Holmes Jury Hears Her Spin Fortune Writer Who Made Her Famous
Holmes Jury Hears From Journalist Who Vaulted Her to Fame
(Bloomberg) -- The former Fortune journalist whose magazine cover story profiling Elizabeth Holmes helped vault the Theranos Inc. founder to fame testified at her criminal trial that he was awed by “this remarkable company and its remarkable founder.”
Prosecutors claim the favorable portrayal of the blood-testing startup by Roger Parloff in his June 2014 story, “This CEO Is Out for Blood,” was used by the young entrepreneur to promote Theranos technology to investors as part of a scheme to defraud them of hundreds of millions of dollars.
Several segments of the journalist’s recorded interviews of Holmes were played in court Thursday to make the government’s case that she crossed the line from hype to deceit in presenting herself as a health-care innovator.
One snippet features Holmes telling Parloff her devices can run as many as 1,000 different tests off tiny blood samples.
“It’s so incredible,” Parloff says.
In another recording, Holmes assures the writer that the compact analyzer developed by Theranos is just as reliable as conventional larger machines made by competitor Quest Diagnostics Inc.
Prosecutors have put on extensive evidence to show that when Theranos technology failed to produce accurate results, the startup relied on analyzers from other companies without telling patients, doctors, business partners and investors. Parloff said Holmes never told him about the practice.
Jurors also heard, in Holmes’s own voice, what prosecutors have highlighted as one of her most brazen lies: that Theranos analyzers were being used by the U.S. military. The machines are being used in “military-specific applications” she says on one of the recordings, explaining her passion about the military use. “It is our way to serve,” Holmes says.
After the Fortune story, Holmes was the subject of glowing write-ups by Forbes, Inc., the New Yorker and T: The New York Times Style Magazine. At trial, investors who said they were misled by Holmes have repeatedly pointed to Parloff’s story -- which was included in promotional materials she sent to prospective shareholders -- as influential in their decisions to buy Theranos shares. Those investors “relied on it to their detriment,” Parloff said in a court filing.
In December 2015, after reporting by the Wall Street Journal about problems at Theranos triggered an unraveling of the company, Parloff wrote a follow-up to his original story entitled, “How Theranos Misled Me.”
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