Former Safeway CEO says Theranos delays raised red flags as emotional juror is dismissed from case

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Former Theranos CEO Elizabeth Holmes arrives for a hearing at a federal court in San Jose, California, July 17, 2019.
Stephen Lam | Reuters

SAN JOSE, CALIF. — Former Safeway CEO Steve Burd on Wednesday testified in the Elizabeth Holmes criminal fraud trial, saying repeated delays with Theranos’ blood-testing machine raised red flags about his company’s failed multi-million dollar partnership with the healthcare startup.

“Deadlines were continuing to be missed and we often weren’t given an explanation for that,” Burd told the jury. “I kept asking ‘Give me some details here.’ So that was the frustrating part. We always tried to help them any way we could.”

Burd’s testimony came on the same day that a juror in the trail disclosed that she would have a difficult time sending Holmes to prison, prompting the judge to excuse her from the case.

Safeway spent over $300 million to build out clinics in hundreds of its grocery stores in anticipation of the blood-testing technology. The idea of the partnership being that “while you’re shopping and before you leave you’re gonna get the results of that blood test,” Burd said.

Burd served as CEO of Safeway for two decades. He testified that he was initially charmed by Holmes and her vision to create cheaper and faster blood testing technology for his customers.

“I was very impressed,” Burd said. “There are very few people I had met in the business that I would actually say are charismatic. She was charismatic, she was very smart and she was doing one of the hardest things you can do in a business, and that’s to create an enterprise from scratch.”

The former Theranos CEO is fighting 12 counts of wire fraud and conspiracy to commit wire fraud. Federal prosecutors allege Holmes and her top executive, Ramesh “Sunny” Balwani, engaged in a multi-million dollar scheme to defraud investors and patients. Holmes and Balwani have pleaded not guilty.

Burd testified that he viewed the partnership with Theranos as an opportunity for Safeway to expand into the healthcare world. However, repeated delays with the miniLabs, Theranos’ blood-testing machine, raised red flags.

Burd testified that Holmes demonstrated the device at a board meeting. They ran a prostate-antigen test on a board member. Burd recalled that “blood was drawn, it went into the machine and we never got a result.”

Burd also testified that Holmes never disclosed to him that she was in a romantic relationship with Balwani.

“It just raises the question of what else is hidden,” Burd said.

‘It’s really hard for me,’ says juror

Burd’s testimony came on the heels of the judge excusing juror No. 4. The juror said she was Buddhist and expressed significant concern and anxiety about the topic of punishment.

“It’s really hard for me,” the juror told the judge. “I’m thinking what happened if she has to be there for a long, long time. It’s my fault, and I feel guilty for that.” The juror said she believes in love, compassion and forgiveness.

“Your responsibility as a juror is to only decide the facts of the case, you are not to determine any punishment at all,” U.S. District Court Judge Edward Davila said. “That’s for the court to decide. That’s not your decision.”

NBC News Legal Analyst Danny Cevallos said having a juror excused because they demonstrate overwhelming sympathy for a defendant is “incredibly rare.”

“Maybe we should have seen this coming,” Cevallos said. “After all, Elizabeth Holmes successfully charmed some of the highest-profile, most-respected individuals, including Henry Kissinger, George Shultz and James Mattis. What’s particularly amazing is that she’s had this effect on the jurors, without saying a word, by just sitting there at the defense table.”

This was the second juror to be excused from Holmes’ trial.

In September, Davila excused a 19-year-old woman for financial hardships. There are now three alternate jurors left from the original five.

Cevallos warned that losing too many alternate jurors runs the risk of a mistrial.

“That would have been a wonderful juror for the defense to keep,” Cevallos said. “I’m sure they are lamenting the loss of a juror who has grown an emotional attachment to Elizabeth Holmes.”

Her replacement, alternate juror No. 2, expressed similar uneasiness after being seated on the main bench. The juror said she had concerns about how her role deciding a verdict would affect Holmes’ future.

“She’s so young,” the juror said while looking at Holmes. “I don’t know if I’m 100% ready to participate in something like this, being English is not my first language, so I don’t know.”

Davila reminded the juror she would not be responsible for possible punishment in the case and a diverse jury is important. Federal prosecutors and defense attorneys for Holmes agreed she can stay on the jury.

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