CA - Elizabeth Holmes (Theranos) Wire Fraud

[UndiscoveredTruth]

Dorothy Atkins@doratki
3h

The parties are focusing on Balwani's deposition in which he states that he took over Theranos' Safeway contract. Volkar says "the key part" of the relationship was that Holmes negotiated Safeway's contract in which the alleged misrepresentations were first made.

Dorothy Atkins@doratki
3h

The parties are also arguing over Balwani's testimony on creating Theranos' financial models. Volkar says financial models are different than financial projections, and Holmes said she could get "comfortable" with the models, which shows they both were responsible for them.

Dorothy Atkins@doratki
3h

Holmes' counsel notes that when the trustworthiness of a witness' statements is at issue, usually it's involving police statements and not sworn depositions. But Volkar says Holmes and Balwani were co-conspirators. It sounds like the judge isn't going to rule yet.

Dorothy Atkins@doratki
2h

Holmes' counsel Kevin Downey notes that the judge previously barred the gov't from bringing up Holmes' mode of travel and itineraries. But prosecutor Robert Leach says "the entirety of their relationship is at issue" and Holmes' testimony "opened the floodgates for that."

Dorothy Atkins@doratki
2h

Leach argues that Holmes testified that she didn't have agency and Balwani controlled what she ate and how she dressed. "The gov't must be able to test that," he says, by asking about her travel and lifestyle. ICYMI, here's a recap of that pretrial order

Jury Can Hear Some Evidence Of Elizabeth Holmes' Wealth - Law360

 

[UndiscoveredTruth]

Dorothy Atkins@doratki
2h

Judge Ed Davila notes that tech CEOs fly in jets, "that’s kind of the way Silicon Valley operates." "That's what they do, they don't fly coach." But he notes that whether Holmes shopped at luxury brand stores isn't relevant to the charges.

Dorothy Atkins@doratki
2h

Leach disagrees and says Holmes' travel and itineraries is "part of the motive." "She coveted fame, she coveted attention, she coveted the ability to interact with these very powerful people, and that's relevant here."

Dorothy Atkins@doratki
2h

Leach says nothing has changed, except "they opened the floodgates" about Holmes' agency and all the luxury evidence should come in. Kevin Downey disagrees and says, "That must be the most aggressive run-over of an [pretrial] order I've seen."

Dorothy Atkins@doratki
2h

Judge Ed Davila says "perhaps there's some cross-over" but the purpose of the lifestyle evidence will have to be established during Holmes' examination. Sounds like it's another "let's wait and see" ruling from the judge. He's calling in the jury.

Dorothy Atkins@doratki
2h

Robert Leach is doing Holmes' cross-examination. A few folks who follow trial closely mentioned to me they thought John Bostic would be doing Holmes' cross. Bostic has a gentler demeanor than Leach, who tends to be more aggressive. Will be interesting to see how this plays out.

 

[UndiscoveredTruth]

Dorothy Atkins@doratki
2h

Holmes is on the stand. Leach begins by asking about her testimony that Theranos' response to the WSJ's articles was "aggressive." He asks if she was worried then-WSJ reporter John Carreyrou would go to Walgreens to get a venous draw. "I don't remember that," she says.

Dorothy Atkins@doratki
2h

Leach points to April 2015 texts b/w Holmes and Balwani in which Holmes says Carreryou would show up. "Better a perfect venipuncture than bad fingerstick, Seems like this guy is trying to write something negative," Balwani wrote. "That’s what he does," Holmes replied.

Dorothy Atkins@doratki
2h

Leach asks Holmes if Theranos hired "Fusion GPS" guy to research Carreryou's background. She says "I don't know," but she acknowledges that they tried to find out his sources and they were "very worried about Mr. Carreyrou's story."

Dorothy Atkins@doratki
2h

Leach asks Holmes if she made fun of Carreyrou's background. She says she doesn't think so. Leach points to a text in which Holmes tells Balwani Carreyrou is French. Balwani says "v funny explain everything. He is proud of being french?" Holmes: "I know & proud of it proud cynic"

Dorothy Atkins@doratki
2h

Leach asks Holmes if Theranos didn't listen to Erika Cheung. Holmes says I don’t think she was right about the specific issues she was raising but "I sure as hell wished we treated her differently and listened to her." "I don't think I thought that there were issues at the time."

 

[UndiscoveredTruth]

Dorothy Atkins@doratki
2h

Holmes concedes that she thinks Cheung was right, and that Theranos hired David Boies' firm to send her a letter, but when Leach asks if she chose to threaten Cheung, Holmes says no.

