Theranos Boasted of ‘Highest Levels of Accuracy' in Mailings to Rupert Murdoch and Other Investors

Drew Angerer | Bloomberg | Getty Images
  • Daniel Edlin, a former Theranos project manager, testified about preparing demonstrations for investors including media mogul Rupert Murdoch.
  • Jurors were shown an investment binder that was sent to Murdoch, one section read "Theranos offers tests with the highest levels of accuracy.”
  • Theranos was once valued at $9 billion, investors dumped more than $900 million in the now defunct startup.

SAN JOSE, CALIF. -- Theranos sent binders claiming the healthcare company had "the highest levels of accuracy" to high-profile investors, including billionaire Rupert Murdoch, according to court testimony on Tuesday.

Elizabeth Holmes once had some of the most powerful business leaders in America backing her start-up, Theranos. The revelations emerged in the seventh week of Holmes' criminal fraud trial in San Jose.

Daniel Edlin, a former project manager recruited by Holmes' brother Christian, testified he would prepare binders on Theranos to send to investors "based on an approved checklist of items," adding "Elizabeth asked to review them." Once Holmes approved them, Edlin testified, he would send the binders to the investors.

Jurors were shown the investment binder sent to Murdoch, who invested $125 million in Theranos. One section of the binder read: "Theranos offers tests with the highest level of accuracy." Another section said the blood-testing technology "generates significantly higher integrity data than currently possible."

Even though the Fox and News Corp. founder lost his investment in Theranos, it didn't have a major impact on Murdoch's overall wealth. Today he's estimated to be worth $9.4 billion according to the Bloomberg Billionaires Index.

In an email from January 2015, Holmes wrote to Murdoch: "It was wonderful to have you here today. I so look forward to the opportunity to continue our conversations, including one day a more detailed conversation on China… [It] would be an honor to have you be part of our company."

Murdoch responded: "Thanks Elizabeth. Enjoyed every minute of it. Any blood results? See you soon, Rupert."

The next day, a Theranos scientist emailed Murdoch's blood test results to Edlin and Daniel Young, a Theranos vice president. "CO2 is run way earlier than usual, so it's a bit high...what do you want to do with it?" the scientist wrote in an email. "We have no sample for rerun since it was a short draw." Edlin testified they couldn't rerun the test because they didn't draw enough blood from Murdoch.

Holmes secured more than $900 million from investors over the course of a decade. Her healthcare company promised to run hundreds of tests with just drop or two of blood. But in 2015 former Wall Street Journal reporter John Carreyrou published a series of investigative reports revealing the inaccuracies of the blood tests.

"I do recall that investment binders were sent to [Murdoch]," Edlin said.

"Did you have a role in preparing or sending those investment binders?" John Bostic, an assistant U.S. attorney, asked.

"I don't remember," Edlin said.

Murdoch is on the list of possible witnesses to testify for the government. A spokesperson did not immediately respond to CNBC's request for comment.

Prosecutors also questioned Edlin about Holmes' romantic relationship with Ramesh "Sunny" Balwani, the company's president and COO and her second in command.

"I was in meetings where Sunny said that he would defer to Elizabeth on certain things and generally Elizabeth was the CEO," Edlin said. "She had kind of the final decision making authority."

According to unsealed court documents Holmes' attorneys filed, part of her defense strategy may be to pin the blame on Balwani, who is being tried separately next year. Defense attorneys for Holmes allege that Balwani controlled and manipulated Holmes physically and mentally. Balwani categorically denies the allegations.

Holmes and Balwani didn't disclose their relationship to many investors, board members and employees at Theranos. Edlin testified he first heard about the pair being romantically involved while he was at Duke University with Holmes' brother.

"And when you were working at the company were you aware they were in a relationship?" Bostic asked.

"Yes," Edlin said.

"Was Ms. Holmes living with Mr. Balwani at the time?" Bostic asked.

"Yes," Edlin said.

"During those interactions was there anything that stood out in your mind about the way Ms. Holmes and Mr. Balwani acted together?" Bostic asked.

"It was always more of a relaxed setting outside of work," Edlin said. "Didn't really discuss work. It was much more relaxed, social."

Edlin's testimony continues on Wednesday.

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