CA - Elizabeth Holmes (Theranos) Wire Fraud Thread *Guilty* #2

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Dorothy Atkins@doratki
2h

Alleged investor victim, hedge fund manager, Brian Grossman is up next. Downey says Grossman had all info about Theranos and analyzed the tech, but chose to invest despite DD gaps after having a "mind blowing" convo with Channing Robertson.

Dorothy Atkins@doratki
2h

On to alleged investor victim ex-Cravath partner Dan Mosley. Downey says Mosley wrote a memo recommending Theranos to his rich clients after reading a slide deck and talking to Holmes. But he learned a "huge amount" after and never updated his memo. ICYMI

Ex-Cravath Atty Introduced Rich Clients To Holmes, Jury Told - Law360


Dorothy Atkins@doratki
2h

Downey argues that Holmes never deceived Fortune writer Roger Parloff, and the gov't's case focuses on only small clips of their 10 hours recorded interviews.

Dorothy Atkins@doratki
2h

Downey says the gov't faults Holmes for not correcting Parloff's article, but "this is not a situation where this was a fulsome article describing Theranos' activities" and when she shared the article w/ investors, she gave Theranos investors that disclosure.

Dorothy Atkins@doratki
2h

Downey argues the last alleged victim investor, the DeVos fam investment firm, gave Theranos $100M without vetting the startup. Here's my coverage of that testimony icymi

DeVos Family Gave Theranos $100M 'On The Spot,' Jury Told - Law360
 
Dorothy Atkins@doratki
2h

Downey argues the gov't takes issue with Theranos' rev projections, b/c they incorporate deferred revenues. But investors were told in their contracts that the projections are speculative and Holmes told investors there was a risk in the Walgreens deal execution, he says.

Dorothy Atkins@doratki
2h

Downey adds that "this was not Ms. Holmes province. This was work done by Mr. Balwani." It hard to say that Holmes had any bad intent about the projections, when she didn't prepare them or make the projections' assumptions, he argues.

Dorothy Atkins@doratki
2h

Downey moves on to Theranos' demonstrations. He says there were thousands of demos, and "many dif kinds" and project manager Daniel Edlin, who helped run them, testified that he didn't think they were deceiving anyone with them.

Dorothy Atkins@doratki
2h

Downey argues that the different test demos required different reagents, and "Don't assume that because something was taken out of a room something untoward was happening."

Dorothy Atkins@doratki
2h

Downey turns to ex-Theranos team manager Surekha Gangakhedkar's testimony, and notes she quit after Balwani criticized her team, while Holmes asked her if there was anything they could do to get her to stay.
 
Dorothy Atkins@doratki
2h

Downey argues that ex-lab director Adam Rosendorff's testimony supports Holmes' good faith belief that tests were accurate and reliable, b/c he said he never signed a validation report on a test he was uncomfortable with and he thought the lab followed CLIA procedures.

Dorothy Atkins@doratki
1h

Downey argues that Rosendorff addressed Erika Cheung's concerns at the time, and Holmes took Tyler Shultz's concerns seriously and asked Daniel Young to meet w/ him repeatedly to consider them.

Dorothy Atkins@doratki
1h

Downey argues that the gov't's timeline of pregnancy-test problems was condensed and left out key details. He says Holmes received an email about a pregnancy test issue and held multiple meetings that day on it, and met w/ the lab and Rosendorff, who stopped testing the next day.

Dorothy Atkins@doratki
1h

Downey says the gov't's highlighted Holmes' brother's email about the pregnancy test issues, but it was not about accuracy, it was about a backlog. He says the gov't's arguments on other assay issues are similarly misleading and cite incomplete evidence.

Dorothy Atkins@doratki
1h

Downey argues that Rosendorff has given unreliable and inconsistent statements and his reasons for leaving Theranos. Downey adds that his emails were erratic and Holmes replied to one of his last ones that he never told her about his concerns and "as you know" her door was open.

Dorothy Atkins@doratki
1h

Downey shows a slide that says in the "post-Rosendorff era" at Theranos, Holmes was less involved with lab operational oversight, b/c Balwani stepped in and hired two temporary lab directors - one who was Balwani's dermatologist.

