1 00:00:00,000 --> 00:00:05,000 JUDY WOODRUFF: Elizabeth Holmes, the founder of the former health technology company Theranos, 2 00:00:05,280 --> 00:00:10,280 faced cross-examination today for the first time in the fraud case against her. 3 00:00:10,720 --> 00:00:15,720 Federal prosecutors have called 29 witnesses over 11 weeks, in an attempt to reveal the 4 00:00:16,720 --> 00:00:21,720 alleged deception that led investors and patients to believe the company 5 00:00:21,760 --> 00:00:26,760 could conduct a range of tests using just a few drops of blood. The start-up collapsed in 2018. 6 00:00:28,960 --> 00:00:32,160 Rebecca Jarvis is the chief business, technology, 7 00:00:32,160 --> 00:00:37,160 and economics correspondent for ABC News and the host of "The Dropout," 8 00:00:37,280 --> 00:00:42,280 a podcast about Holmes and the ongoing trial, which is being held in San Jose. 9 00:00:43,760 --> 00:00:46,400 Rebecca Jarvis, thank you very much for being with us. 10 00:00:47,120 --> 00:00:52,120 The defense has only begun its side. The prosecution has spent, what, almost two months 11 00:00:54,320 --> 00:00:59,320 making this case or even longer. If you can, sum up what the prosecution was trying to do. 12 00:01:00,720 --> 00:01:05,720 REBECCA JARVIS, ABC News: Well, Judy, the prosecution has shown now in meticulous detail 13 00:01:06,080 --> 00:01:10,160 their allegations that Elizabeth Holmes was the one in charge of her company, 14 00:01:10,160 --> 00:01:15,160 Theranos, that she's the reason investors, patients and doctors were defrauded here. 15 00:01:15,760 --> 00:01:20,760 And they have shown us individuals, including investors, patients. We have heard from doctors. 16 00:01:22,320 --> 00:01:27,320 We have heard from scientists inside the company. We have heard from scientists outside the company, 17 00:01:27,360 --> 00:01:32,360 in meticulous detail, laying out this fraud and putting Elizabeth Holmes at the front of it. 18 00:01:32,400 --> 00:01:36,240 JUDY WOODRUFF: And she has just, as we said, taken the stand, 19 00:01:37,040 --> 00:01:42,040 I guess just before Thanksgiving. She's only - - we have only heard from her for a few days, 20 00:01:43,680 --> 00:01:48,680 but it's been dramatic, including her discussing being raped in college. 21 00:01:49,840 --> 00:01:53,744 Give us a sense of what she's saying and what the reaction's been. 22 00:01:53,744 --> 00:01:56,160 REBECCA JARVIS: Well, Judy, this has been explosive testimony. 23 00:01:56,160 --> 00:02:00,640 We have barely heard from Elizabeth Holmes since the charges were first brought and, 24 00:02:00,640 --> 00:02:05,200 frankly, have never heard some of the things she's been saying on the stand, 25 00:02:05,760 --> 00:02:10,480 and seen here in the way she's behaved on the stand, getting emotional, talking about, 26 00:02:10,480 --> 00:02:15,480 as you mentioned, being raped as a college student at Stanford, that being, according to her, one of 27 00:02:16,160 --> 00:02:21,160 the reasons she decided to drop out of Stanford and begin her blood testing company, Theranos. 28 00:02:21,440 --> 00:02:26,440 And she's also raised these allegations which we thought might come up at this trial against her 29 00:02:27,360 --> 00:02:32,360 former boyfriend and COO, Sunny Balwani, alleging years of abuse in the relationship, alleging 30 00:02:33,840 --> 00:02:38,840 it was emotional, it was physical, he dictated everything from her schedule to way that she ate. 31 00:02:40,480 --> 00:02:45,480 Now, these are claims he has denied vociferously. But these are claims that she raised. And they are 32 00:02:46,880 --> 00:02:51,600 something that certainly the jurors now are going to have to think about as they think 33 00:02:51,600 --> 00:02:56,400 about the bigger picture question, which is, did this woman intend to commit fraud? 