Theranos Trial: Investor Who Poured $96M Into Startup Claims He Was Duped
SAN JOSE (KPIX 5) – In the fraud trial of Theranos founder Elizabeth Holmes, an investor who poured nearly $100 million into the failed startup took the stand Tuesday.
Brian Grossman, a manager for the investment firm PFM Health Sciences, took the witness stand to say he met with Elizabeth Holmes and Sunny Balwani in 2013 to talk about investing in Theranos.
Grossman said Holmes did most of the talking. She told him that Theranos devices were being used by the Department of Defense in battlefield situations and medivac units, and that several big pharmaceutical firms were using the devices in patient trials.
Other witnesses have testified both statements were false.
"This witness had decades of being a biotech analyst, and even he got duped by the claims Elizabeth Holmes and Balwani made on two occasions," said Michele Hagan, a former prosecutor and legal analyst who is following the trial.
Grossman testified that as part of his due diligence, he went to a Walgreens in Palo Alto, which at that time was one of the first to use Theranos devices to do blood tests for customers.
He said he was surprised that he did not get a finger stick blood draw, but rather a venous puncture, like any other lab would do.
Grossman said Balwani later told him it was because his doctor ordered an unusual test that Theranos wasn't doing yet.
Despite that, Grossman invested $96 million in Theranos.
"It's the old FOMO. Fear of missing out on the next Apple, the next Tesla. And they bought in to the dream, to the vision and to the product that Elizabeth Holmes was selling," Hagan told KPIX 5.
Grossman's testimony did help prosecutors establish that Holmes and Balwani were deceptive as a team, which Hagan said supports the prosecution's charges of fraud and conspiracy.