Dorothy Atkins@doratki
2h

Holmes says "I knew our lawyers were following up with her so that she would stop disclosing our trade secrets." Leach tells her to stop inserting "trade secrets" into her answers.

Dorothy Atkins@doratki
2h

There was some confusion over binders. Holmes apologized to Leach three times as she tried to find the right page.

Dorothy Atkins@doratki
2h

Leach asks Holmes if she would have handled the WSJ reaction differently. Holmes: "100 percent, I think I mishandled the entire process of the Wall Street Journal reporting."

Dorothy Atkins@doratki
2h

Leach points to a Feb 2014 email in which Daniel Young said Tyler Schultz was raising multiple issues about Theranos' proficiency testing and tests. Balwani replied "how long did you spend with him? This seems to be an overkill."

 

[UndiscoveredTruth]

Dorothy Atkins@doratki
2h

In April 2014, Tyler Shultz wrote Holmes a long email on validation reports and Theranos' claim that its syphilis tests were the "most accurate or precise tests" on the market. Schultz said a "quick google search" yields a handful of articles "that explicitly make these claims."

Dorothy Atkins@doratki
2h

Schultz' email to Holmes says the WSJ article also makes the claim, even though Daniel Young said Theranos never claimed to have the most accurate and precise tests. Schultz also raised concerns about Theranos' claim of less than 10% "CV for our assays."

Dorothy Atkins@doratki
2h

Schultz also raised concerns about Theranos' claims about its Vitamin D tests. Balwani responded to Schultz's email and looped in Holmes and Daniel Young.

Dorothy Atkins@doratki
2h

Balwani wrote Schultz: "Had this email come from anyone else in the company, I would have already held them accountable for the arrogant and patronizing tone and reckless comments. In your case, I am giving you the benefit of doubt that your intentions are in the right place..."

Dorothy Atkins@doratki
2h

Before emailing Schultz, Holmes saw Balwani's email and suggested "Stronger -- emphasize what he did first especially in light of my comment on accuracy below." Holmes says she thought they needed to explain the accuracy to Schultz.

Dorothy Atkins@doratki
2h

Balwani's email to Schultz also said "Your basic understanding of statistics is still low." Shultz responded by giving his two week notice, and saying "I do not expect to be treated differently because of who I am related to."

 

[UndiscoveredTruth]

Dorothy Atkins@doratki
2h

Holmes acknowledges that Theranos hired Boies Schiller to send a letter to Schultz. Leach tries to get her to concede that she hired the firm to threaten him and George Schultz called her the next day. "That's not my memory of it," she says.

Dorothy Atkins@doratki
2h

Leach tries to get Holmes to acknowledge that George Schultz called her and told her he thought Boies Schiller attorneys had been totally inappropriate. "No," Holmes says. "I know that he later felt that."

Dorothy Atkins@doratki
2h

In May 2015, Balwani texted Holmes "You not calling George back also sends a message that we are about to sue." Holmes replied "Exactly was thinking same." Holmes says she thought it would stop Tyler from sending the WSJ trade secrets.

Dorothy Atkins@doratki
2h

In June 2015, Balwani texted Holmes "don't talk in this meeting. u shd talk to david first" Holmes replied "George wants to know what Tyler has done. Would you ask David if I should say or tell him we'll let him know later and text me back."

Dorothy Atkins@doratki
1h

Holmes acknowledges she thought Tyler was a low-level disgruntled employee, and she says again Theranos "totally" messed up its response to the WSJ coverage, but she says she didn't know Boies Schiller was threatening to sue WSJ but thought the firm was meeting w/ the WSJ.

 

[UndiscoveredTruth]

Dorothy Atkins@doratki
1h

In a Sept 2015 letter, Holmes wrote Rupert Murdoch she was hoping a senior WSJ person named Gerard would meet w/ Theranos & she sent Murdoch the documents that Theranos sent to Carreyrou for his reporting. Holmes says they weren't trying to quash the story but to protect its IP.

Dorothy Atkins@doratki
1h

Leach played a Mad Money clip and gets Holmes to acknowledge that she didn't say Theranos could run 12 tests on its Edison devices.

Dorothy Atkins@doratki
1h

Holmes agrees that she was responsible for the company and when asked if she was the hardest person working at Theranos she replies, "I tried to be, but we had a lot of people were working really hard."

Dorothy Atkins@doratki
1h

Holmes also acknowledges that she could have fired the board members and Theranos employees, including Sunny Balwani. Holmes agrees that she "let him run the company and run operations."

