The government has alleged Holmes used the media, and Parloff’s Fortune Magazine story titled “This CEO is Out for Blood” in particular, to perpetuate a scheme to defraud investors.
Parloff’s anticipated testimony comes as the government has said it is close to resting its case against Holmes. She faces a dozen counts of federal fraud and conspiracy charges, and up to 20 years in prison over allegations that she knowingly misled doctors, patients and investors in order to take their money. Holmes has pleaded not guilty.
Holmes was for a time upheld in the media as a rare female founder who’d raised significant sums of capital and driven her startup to an eye-popping $9 billion valuation. Parloff’s story was the first of many laudatory cover stories of Holmes and has been shown repeatedly in the San Jose courtroom. Prosecutors have tried to show jurors how the article, which contained false and misleading statements, was circulated to stakeholders and how it played a role in validating the company to outsiders.
“Great article, great pictures, the whole thing,” testified Lucas.
“As much as I’d like to say that Holmes lied to me, I don’t think she did. I do believe I was misled — intentionally — but I was also culpable, in that I failed to probe certain exasperatingly opaque answers that I repeatedly received,” wrote Parloff, who was formerly an attorney.
The government said in a court filing that it will not seek to admit the follow-up column but “reserves the right to introduce that article for a non-hearsay purpose should the defense open the door by questioning Parloff about statements he made in that article.”
For weeks, attorneys have been wrangling over what Parloff can testify to, and what information he can be compelled to provide. While Parloff has turned over audio recordings and notes from his interviews with Holmes and former Theranos COO Ramesh “Sunny” Balwani as part of a grand jury subpoena order, he successfully fought a trial subpoena order by Holmes’ defense team for notes and recordings from interviews he conducted with others for his story. (Balwani faces the same charges as Holmes; his criminal trial is slated to begin next year. He has also pleaded not guilty.)
Holmes’ attorneys argued those notes may serve to refute the claims that Holmes misled Parloff, and through him, investors. Judge Nathanael Cousins, who presided in a hearing on the matter, called the quest for Parloff’s additional notes “a fishing expedition as to whether there might be material out there that could be helpful to the defense.”
Parloff’s remorse over the story has been well-documented.
The statement continued, “Our writer asked Elizabeth Holmes to confirm complicated facts on a technical subject, not to approve publication. Our writer visited Theranos, spoke with numerous sources in and outside the company about its technology, and had his blood tested on a Theranos machine that appeared to offer credible results. If that was all a deception, then the responsibility lies with Ms. Holmes and Theranos.”