Holmes gets rehearing after disheveled government witness shows up at her home

Enlarge / Elizabeth Holmes, founder of Theranos Inc., arrives in federal court in San Jose, Calif., on Thursday , September 1st. Getty | Bloomberg

On the brink of sentencing for her four fraud convictions in January, disgraced Theranos founder Elizabeth Holmes will get a rehearing in which the judge handling the criminal case will assess the allegations "limited, but serious" claims that government prosecutors manipulated the testimony of a key witness, former Theranos lab director Adam Rosendorff.

The rehearing of witnesses is scheduled for October 17, the day Holmes was previously scheduled to be sentenced. His sentencing is now delayed, with a possible postponement between November and January.

The new evidence hearing stems from an unusual incident in August, in which a supposedly distraught Rosendorff showed up at Holmes' home to try to talk to him. According to court documents, Rosendorff first called Holmes' lawyer around 5 p.m. on August 8 and left a voicemail requesting an arranged meeting with Holmes at her home. The lawyer has a voicemail recording. About an hour after leaving this message, Rosendorff—having had no response from the attorney—showed up at Holmes' home. Holmes did not speak with Rosendorff, but his partner, William Evans, did.

Evans says Rosendorff appeared at the front door of their home, looking disheveled and anxious. His shirt was untidy, his hair messy and his voice shaky. Although Evans said he tried to get Rosendorff out, the former lab director apparently continued to speak, saying he felt guilty for the way things went during the trial and that he was losing sleep over it. He thought if he could just speak directly with Holmes it might be a "healing" for both of them.

Key to the judge's interest in Evans' account of the exchange, Rosendorff allegedly suggested that government prosecutors manipulated his testimony. Specifically, Rosendorff said that while he was on the stand, government prosecutors worked to make everyone at Theranos "look bad" and things at the company look worse. than they were. It was, Rosendorff would have confessed, what weighed on him and kept him awake at night. He added that he tried to answer all questions honestly during the trial.

Fishing for the truth

With this information, Holmes' attorneys filed a motion for a new trial. In response, government prosecutors submitted an affidavit from Rosendorff in which he said he "answered all questions put to me fully, accurately, and truthfully to the best of my ability." He also said, "I have no reason to believe that the government has misrepresented or created a false impression about the conduct of Ms. Holmes or Mr. Balwani at Theranos."

The judge handling the case, U.S. District Judge Edward Davila, expressed skepticism about the whole situation, even wondering if it was a "fishing expedition" for the defense in order to to get more evidence. He also noted that Rosendorff's testimony was likely irrelevant to the charges Holmes was convicted of, which relate to fraudulent investors. As the director of the lab who handled clinical testing directly, Rosendorff's testimony is particularly relevant to the charges of defrauding doctors and patients, on which Holmes was acquitted.

But, Judge Davila also noted that a star witness appearing at a defendant's home is highly unusual and that the allegation of government misconduct is serious. As such, he agreed to postpone sentencing and hold a hearing of witnesses. But, he would have warned that the audience should be narrow, focused and short.

"I don't think it will be a long process," Law360 quoted him as saying. Speaking directly to Holmes' attorney, he added, "It's not going to be a fishing trip."

"Really, what I want to know is if [Rosendorff] was telling the truth?"