Dorothy Atkins@doratki
1h

Leach gets Holmes to acknowledge that as CEO she had the power to hire marketing firms, Boies Schiller and outside counsel, and that she signed offer letters and hired lab directors.

 

[UndiscoveredTruth]

Dorothy Atkins@doratki
1h

Holmes was getting paid $200k annually from 2010-2014 and $300-$390K in 2015 and 2016. She agrees she also held 250 million shares of Theranos, or 51% of the co.

Dorothy Atkins@doratki
1h

Holmes agrees that the FDA only approved herpes tests on the Minilab and 4s devices and sept 2013 and june 2015 Theranos only used the Edison 3.5 to run 12 tests in its CLIA lab.

Dorothy Atkins@doratki
1h

Holmes agrees that Theranos was running 58 assays on modified third party machines and around Oct 2015, the majority of Theranos' blood-tests on its menu were done on "ordinary commercial equipment."

Dorothy Atkins@doratki
1h

Leach is throwing out various Theranos statistics, and Holmes is saying she has no reason to doubt the stats but she didn't know them. Trial is taking a break. Brb.

Dorothy Atkins@doratki
1h

If another person asks me what Elizabeth Holmes’ voice sounds like I may just delete my Twitter account and call it a day.

 

[UndiscoveredTruth]

Dorothy Atkins@doratki
1h

And we're back. Prosecutor Robert Leach asks Holmes if her relationship with Sunny Balwani was "loving" and "at times not loving." She says yes. "You were often complementary and loving to him?" "Yes." "And at times it was less so?" She says she would get upset w/ him at times.

Dorothy Atkins@doratki
1h

Leach pulls up Balwani and Holmes' text from 2011-2016. In a May 2012 text, Holmes wrote "We have to work together on the rev piece" and Balwani said "you are the co" and they have to work on the revenue. (It's hard to see the texts on the exhibit screen and know who said what.)

Dorothy Atkins@doratki
1h

In a 2015 text, Balwani wrote Holmes "Love you. I prayed from the bottom of my heart for you. I have never prayed w/ this intensity in my life for anything and anyone. you will shine. Was just thinking about you & meditating on my tigress"

Holmes: It is us together...My nirvana

Dorothy Atkins@doratki
1h

In another Oct 2015 text, Balwani texted Holmes before she had an interview "you are god’s tigress & warrior you are extraordinary." She replied "Coming from my tiger means the whole universe to me I love you."

Balwani told her "be yourself" & "I worship you"

Holmes: Me more.

Dorothy Atkins@doratki
1h

Elizabeth Holmes is crying as she's reading her texts with Balwani aloud. In a Nov 2014 text, Holmes asked Balwani "Would you be ok if I saw Jesse and laura separately?" On the stand, Holmes says "I would often try to ask him to see if it could be ok to see a friend..."

 

[UndiscoveredTruth]

Dorothy Atkins@doratki
1h

Leach is having Holmes read various texts. Balwani calls Holmes "baby" and says he loves her and her "beauty." In other texts, she tells him it was a "gift" to meet a man like him. Leach says the word "love" appeared 594 times in their texts and "loving" appeared over 100 times.

Dorothy Atkins@doratki
1h

Leach asks Holmes if she and Balwani had a "spiritual connection." She says, she thought they did and she thought at the time that god had put Balwani in her life for a reason.

Dorothy Atkins@doratki
1h

Leach asks Holmes how their relationship ended. "I think when I started to realize that this person who I had believed in more than anything wasn't" who he said he was "nothing was real anymore. my whole foundation for life... was based on believing that he was this person."

Dorothy Atkins@doratki
1h

Leach pulls up Holmes' SEC 2017 deposition and tries to get her to concede that she didn't mention the CMS inspection as a reason for ending their relationship. She says she doesn't remember mentioning it, but she discussed the start of their relationship.

Dorothy Atkins@doratki
1h

Leach pulls up Holmes' April 2015 notes she said she took when Balwani was yelling at her. The notes are long, and include "command" and "rule the world" but Leach focuses on her note that Balwani said " mediocre quality of this piece of *advertiser censored* company."

Dorothy Atkins@doratki
1h

Leach is pointing to various text messages and repeatedly getting Holmes to acknowledge that Sunny Balwani did not hide his opinions about the company from her.

 

[UndiscoveredTruth]

Dorothy Atkins@doratki
58m

Leach points to texts from April 2015 after her Mad Money interview in which Balwani said "you came across as a pure statesman" and "if I was competing with you I would be scared. Got to get more assays on fingerstick" She replied "loved seeing this so much."

