The Theranos investor details his frustration with Elizabeth Holmes


(Bloomberg) – Elizabeth Holmes became so irritated with a probing investor in Theranos Inc. that she offered to pay him more than five times what she paid for her dues to leave, she testified.

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Alan Eisenman, a former Houston-based finance manager and financial planner, told jurors in Holmes’ criminal trial that he tried in vain for years to get direct answers on the blood test startup, only to see it eventually collapse in 2018 while it was still. holding its stake of approximately $ 1.2 million.

Eisenman’s testimony that he was more “proactive” than other stakeholders contrasts with previous witnesses who have managed or promoted much larger investments – including nine-figure amounts offered by some of the richest families in the United States – while accepting for face value what Holmes said in conversations and prospectus materials.

Holmes is accused of raising more than $ 700 million by lying about Theranos technology capability, and the trial in San Jose, California is in its ninth week.

Read More: Holmes met ultra-wealthy supporters through Kissinger’s attorney

When Eisenman first heard about Theranos from a consultant in the Holmes family, he said, he was put in direct contact with the young entrepreneur who had left Stanford University to devote himself to revolutionizing healthcare technology.

At first, he said, Holmes was chatty, falling into a 2006 conversation that he spoke with Oracle Corp. co-founder Larry Ellison on a weekly basis and that the billionaire would invest about $ 20 million in a funding round. Holmes predicted “jaw-dropping” business models, including 2008 revenue of $ 200 million, and said the company was talking to Morgan Stanley about an initial public offering, Eisenman said.

But as time went on, information was more difficult for Eisenman to obtain. She said Holmes got so annoyed with her investigation that she offered to buy it from her location in Theranos – and then she stopped responding altogether. “We do not do quarterly calls with our other investors, many of whom have invested much larger sums than you,” Holmes wrote to Eisenman in an email from 2010. “We acknowledge that you have been an investor for some time and , if we proceed with the transaction we propose, we can provide you with a> 5x return on your investment in Theranos. ” In 2012, Eisenman said he attempted to contact Theranos board member Donald Lucas to find out what was going on. “This wasn’t taken very well by Elizabeth – I was trying to get around her,” Eisenman said.

“There was no information from the company,” Eisenman said. “For me this is a sign of difficulty”. However, in 2013, Eisenman said he considered investing more money. This time, instead of being shot down, he was warmly courted by Holmes’ boyfriend, Theranos president Ramesh “Sunny” Balwani, who was raising money for the company. It was “incredibly surprising” that Balwani tipped “180 degrees” and was no longer “hostile” when Eisenman expressed interest in upping the ante, the witness recalled.

Balwani faces a separate trial on the same charges as Holmes and has pleaded not guilty. His attorney, Jeffrey Coopersmith, declined to comment on Eisenman’s testimony.

In October 2014, Eisenman’s relationship with Theranos became controversial again as he tried to follow up on a report from a UBS investor who raised red flags about the company’s business partnership with Walgreens and suggested that Holmes’ blood analyzers could be less reliable than traditional test methods. Balwani at first dismissed the investor report as uninformed and then told Eisenman to stop texting him every day, he said.

With his “suspicions” heightened, Eisenman was ready to dump his Theranos shares, which he claimed had tied up a “significant amount” of his net worth. He said he learned from Balwani that the company had no plans for a liquidity event, contrary to what he was led to believe, and was stuck with his stake.

“It’s really unfair to play this cat and mouse game with me,” Eisenman wrote to Holmes and Balwani in March 2015. Nine years after his initial investment, he wrote, “I can’t make a rational decision whether to sell or keep the my stock with the lack of information you provided. “” Your emails are offensive, full of inaccurate claims and a waste of our time, “wrote Balwani. “Our next reply to this email and all your future emails will come from our attorney.”

(Updates with testimonials)

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