Dorothy Atkins@doratki
1h

Downey says he has about 20 more minutes of closings, but wants to take a break now. We'll be back in 30 mins!
 
Dorothy Atkins@doratki
1h

The jury left. Before leaving the bench, the judge clarifies this morning's discussion. He emphasizes his comments to defense counsel were q's and not suggestions about what the gov't should do in closings. Judge Davila is being super careful now that we're so close to the end.

Dorothy Atkins@doratki
1h

The vibe of the courthouse right now is like being at a holiday party, albeit without an open bar. Some ladies (not me sadly) are dressed up - one in a velvet dress - and a kind soul brought in a large bag of Ghirardelli chocolates and a box of cookies for everyone.
 
Dorothy Atkins@doratki
56m

We're back! Downey tells the jury he wants to walk through the counts, but he prefaces it by acknowledging that receiving an errant blood test result is "frustrating and upsetting" and nobody wants that. But he points out the gov't presented no stats on the number of bad results.

Dorothy Atkins@doratki
56m

Downey says there were roughly 8 million patients who took Theranos blood tests, but the gov't called only 3 patients and 2 doctors who testified on 3 assays and 7 test results.

Dorothy Atkins@doratki
55m

One patient, Erin Tompkins, said she got a bad HIV tests, but the test was 1 of 1,969 Theranos tests her doctor ordered, Downey says.

Dorothy Atkins@doratki
54m

Another patient, Brittany Gould, received erroneous pregnancy tests, which Downey acknowledges was "horrible." But he notes that her provider group ordered hundreds of similar pregnancy tests.

Dorothy Atkins@doratki
54m

Downey acknowledges there were testing errors, but he says there's no evidence that the errors were happening at a rate that would put Elizabeth Holmes on notice that the blood tests were unreliable.
 
Dorothy Atkins@doratki
47m

Downey argues that Holmes didn't learn about the patient who received bad prostate cancer test results until weeks after they happened, and by then, Theranos stopped offering the test.

Dorothy Atkins@doratki
47m

Downey pointes out that the charges are Holmes intended to defraud patients. But when you have a pool of millions of tests it’s hard to see how these three tests show she had knowledge, he says.

Dorothy Atkins@doratki
44m

Downey says one wire fraud count is related to ads that Theranos paid for in Arizona, but he says there's no evidence the ads ran and "the gov't really has proven nothing w/ respect to this."

Dorothy Atkins@doratki
42m

Downey says there's no evidence to support the gov't's theory that Theranos was "out of money and out of time" in 2009 leading her to defraud investors. He said Theranos was cash strapped in early '09 but Holmes didn't begin raising money until 15 months later.

Dorothy Atkins@doratki
35m

Downey says Holmes was devoted to her mission and she did not sell her Theranos stock despite repeated opportunities. There’s no evidence that her alleged motive for not selling was bc she didn’t want to lose control of the company, as the gov't argues, he says.

Dorothy Atkins@doratki
33m

Downey tells the jury that they know Holmes' story, and how she dropped out of college and "gave up her youth" to pursue a tech she believed in. But the gov't claims every day since 2010 she was committing a crime to rob investors and patients. That's not true, he says.

Dorothy Atkins@doratki
30m

Downey's final argument in Elizabeth Holmes' defense is that at the "first sign of trouble, crooks cash out, criminals cover up and rats flee a sinking ship" but she didn’t do any of those. "She went down with that ship when it went down," he says, and the jury should acquit her.

Dorothy Atkins@doratki
30m

It was a heckova closing line, and the reporters and observers in the overflow courtroom keep repeating the line "crooks cash out, criminals cover up and rats flee a sinking ship" to each other. Guess we know the lede today! Trial's taking a break.
 
Dorothy Atkins@doratki
14m

Jury's back. Prosecutor John Bostic has a rebuttal for the government, which is expected to go 60-90 minutes before jury instructions and deliberations. We're gettin' close!

Dorothy Atkins@doratki
12m

Bostic says the version of Theranos that Holmes and Balwani pitched never existed. It only existed in their in the minds of people who believed her - the investors and patients. "The real version of Theranos" where Holmes worked everyday was different, he says.
 