Dorothy Atkins@doratki
52m

Leach is going through more texts about fingersticks and he is trying to highlight that Balwani is "being open about his plans and ideas" and "talking openly" about risks he sees. Holmes agrees that he is.

Dorothy Atkins@doratki
47m

In a July 2015 text, Balwani wrote "I am responsible for everything at Theranos. All have been my decisions too." He later adds "I do dislike the direction u have taken" Leach points out Balwani disagreed with Holmes about PR and legal. "And a lot of other things," she says.

Dorothy Atkins@doratki
41m

Leach is flipping through more texts, many which the jury has already seen in trial, really trying to drive home the point that Sunny Balwani didn't hide his opinions from Elizabeth Holmes. (Kinda surprised the defense isn't raising an "asked & answered" objections.)

Dorothy Atkins@doratki
31m

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.

 

[UndiscoveredTruth]

Dorothy Atkins@doratki
21m

Leach is pointing to text exchanges, which we've seen multiple times now, in which Holmes and Balwani were praying during the 2015 CMS lab inspection of Theranos. Again, Leach points out Balwani was open with Holmes and wasn't hiding his opinions from her.

Dorothy Atkins@doratki
14m

After more texts, Leach gets Holmes to acknowledge Balwani didn't hide his opinions about Walgreens from her (and I'm starting to feel like I'm in an episode of the Twilight Zone).

Dorothy Atkins@doratki
9m

Leach: There were times you gave Balwani direction on what to do?

Holmes: I'm sure there was.

Leach: There were times you told him what to do?

Holmes: I’m sure there could have been.

Trial is taking a 30 min break, gonna see if I can find Rod Serling walking around here...

 

[Herat]

The Holmes- Bawamia texts: Ewwwwwwwwww

 

[Herat]

The Reddit folks don't think the prosecution has landed any punches and is, indeed in the Twighlight Zone.

Too much on the relationship and peripherals, not enough on the FRAUD issues.

Falling into the personal issues trap she has been well-coached on and not enough on the cold hard facts of the fraud of the performance of the instrument and the absolute misrepresentation of the lab results, as were clearly outlined in the CMS survey of 2015 and other data.

 

[Herat]

This is what Holmes' defense is consisting of:

He was my boyfriend!

 

[UndiscoveredTruth]

Dorothy Atkins@doratki
20m

We're back! Holmes agrees that she and Balwani were "jointly involved" on Theranos' regulatory strategy and Holmes says they "could be" jointly involved in *firing Theranos employees.

Dorothy Atkins@doratki
12m

Leach gets Holmes to acknowledge she was close to and could seek advice from Henry Kissinger, Bill Foege, William Perry, Sam Nunn, Dick Kovacevich, Channing Robertson and George Shultz, who Leach notes "stared down the Soviet Union in the Cold War."

Dorothy Atkins@doratki
6m

Leach points out that Balwani and Holmes had a limited liability holding company named HMFR, which is an Arabic prayer giving thanks to god. Leach has pointed out to multiple text exchanges between Balwani and Holmes in which they share "hmfr".

Dorothy Atkins@doratki
5m

Leach notes the HMFR LLC holding company had an address that was Holmes and Balwani's home. The home is listed on Zillow for $16.5M. It was bought in 2013 for $9M and sold in March 2018 for $7.9M, according to Zillow data.

227 Park Ln, Atherton, CA 94027 | MLS #ML81870866 | Zillow

Dorothy Atkins@doratki
1m

Holmes acknowledges she hired a contractor named Kendra to do work for her and she "gifted" her Theranos shares, but when Kendra tried to cash the shares in in 2016, Holmes said she couldn't.

 

[UndiscoveredTruth]

Dorothy Atkins@doratki
1m

Prosecutor Robert Leach asks Holmes if she was in another romantic relationship with someone who wasn't Sunny Balwani between 2010 and 2015. She says yes, in the beginning of 2010, but "it was not a formal relationship."

Dorothy Atkins@doratki
2m

Leach turns to a Sept 2013 email that in-house counsel Kate Beardsley sent Holmes stating that she is "worried" about the claims on Theranos' website. Leach notes Holmes forwarded the email to Balwani.

Dorothy Atkins@doratki
29m

Beardsley sent Holmes' response and email with Theranos' website to attorneys at Hyman Phelps & McNamara PC for them to review. Attorney Jamie Wolszon replied that Theranos should remove references to "all" tests and replace with "multiple" or "several."

