San Jose, California (CNN Business)Elizabeth Holmes, flushed and holding back tears, testified Monday that she left Stanford to launch Theranos in part because she had been raped, and said she later entered into what she alleged was an abusive relationship with the person who would become her startup’s chief operating officer.
In an emotional moment during her fourth day on the stand in her criminal fraud trial, Holmes disclosed her sexual assault at college and said she stopped attending classes in the aftermath. Holmes said she left to pour herself into building her company instead.
“I was questioning what — how I was going to be able to process that experience and what I wanted to do with my life, and I decided that I was going to build a life by building this company,” she said.
Holmes testified that she later began a professional relationship that turned romantic with former software executive Ramesh “Sunny” Balwani, who would go on to serve as COO of Theranos while they dated. She first met him in China after she graduated high school when she was 18 and he was 38. When she later disclosed to him the trauma of her rape at Stanford, she testified: “He said that I was safe, now that I had met him.”
Holmes went on to paint a picture of how Balwani both coached and controlled her, criticizing everything from the tone of her voice in meetings to her being too feminine and behaving “like a little girl.”
“He told me that I didn’t know what I was doing in business, that my convictions were wrong, that he was astonished at my mediocrity,” she said, adding that he told her that “I needed to kill the person I was” to become successful.
Holmes also alleged Balwani would “get very angry with me, and then he would sometimes come upstairs to our bedroom and he would force me to have sex with him when I didn’t want to, because he would say that he wanted me to know that he still loved me.”
In court filings unsealed ahead of the trial, Holmes’ legal team had signaled that the former Theranos CEO was likely to defend herself by claiming she was the victim of a decade-long abusive relationship with Balwani. Balwani’s attorneys have denied those allegations.
Holmes’ testimony potentially gives jurors, through her own words, a glimpse into her state of mind at the time of the alleged fraud. According to legal experts, one of the most difficult things about fraud cases is proving intent.
Holmes and Balwani were indicted on the same federal fraud charges over allegations that they knowingly misled investors, doctors and patients about Theranos’ blood testing capabilities in order to take their money. Both have pleaded not guilty and face up to 20 years in prison.
Their trials were severed after Holmes indicated she may claim she was the victim of a psychologically, emotionally and sexually abusive relationship and that, due to the nature of their relationship, she believed what she was being told about the company’s technology and its business dealings. Balwani’s trial is slated to begin early next year.
In her prior testimony on the witness stand, Holmes has admitted to some of the prosecution’s most damning allegations while offering up alternative explanations. She has attempted to sow doubt that she had any intention to deceive — a key part of what federal prosecutors are seeking to prove. She has also deflected responsibility onto others by simply naming who held certain roles at the company.
On Monday, Holmes testified extensively about how Balwani shaped how she approached her business — and how she ultimately lost faith in him.
Balwani told her that if she wanted to become a good entrepreneur, she needed to spend all her time on the business and only doing things that could contribute to making the company successful. That meant, she testified, not sleeping very much, only eating foods that “would make me pure.” Holmes’ attorney presented handwritten notes from Balwani to Holmes.
In one note, Balwani said: “Every morning I will force myself out of bed and spend 30 minutes+ (never a minute less) to write what I want from my day.” In other notes, Balwani said Holmes was going about her meetings wrong: “I will always give crisp, clean goals and feedback to my subordinates, even if they don’t like it — especially if they don’t like it.”
“He had taught me everything that I thought I knew about business and I thought he was the best business person that I knew,” she said. “I think that I didn’t question him in the way that I otherwise would have.”
Holmes said that view changed following the findings of the 2015 inspection by the Centers for Medicare and Medicaid Services that would result in the license of its California blood-testing facility being revoked and Holmes being banned from running a lab for two years.
Balwani oversaw the lab and Holmes testified that she went in thinking Theranos had one of the best labs in the world.
“He wasn’t who I thought he was,” she said. The two had a personal relationship for 13 years and a professional one for seven.
Balwani left the company in May 2016. Holmes was living with him at the time but didn’t continue her personal relationship with him after he left Theranos. Holmes testified that her brother helped her move out while Balwani was in Thailand.
After detailing Balwani’s influence, Holmes’ attorney asked her if Balwani forced her to make statements to investors, retailers, board directors and journalists that jurors have heard about in the course of this case. Holmes testifies “no” to all.
Her attorney followed up to ask, what impact, if any, did Balwani have on your work at Theranos in your view? “I don’t know. He impacted everything about who I was and I don’t fully understand that.”