Dorothy Atkins@doratki
14m

Bostic says the version of Theranos that Holmes and Balwani pitched never existed. It only existed in their in the minds of people who believed her - the investors and patients. "The real version of Theranos" where Holmes worked everyday was different, he says.


Dorothy Atkins@doratki
13m

"The disease that plagued Theranos was not a lack of effort. It was a lack of honesty," Bostic says. The "dark side" of Theranos was that there were serious problems with its technology, he says.

Dorothy Atkins@doratki
11m

Bostic highlights Theranos' quality control practice of removing two of six outlier data points, which Erika Cheung complained about, and its process of diluting samples doesn't square w/ Holmes claims the tech was reliable and more accurate and could do any test.

Dorothy Atkins@doratki
9m

The exhibits aren't showing in the overflow courtroom, and once again court staff isn't answering the 'help' line.

Dorothy Atkins@doratki
6m

Bostic says if Theranos had quality control issues and QC tests failed half the time. "How could anyone... be comfortable with that in the clinical setting?" he says. He adds that the systems also "dismally" failed spot checks.
 
Dorothy Atkins@doratki
2m

Bostic says Holmes' claims about Theranos' relationships with pharma cos were limited and focused on specific assays, and Theranos never collected "a dollar" from pharma cos in revenue after 2009.

Dorothy Atkins@doratki
2m

Bostic says Theranos' relationships with pharma cos were limited and their contracts focused on specific assays. Theranos never collected "a dollar" from pharma cos in revenue after 2009, he says.

Dorothy Atkins@doratki
1m

Bostic says in 2009 Theranos' "burn rate" was so high that it had one to two months before it had to shut down. Although it's not necessary to find motive in this case, Bostic argues that Theranos' cash shortages that year speak to the motive to allegedly defraud investors.

Dorothy Atkins@doratki
1m

Bostic argues that Holmes overstated Theranos' military dealings to investors, even though the studies "never got off the ground" and Theranos never did comparative testing. Those claims skewed investors' perception of the company's tech.

Dorothy Atkins@doratki
1m

Bostic argues that Holmes' defense team wants the jury to think that Holmes' hard work shows her good faith intention, but it shows she was "so desperate to see the company to succeed," that she was willing to do anything.
 
Dorothy Atkins@doratki
15s

"It's important to remember the person on trial is 37-years-old today," he says, and she was 26 at the time of the start of the alleged scheme. "That is certainly old enough to know the difference b/w right and wrong...b/w honesty and dishonesty."

Dorothy Atkins@doratki
4m

Bostic argues that Erika Cheung proves young people know the dif b/w right and wrong and that it's bad to give inaccurate blood-tests to patients. (I think she's 30 rn, but could be wrong.)

Dorothy Atkins@doratki
3m

Bostic argues that Holmes blames others, but she didn't disclose Theranos' reliance on third party devices to its own board for its own tests.

Dorothy Atkins@doratki
2m

Bostic argues that Holmes didn't tell the board about the modifications to 3rd party devices until 2015 "when she had to," b/c of WSJ news articles.

Dorothy Atkins@doratki
30m

(Breaking news, just found out via email that I won @law360
's award this year for "best news analysis" for this Holmes-related story. I missed the awards ceremony today b/c OMG THIS TRIAL)

C6CyUSEj


Elizabeth Holmes' Privilege Loss 'A Cautionary Tale,' Attys Say - Law360
 
Dorothy Atkins@doratki
29m

Bostic says Theranos employees knew there were problems with the tests and some even resigned over it. The defense has blamed ex-lab director Adam Rosendorff for validating tests, but he testified that the validation process was too rushed.

Dorothy Atkins@doratki
25m

Bostic says Rosendorff testified he felt pressured from the top, and thought he'd be fired if he pushed back and complained about the equipment and tests, b/c "of course that would have happened."