Dorothy Atkins@doratki
28m

Wolszon also said replace other language about "highest quality" and "highest levels of accuracy," among other things. (The jury has already seen this email earlier in trial ICYMI)

Holmes OK'd Testing Claims Over Atty's Concerns, Jury Told - Law360

Dorothy Atkins@doratki
8m

Leach pulls up ex-Theranos board member Dick Kovacevich's email to Holmes after the WSJ articles came out in 2015. He wrote "I am still confused..how many of our customer submissions are being tested on lab equipment versus Edison?"

 

[LinasK]

The Reddit folks don't think the prosecution has landed any punches and is, indeed in the Twighlight Zone.

Too much on the relationship and peripherals, not enough on the FRAUD issues.

Falling into the personal issues trap she has been well-coached on and not enough on the cold hard facts of the fraud of the performance of the instrument and the absolute misrepresentation of the lab results, as were clearly outlined in the CMS survey of 2015 and other data.

I think he's getting the fraud in there. but now he's having to knock down the "I was Balwani's slave" defense. It's very clear already to me that she fraudulently used Pfizers's logo and tried to claim that she had the military authorization to get Walgreen's and Safeway on board. She knew that she had a defective product and chose to ignore that fact and instead both she and Balwani went on offensive and attacked anyone who dared question them, including the investor Eisenman. She claims that Balwani was a predator, yet she was old enough to willingly choose a man 20 years older than her. She was no shy wallflower. I'm glad that the prosecutor is attacking her use of the euphemism phrase "trade secrets" to mean her lies about the company and her product. Using another company's product to make yours work isn't a trade secret. It's just a phony, bad product.

 

[Herat]

I think he's getting the fraud in there. but now he's having to knock down the "I was Balwani's slave" defense. It's very clear already to me that she fraudulently used Pfizers's logo and tried to claim that she had the military authorization to get Walgreen's and Safeway on board. She knew that she had a defective product and chose to ignore that fact and instead both she and Balwani went on offensive and attacked anyone who dared question them, including the investor Eisenman. She claims that Balwani was a predator, yet she was old enough to willingly choose a man 20 years older than her. She was no shy wallflower. I'm glad that the prosecutor is attacking her use of the euphemism phrase "trade secrets" to mean her lies about the company and her product. Using another company's product to make yours work isn't a trade secret. It's just a phony, bad product.

Excellent point. There are no such thing as "trade secrets" in laboratory medicine.

As an innovator, the technology or innovations have to be able to stand up to validations, proficiency testing, limitations on testing, and compliance with regulatory standards exactly so fraud and deceipt like this is not perpetuated on patients and medical providers.

There are way to handle proprietary technology and patents that can assure the investment a company puts into a new technology or process can be returned.

Nothing that Theranos did was ever a "trade secret". Microsampling and hyperdilution have been around for a long time and there are technologies available for valid use, but they are open and their limitations are well recognized. None of them need to go as far as Holmes did with her outlandish claims and complete lack of accountability while hiding behind "trade secrets".

 

[UndiscoveredTruth]

Dorothy Atkins@doratki
4m

Holmes acknowledges she didn't mention modified third-party Siemens devices & she said Theranos wasn't using Edisons at that time.

Holmes: I definitely wouldn’t say it that way now Holmes says.. There are many things I wish I did differently

Leach: Including this?

Holmes: Yes

Dorothy Atkins@doratki
3m

Leach moved on to Theranos' validation reports. Holmes admitted she placed Pfizer logos on the docs and sent them to Walgreens. After Leach points out she also apparently deleted Pfizer info on the docs, Holmes says "I do, I wish I handled this differently, yes."

Dorothy Atkins@doratki
2m

It seems like Robert Leach is trying to really grill Elizabeth Holmes, but her outright admissions are making the examination somewhat anticlimactic.

Dorothy Atkins@doratki
36m

Leach tries to get Holmes to admit Theranos' dealings with Pfizer were "all talk," but Holmes wouldn't concede the point and said "It was talk and work, but we didn’t get revenue from it."

Dorothy Atkins@doratki
33m

Leach moved on to the validation report with Schering-Plough logo. "I absolutely wish that I had bolded that [the reports] were written by us," Holmes says, but she adds that the assay data in the report is accurate.

Dorothy Atkins@doratki
26m

Leach questions Holmes on whether she changed various language in a GlaxoSmithKline validation report. She replies that she doesn't know.

Dorothy Atkins@doratki
20m

Leach tries to get Holmes to concede that Theranos used Schering-Plough's logo even though she was disclosing the type of IP that Theranos was concerned about protecting, but Holmes says it depends b/c sometimes they were ok with drugmakers using Theranos' logos w/o permission.