James Mattis testifies he invested $85,000 in Theranos, ended up feeling ‘disappointed’

September 24, 2021

Testifying on Wednesday, September 22, in the San Jose, California-based trial of former Silicon Valley star Elizabeth Holmes, former Defense Secretary, General James Mattis, said that, as a board member at Theranos, he was “frankly amazed” at what was possible at first—but later became disillusioned with the company, reports NBC News.

“We were putting our reputation at risk, and reputational risk is something I pay a lot of attention to, given my background,” Mattis said on the stand during the trial of Theranos founder and CEO Elizabeth Holmes.

Holmes is the disgraced founder of the blood testing start-up Theranos—a company she started at the age of 19 in 2003. Although the company touted that it could use just a pinprick of blood to rapidly diagnose any illnesses in a customer’s body, the technology was exposed as spurious.

Holmes now is standing trial for two counts of conspiracy to commit wire fraud and ten counts of wire fraud. She has not pled guilty.

According to NBC News, Mattis, a retired four-star general, invested $85,000 in the now-defunct company and was paid $150,000 to serve on Theranos’ board of directors from 2013 until December 2016.

He was the first high-profile witness to appear since the trial kicked off last month. The jury listened intently to his testimony, which lasted three hours.

“Looking back now I’m disappointed at the level of transparency from Ms. Holmes,” Mattis said, adding “we were being deprived of fundamental issues.”

Mattis recounted meeting Holmes after an event in San Francisco where she pricked his finger to demonstrate her blood-testing technology. He said his first impression of the CEO was “sharp, articulate, committed,” but he was at first hesitant to accept Holmes’ invitation to join the board.

“I asked her ‘why,’ I was not a medical person,” Mattis said. He recalled that Holmes told him she wanted him on the board “to help her build a corporate culture out of building elite teams, how to get commitment out of people, it was about management, about personnel.”

Mattis eventually agreed to join, testifying that he went to a bookstore “and picked up two books and two pamphlets to educate myself on being a board member.”

Referring to the $85,000 that Mattis invested in the new company, Assistant U.S. Attorney John Bostick asked him, “Was that a significant investment for you?”

 “For someone who had been in government for 40 years, yes,” Mattis said.

Other high-profile government figures on the board included former secretaries of state Henry Kissinger and George Shultz.

During cross-examination, NBC News reports, defense attorneys pointed to an email from February 2015 in which Holmes wrote to Mattis stating that she and Ramesh Balwani, her top executive and for a time romantic partner, wanted to get paid in stock options rather than a salary.

“At the time I thought she had strong belief in her company,” Mattis said.

Attorneys for Holmes also pointed out that the board members were sophisticated and knowledgeable enough to express their opinions and ask questions if they had concerns. Mattis agreed.

Defense attorneys also discussed Holmes’ eventual need for a security team. “You thought that providing that kind of security for her was necessary?” Kevin Downey, a defense attorney for Holmes asked.

“Secretary Shultz called me in with a concern that her public profile was going to be a danger for her,” Mattis recalled. Mattis introduced Holmes to his longtime chief bodyguard.

“I deferred to her, I thought she had good judgment and Secretary Shultz probably knew more about the civilian world and what the threats were for people who end up on the front page of a magazine,” Mattis said.

Research contact: @NBCNews

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