Dorothy Atkins@doratki
23m

Court staff got the exhibits back up in the overflow courtroom. The slide currently being shown to the jury is titled "Lab Director Versus CEO"

Dorothy Atkins@doratki
19m

Bostic says the jury heard testimony that the lawyers ignored "cautionary advice" from lawyers regarding claims Theranos could make, b/c people at Theranos cared. "The problem was that Ms. Holmes was not one of those people and she was in charge. She was the decision maker."

Dorothy Atkins@doratki
13m

Bostic has a slide up that says "PATENTS = PAPER, NOT WORKING TECHNOLOGY" (try telling that to a patent attorney) Trial is taking another break. We'll be back in 30 mins.
 
Dorothy Atkins@doratki
2m

We're back for what will **hopefully** be the last hour (minutes?) of arguments in this trial. Bostic tells the jury to focus on Holmes' statements and that they were "present tense claims" with "no forward looking language.

Dorothy Atkins@doratki
1m

Bostic says the jury should pay attention to the investor presentations and the claims and language used in the investor binders, like the number of tests the devices could do. The claims were in present tense and not "some speculative future event that she hoped could occur."

Dorothy Atkins@doratki
2m

Those investor statements would need to be "completely rewritten" to be honest, Bostic says. He says he supposes that Holmes could have placed a warning on the binders that the statements were forward looking, "but that wasn't done."

Dorothy Atkins@doratki
4m

Bostic notes that "a lie is a lie, the moment that it's made," and her statements about Theranos' tech capabilities was about technology that was current at the time, which was the 3 series device, not the 4.0.

Dorothy Atkins@doratki
2m

(I dunno if Holmes lied, but I'll tell ya what, I feel pretty lied to about the length of both sides' closing arguments right now)
 
Dorothy Atkins@doratki
1m

Bostic turns to the Pfizer and Schering-Plough logost that Holmes placed on validation reports. He says "this is not a case about misuse of logos" or trademark infringement. "The wrong thing that happened there was that the logos were used to deceive a third party."

Dorothy Atkins@doratki
4m

Bostic pulls up the April 2010 email that Holmes sent Walgreens execs with the validation reports. In the email she claimed the pharma cos had "three independent due diligence reports." "There’s truly no explanation here except for an intent to deceive," Bostic says.

FG2Fk7nX0AI_Hy-



Dorothy Atkins@doratki
2m

Bostic says nothing in Theranos' contracts with investors gave Holmes the right to knowingly deceive them about material facts, and patients were "far worse off" in their ability to fact check Theranos' statements.
 
UndiscoveredTruth said:
Dorothy Atkins@doratki
3h

Downey says "People lost money... Ms Holmes certainly did not intend for that. That was a bad event." But the case isn't about losses, it's about whether Holmes intentionally and knowingly lied to investors to defraud them, and there's no evidence she did, he says.

Dorothy Atkins@doratki
2h

Downey argues the investors' relationship to Theranos wasn't governed by news articles, it was governed by the terms of their stock purchase contracts, which specifically said the investments were highly speculative and investor statements weren't thorough descriptions of the biz

Dorothy Atkins@doratki
2h

Downey turns to alleged victim investor Alan Eisenman, who invested in 2006 and again in 2016. Downey notes he was an experienced investor, but initially gave Theranos money after a 5 min convo. ICYMI, here's my coverage of his testimony.

Theranos Investor Emailed Prosecutors During Trial, Jury Told - Law360


Dorothy Atkins@doratki
2h

Downey points out that Eisenman testified that he relied on current info when he invested a second time in 2013* (correcting that previous tweet, which said 2016 and would be outside the alleged fraud period) and not Holmes prior statements.

Dorothy Atkins@doratki
2h

Downey notes that Balwani repeatedly told Eisenman in 2013 that he would not receive additional information before his investment, but he invested again in Theranos anyway. (Alan Eisenman was probably the least convincing alleged investor victim who testified in the DOJ's case)
Click to expand...
I don't see it the same way. I think that this guy had every right to persist in asking questions that he wasn't getting answers to since he was investing so much money.
 
IMHO, she's going down, but this case will be locked up in appeals for years. She'll write some ridiculous book about her personal struggles to succeed, and it will become a made for tv moviette. Just another american train wreck.
The jury will not be kind to her. She comes off loathsome.