34 00:02:56,400 --> 00:03:01,200 JUDY WOODRUFF: And what I have read, Rebecca, is that she's walking this fine line, because, 35 00:03:01,200 --> 00:03:06,200 on the one hand, she's saying she was heavily influenced by him over a period of time, but then 36 00:03:07,840 --> 00:03:12,840 she's now saying that he was not the reason she made these decisions as the head of the company. 37 00:03:13,920 --> 00:03:18,000 REBECCA JARVIS: Well, and that's a really important point that you raised, Judy, 38 00:03:18,000 --> 00:03:23,000 because she was asked point blank by her own attorney, did Sunny Balwani dictate what you said 39 00:03:24,000 --> 00:03:29,000 to investors? Did he dictate what you shared with Walgreens, your biggest customer, Walgreens 40 00:03:30,640 --> 00:03:35,640 being the place, the one place where Theranos tests got in front of patients in this country? 41 00:03:36,720 --> 00:03:41,720 So she said point blank, no, that he was not a part of those decisions. 42 00:03:41,760 --> 00:03:46,760 That is the fraud here. The fraud is not about the rest of these conversations and 43 00:03:46,880 --> 00:03:51,880 allegations, though they might make the jury feel more connected to her. 44 00:03:52,560 --> 00:03:56,640 Of course, they have sat in front of her now for many weeks. She's been there in the trial with 45 00:03:56,640 --> 00:04:00,880 her family sitting behind her, her partner. They have been told that she's a new mom, 46 00:04:00,880 --> 00:04:05,880 she has a newborn baby. And so they have really seen this woman for an extended span of time. 47 00:04:06,240 --> 00:04:10,960 JUDY WOODRUFF: And, Rebecca, of course, whatever the jury decides will have 48 00:04:10,960 --> 00:04:15,600 an enormous impact on her. She could face up to 20 years in prison. 49 00:04:15,600 --> 00:04:20,600 But it's also seen as a case important for the future of Silicon Valley. How so? 50 00:04:20,640 --> 00:04:25,280 REBECCA JARVIS: Well, it raises these questions about faking it until you make it. 51 00:04:25,280 --> 00:04:29,840 There are definitely people who believe that this is endemic to Silicon Valley, 52 00:04:29,840 --> 00:04:33,120 that this is the way people behave in Silicon Valley. And then there are those 53 00:04:33,120 --> 00:04:37,600 who think this is absolutely not the case. The bottom line here is, this is a woman who 54 00:04:37,600 --> 00:04:42,160 was able to raise more money than almost any other female founder. She became one of the 55 00:04:42,160 --> 00:04:46,800 wealthiest self-made women in the world. At one point, her company was worth $9 billion. 56 00:04:47,440 --> 00:04:52,440 So it does raise these questions about how -- what standards we hold founders to. What is important 57 00:04:53,840 --> 00:04:58,840 when a device like a blood testing device gets in front of anybody at a Walgreens store? 58 00:05:00,160 --> 00:05:05,160 JUDY WOODRUFF: And, finally, any sense of what we can expect next from the defense? 59 00:05:05,440 --> 00:05:10,160 REBECCA JARVIS: Well, we have certainly now heard this cross-examination today from the 60 00:05:10,160 --> 00:05:14,880 prosecution. And they have raised a number of text exchanges between Elizabeth Holmes 61 00:05:14,880 --> 00:05:18,240 and her former boyfriend and COO, Sunny Balwani. 62 00:05:18,240 --> 00:05:22,080 The defense is going to have to come back strong here, because the prosecution has 63 00:05:22,080 --> 00:05:27,040 presented a lot of very important evidence that really links -- especially today, 64 00:05:27,040 --> 00:05:31,280 that really links Elizabeth Holmes directly to the allegations of fraud. 65 00:05:31,280 --> 00:05:36,280 JUDY WOODRUFF: Rebecca Jarvis watching this riveting trial. 66 00:05:37,040 --> 00:05:39,200 Thank you very much, Rebecca. We appreciate it. 67 00:05:39,200 --> 00:05:44,200 REBECCA JARVIS: Thank you, Judy.