Former U.S. Secretary of Defense James Mattis on September 03, 2019 in New York City.
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SAN JOSE, CALIF — Former U.S. Defense Secretary General James Mattis testified on Wednesday that as a board member at Theranos he was “frankly amazed” at what was possible at first but later became disillusioned with the company.
“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 former Theranos CEO Elizabeth Holmes.
Mattis, a retired four-star general, served on Theranos’ board of directors from 2013 until December 2016., and was the first high-profile witness 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 was the seventh witness the government called to testify in the case. Holmes is fighting 12 charges of wire fraud and conspiracy in connection with misleading investors and patients. She has pled not guilty.
‘I was not a medical person’
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.” Mattis revealed he invested $85,000 in Theranos and was paid $150,000 to serve on its board.
“Was that a significant investment for you?” John Bostic, an assistant U.S. attorney asked.
“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, 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.
