Elizabeth Holmes, the Theranos founder, with her husband, Billy Evans, outside the federal courthouse in San Jose, Calif., last week.
Elizabeth Holmes, the Theranos founder, with her husband, Billy Evans, outside the federal courthouse in San Jose, Calif., last week.Credit...Mike Kai Chen for The New York Times
Erin Griffith

SAN JOSE, Calif. — A key whistle-blower against Theranos, the blood testing start-up that collapsed under scandal in 2018, testified on Tuesday in the fraud trial of the company’s founder, Elizabeth Holmes.

The whistle-blower, Erika Cheung, worked as a lab assistant at Theranos for six months in 2013 and 2014 before reporting lab testing problems at the company to federal agents at the Centers for Medicare & Medicaid Services in 2015. Her first day of testimony revealed to a jury what those following the Theranos saga most likely already knew: The company’s celebrated blood testing technology did not work.

In a crowded courtroom, Ms. Cheung said she had turned down other job offers out of college to join Theranos because she was dazzled by Ms. Holmes’s charisma and inspired by her success as a woman in technology. Ms. Holmes said Theranos’s machines, called Edison, would be able to quickly and cheaply discern whether people had a variety of health ailments using just a few drops of blood.

“She was very articulate and had a strong sense of conviction about her mission,” Ms. Cheung said of Ms. Holmes.

Erin Woo
Erin Woo📍Reporting from San Jose, Calif.
Erin Woo
Erin Woo📍Reporting from San Jose, Calif.
Carlos Chavarria for The New York Times

Elizabeth Holmes, the disgraced founder of the blood testing start-up Theranos, stands trial for two counts of conspiracy to commit wire fraud and 10 counts of wire fraud.

Here are some of the key figures in the case →

Erin Woo
Erin Woo📍Reporting from San Jose, Calif.
Stephen Lam/Reuters

Holmes founded Theranos in 2003 as a 19-year-old Stanford dropout. She raised $700 million from investors and was crowned the world’s youngest billionaire, but has been accused of lying about how well Theranos’s technology worked. She has pleaded not guilty.

Erin Woo
Erin Woo📍Reporting from San Jose, Calif.
Justin Sullivan/Getty Images

Ramesh Balwani, known as Sunny, was Theranos’s president and chief operating officer from 2009 through 2016 and was in a romantic relationship with Holmes. He has also been accused of fraud and may stand trial next year. He has pleaded not guilty.

Erin Woo
Erin Woo📍Reporting from San Jose, Calif.
Jefferson Siegel for The New York Times

David Boies, a prominent litigator, represented Theranos as its lawyer and served on its board.

He tried to shut down whistle-blowers and reporters who questioned the company’s business practices.

Erin Woo
Erin Woo📍Reporting from San Jose, Calif.
Getty Images

The journalist John Carreyrou wrote stories exposing fraudulent practices at Theranos.

His coverage for The Wall Street Journal helped lead to the implosion of Theranos.

Erin Woo
Erin Woo📍Reporting from San Jose, Calif.
Jeff Kravitz/FilmMagic, via Getty Images

Tyler Shultz and Erika Cheung are former Theranos employees and were whistle-blowers. They worked at the start-up in 2013 and 2014.

Shultz is a grandson of George Shultz, a former secretary of state who was on the Theranos board.

Erin Woo
Erin Woo📍Reporting from San Jose, Calif.
Eric Thayer for The New York Times

James Mattis, a retired four-star general, was a member of Theranos’s board.

He went on to serve as President Donald J. Trump’s secretary of defense.

Erin Woo
Erin Woo📍Reporting from San Jose, Calif.

Edward Davila, a federal judge for the Northern District of California, will oversee the case.

Kevin Downey, a partner at the Washington law firm Williams & Connolly, is the lead lawyer for Holmes.

Robert Leach, an assistant United States attorney for the Northern District of California, will lead the prosecution for the government, along with other prosecutors from the U.S. attorney’s office.

But Ms. Cheung’s excitement faded after she witnessed actions she disagreed with in Theranos’s lab, she said. In some cases, outlier results of the blood tests were deleted to ensure that Theranos’s technology passed quality control tests. Ms. Cheung was also alarmed when she donated her own blood to Theranos and tests on the company’s machines said she had a vitamin D deficiency but traditional tests did not, she testified.

Ms. Cheung, who viewed a menu of around 90 blood tests offered by Theranos, said that despite Ms. Holmes’s promises about the Edison machines, they could process only a handful of the tests listed. The rest had to be done by traditional blood analyzers or sent out to a diagnostic company, she said.

Ultimately, Ms. Cheung resigned over her misgivings about Theranos’s testing services.

“I was uncomfortable processing patient samples,” she said. “I did not think the technology we were using was adequate enough to be engaging in that behavior.”

During Ms. Cheung’s testimony, Ms. Holmes’s lawyers objected to a wide variety of emails and other internal communications submitted by the prosecution as evidence. The two sides sparred over the rules of the arguments that could be used and the relevance of Ms. Cheung’s testimony.

“The C.E.O. is not responsible for every communication that happens within a company,” said Lance Wade, a lawyer representing Ms. Holmes.

John Bostic, a prosecutor and an assistant U.S. attorney, argued that documents showing Theranos’s internal issues were relevant to the case, regardless of whether Ms. Holmes’s name was on them.

Mr. Wade countered that Ms. Cheung had been an entry-level employee and hardly interacted with Ms. Holmes.

“To the best of our knowledge, the interview you just heard was the longest conversation she ever had with our client,” he said.

Through it all, Ms. Holmes sat quietly in a gray blazer and black dress, watching the proceedings from behind a medical mask.

Ms. Cheung’s 2015 letter to the Centers for Medicare & Medicaid Services outlining problems with Theranos’s testing triggered a surprise inspection by the agency that led the company to close its labs. Tyler Schultz, another young employee in Theranos’s lab, also shared details about the lab problems with The Wall Street Journal, which published exposés of the company. Mr. Schultz is also listed as a potential witness in the trial.

Since her role in Theranos’s demise, Ms. Cheung has become an advocate for ethics in technology. She has delivered a TED Talk about speaking truth to power and helped found Ethics in Entrepreneurship, a nonprofit that provides ethics training and workshops to start-up founders, workers and investors.