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Holmes cross-examined in Theranos trial

Jody GodoyReuters
Elizabeth Holmes has pleaded not guilty to nine counts of wire fraud and two counts of conspiracy.
Camera IconElizabeth Holmes has pleaded not guilty to nine counts of wire fraud and two counts of conspiracy. Credit: AP

A prosecutor has cross-examined Theranos founder Elizabeth Holmes about her relationship with former romantic and business partner Ramesh "Sunny" Balwani, in an apparent attempt to counter Holmes' claims that he had been abusive.

Holmes, 37, testified on Monday that the relationship had a pervasive impact on her life during the time when prosecutors say she committed fraud.

Prosecutors say Holmes lied about the effectiveness of the technology at the now-defunct start-up, claiming it could run diagnostic tests more quickly and accurately than traditional lab testing.

The former Silicon Valley executive has pleaded not guilty to nine counts of wire fraud and two counts of conspiracy.

Prosecutor Robert Leach on Tuesday showed Holmes texts between her and Balwani that he said showed them expressing love for each other, and had her read aloud the exchanges.

"I prayed from the bottom of my heart for you," Balwani wrote in one exchange in 2015.

Leach also walked Holmes through text exchanges where Balwani, who was Theranos' chief operating officer, expressed opinions about problems at the company. Holmes agreed that Balwani had not hidden his views from her.

Holmes testified last week that Balwani was in charge of certain aspects of the company, including financial projections that were shared with investors.

She said on Monday she did not question him as she should have, because he had taught her "everything I thought I knew about business".

Balwani, 56, has "categorically" denied the abuse allegations, calling them "false and inflammatory."

Balwani is also charged with fraud and will stand trial separately.

Once valued at $US9 billion, Theranos vaulted Holmes to Silicon Valley stardom. The company collapsed after the Wall Street Journal published a series of articles starting in 2015 that suggested its devices were flawed and inaccurate. She was indicted in 2018.

Earlier on Tuesday, Leach questioned Holmes about actions Theranos had taken in response to then-Journal reporter John Carreyrou's stories about Theranos' technology.

Holmes said the company's response to his reporting was a "disaster" and admitted trying to quash it.

Carreyrou authored Bad Blood, which chronicles the rise of the company that Holmes started at age 19 and describes retaliation against former employees after they raised concerns about Theranos' devices.

Holmes denied trying to retaliate against two of those employees, but she admitted concerns expressed by former Theranos lab employee Erika Cheung were later validated by regulators.

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