Amateur opinion and speculation
 
Dorothy Atkins@doratki
14m

Bostic says Holmes' argument she thought Theranos' 3rd party device modifications were trade secrets doesn't work. "Theranos was no Coca-Cola." If it were a soda company, it would repackage other companies’ sodas and sell it as its own, or sell only a couple sodas, he says.

Dorothy Atkins@doratki
14m

Bostic argues that Holmes didn't disclose the modifications b/c it would have exposed Theranos as a fraud and "make it less special," but not because it was the modifications were trade secrets.

Dorothy Atkins@doratki
12m

Bostic argues that even though Holmes didn't cash in her stock, she had fame and a six-figure salary that went along with her title as CEO. He notes that the gov't doesn't need to show she financially profited off the alleged scheme.

Dorothy Atkins@doratki
10m

Bostic is bringing up Holmes' abuse claims. I'm actually surprised there's no objection to this by the defense attorneys, b/c the defense notably didn't mention those claims during closings so I think it should be beyond the scope...

Dorothy Atkins@doratki
9m

Bostic says the abuse testimony was difficult to hear but it's important the jury focuses on the fact that on the stand Holmes denied Balwani made her lie or controlled her actions.
 
Dorothy Atkins@doratki
6m

I need to correct this tweet. Balwani wrote the first part and Holmes replied "that's what we're doing." S/o to@MilesKruppa
who called me out on this error at the time but who I stubbornly (and perhaps stupidly) failed to believe

Dorothy Atkins@doratki
Dec 1

Leach points to a nov 2013 text. Elizabeth Holmes wrote Balwani: Let’s build the true American empire. A monopoly. Our obligation to USA.

Balwani: That’s what we’re doing.
Click to expand...


Dorothy Atkins@doratki
6m

Bostic is walking through certain jury instructions, and notes that "sympathy has no part in your deliberations." They should only consider the facts, he says.

Dorothy Atkins@doratki
5m

Bostic says the jury should judge Holmes based on what she did before the WSJ articles came out in late 2015, because after they were published "all eyes were on Theranos."

Dorothy Atkins@doratki
4m

Bostic argues that Holmes is thoughtful and careful about what she says and does, so that should serve as evidence that she knew and intended to deceive and cheat.
 
rosesfromangels said:
IMHO, she's going down, but this case will be locked up in appeals for years. She'll write some ridiculous book about her personal struggles to succeed, and it will become a made for tv moviette. Just another american train wreck.
The jury will not be kind to her. She comes off loathsome.

Amateur opinion and speculation
Click to expand...
I'm gobsmacked that her defense team just casually threw in the "I dropped out of Stanford because I was raped" at the very end. Where did that come from?
 
LinasK said:
I'm gobsmacked that her defense team just casually threw in the "I dropped out of Stanford because I was raped" at the very end. Where did that come from?
Click to expand...
Last minute sympathy zinger. It's a horrible thing to have happen, and I hope justice was served. However, it has zero to do with her current case, so irrelevant.
We all have histories of one variety or another, and some quite traumatic. That does not excuse us from criminal behavior.

Amateur opinion and speculation
 
Dorothy Atkins@doratki
1h

Bostic wraps the rebuttal arguing that a guilty verdict on all counts is the only result that is supported by the evidence in the case. CLOSINGS WRAPPED, and there was an audible sigh of relief from observers in the overflow courtroom.

Dorothy Atkins@doratki
1h

Judge Ed Davila is keeping the jury long today so he can read them the jury instructions. He suspects that will take 45 minutes. (I suspect it'll go longer.)

Dorothy Atkins@doratki
14m

Judge Davila finished reading jury instructions. A CSO is taking the jury panel of four women and eight men to the jury room to begin deliberations in U.S. v Elizabeth Holmes. The judge excuses the two alternates for now, and says he may call them to return if a juror is excused.

Dorothy Atkins@doratki
7m

In the spirit of true professionality, the lawyers for the defense team and federal prosecutors just shook each others' hands. (Wonder if they'll do that again after the verdict is read.) Holmes just gave her partner and her mother long hugs.
 
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