helping Theranos raise more than $400 million a few months after the Fortune article was published.
Most of that money came from a small group of Mosley’s clients – the Walton family behind Walmart, the family of former US Secretary of Education Becky DeVos and family associated with media conglomerate Cox Enterprises – after Kissinger asked Mosley in July 2014 to take a closer look at Theranos.
Soon after a series of explosive articles in the Wall Street Journal revealed potentially serious flaws in Theranos’ blood-testing technology, Parloff issued a panicked December 2015 retraction of the original cover story.
This retraction, set by the headline “How Theranos misled me,” was not presented as evidence at trial.
While Barloff voluntarily cooperated with the government in its case against Holmes, he resisted efforts by Holmes’ attorneys to get him to disclose other information he collected while writing his 2014 story and in follow-up interviews with Holmes in 2015. Barloff and his attorneys successfully argued that most of this information should not be disclosed. Under laws that protect the media.
The issue of reporter privilege was raised again Thursday when John Klein, one of Holmes’ attorneys, questioned Barloff. The reporter told Klein that he was limited in what he could present anyway because he took most of his handwritten notes from his interviews with Holmes a year after they happened, following a standard procedure in Fortune magazine.
Barloff is scheduled to return to the podium for further questioning on Friday.
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