CA - Elizabeth Holmes (Theranos) Wire Fraud

[UndiscoveredTruth]

Dorothy Atkins@doratki
2h

In 2012, Eisenman wrote Holmes that "It has been over 2 years since you have communicated w/ investors." Holmes replied, “No Alan, it has been about that long sing you decided to start harassing our chairman..."

Dorothy Atkins@doratki
2h

Holmes' email went on.. "despite the fact we communicated multiples times that if you did so, we would no longer respond to your requests to talk with you in light of all our past interactions." On the stand, Eisenman says Holmes' email is a "total mischaracterization."

Dorothy Atkins@doratki
2h

Holmes' counsel points out that Alan Eisenman's father-in-law is an "extremely wealthy" Tennessean Joe Gordon who is an active political contributor. Eisenman acknowledges Gordon is philanthropic, but refuses to comment on his political contributions.

Dorothy Atkins@doratki
2h

Holmes' counsel points out that Alan Eisenman emailed Repub. Sen. William Frist, who was a Theranos director, asking for info, and mentioned his father-in-law, Joe Gordon, but he wrote in his email that he didn't want Gordon, who was also an investor, to know he was reaching out.

Dorothy Atkins@doratki
2h

Holmes' counsel notes that last week prosecutors told Eisenman that they couldn't communicate with him about his testimony during the trial break, but Eisenman emailed an agent 15 hours later about his testimony.

Dorothy Atkins@doratki
1h

Eisenman's email asked prosecutors for their take on how he did on the stand. The gov't agent called him and told him "Do not communicate with the government. She said 'do not call us. Do not text us and do not email us.'" Eisenman agrees she said he couldn't talk to gov't.

Dorothy Atkins@doratki
1h

Holmes' counsel asks after their call, "how long did it take for you to reach out to the government?" He won't answer the q directly and says his next email "had nothing to do with the case." But defense notes that prosecutors called him and told him not to email or call the DOJ.

Dorothy Atkins@doratki
1h

Holmes' counsel points out that prosecutors told Eisenman "Do not communicate with us again." "That was the third time the gov't told you do not communicate." He replies "I’m a smart guy this had nothing to do the case." Holmes counsel notes the prosecutors thought it did.

Dorothy Atkins@doratki
1h

Eisenman keeps interrupting Kevin Downey. For probably the 6th or 7th time since Eisenman took the stand last week, Judge Ed Davila has interrupted Eisenman and asked him to listen to the attorney's q and answer it directly.

Dorothy Atkins@doratki
1h

Eisenman says his relationship with Balwani was "very hostile for a number of years" and Balwani had "responded fictitiously" to him, "so his credibility was low." "For the most part he either ignored or intimated me," Eisenman says.

Dorothy Atkins@doratki
1h

In Jan 2015, Balwani wrote Eisenman "You continue to bombard us w/ emails and phone calls even though just 12 short months ago I spoke with you in detail that you will not get any updates, that you shouldn’t invest.." Eisenman says before 2015, Balwani was "most encouraging."

Dorothy Atkins@doratki
1h

Trial is taking a 30 min break and the jury and Eisenman left the courtroom. The parties are discussing Eisenman's personal notes, which the defense subpoenaed for "counsel to review." Eisenman didn't want to hand them over.

 

[UndiscoveredTruth]

Dorothy Atkins@doratki
51m

We're back! After reviewing Eisenman's handwritten notes, Holmes' counsel Kevin Wade tells the judge that it looks like Eisenman added details to his notes, b/c some notes are written in a different color pen. He has "concerns about the integrity" of the notes, he says.

Dorothy Atkins@doratki
36m

Kevin Downey* (not Wade) wants to question Eisenman about his notes. Judge Davila says it sounds like Eisenman's examination won't be done today in light of defense's request. (The judge seems mildly irked.) He calls in the jury.

Dorothy Atkins@doratki
30m

Eisenman is back on the stand. Downey points to a Dec 2013 email Balwani wrote in response to Eisenman's request for info on future offering rounds and valuations. Balwani wrote he can't answer the q's "and speculate on what those valuations may be. Those may or may not happen."

Dorothy Atkins@doratki
27m

In 2010, Holmes wrote Eisenman "as you know" Theranos is an early stage startup that "comes with immense risk" and “this may not change in years to come." Eisenman replies "this is a total contradiction" to everything he was told and goes on, but the judge strikes the answer.

Dorothy Atkins@doratki
25m

The judge asks Eisenman if he heard the attorney's question, but Eisenman interrupts the judge "I did hear it, but it’s misleading." The judge tells him "that's not how this works" and tells him he needs to wait for him to finish his q and then give a thoughtful response.

Dorothy Atkins@doratki
20m

Downey points out that Eisenman initially bought 400k Theranos shares in 2006 for $2.82 per share, and in Dec 2013, Theranos was selling shares for $75, so his investment had increased by more than 2,000% and he chose to buy more.

Dorothy Atkins@doratki
13m

Downey points to Eisenman's 2013 contract that says the Theranos is "highly speculative". Eisenman says repeatedly that "I would agree it’s boilerplate" and "everybody signs it," but he had no choice to sign it and "this contradicts everything I understood at this point of time."

Dorothy Atkins@doratki
12m

Elizabeth Holmes' attorney: "The company didn’t put a gun to your head and make you invest, did they?"

Alan Eisenman: "Excuse me? I don’t understand the question."

Dorothy Atkins@doratki
7m

Eisenman eventually concedes that he thinks the speculative provision in his Theranos investment contract was meaningless. Holmes' attorney moves on pointing out that in 2010, Holmes told Eisenman he could liquidate his $1M investment w/ a 500% profit, but he didn't take it.

Dorothy Atkins@doratki
6m

Eisenman said he considered the offer, but "they just mentioned it and dropped the ball” when he asked for more info. He adds that if you sell stock you want to be informed, and "no one has ever treated me this way."

 

[UndiscoveredTruth]

Dorothy Atkins@doratki
4m

Holmes' counsel points out that Broadmark investment co later offered to buy out his Theranos shares that he had bought for $1 million for $30-$35 million. Eisenman said he didn't follow up, bc he didn't know if the offer was legitimate.

Dorothy Atkins@doratki
2m

Holmes' counsel notes that in Aug 2015, Theranos offered to buy back Eisenman's shares for $15 per share, but he responded that the shares were probably worth "well in excess" of the $15 offered. "We had no financial information to make a rational decision," Eisenman explains.

Dorothy Atkins@doratki
8m

Eisenman then went to a market maker, SharesPost, in Sept 2015 and tried to see how much his shares would go for in a secondary market. They told him the shares were going for $14.75 per share, and Holmes' counsel points out he could've gotten $20-$25M on his $1M investment.

Dorothy Atkins@doratki
2h

Holmes' counsel pulls up a Dec 2018 email Eisenman wrote an FBI agent. He said "You know that I am a faithful part of your team, and will do all that I can to help your case.” The atty asks if the statement is accurate. Eisenman won't answer directly and says it's "subjective."

Dorothy Atkins@doratki
2h

Holmes' attorney Kevin Downey wraps cross asking Eisenman if he's ever asked the DOJ to investigate other companies he's lost money in. Prosecutors objected, and Eisenman states loudly, “I have no bias in this case." (Got a laugh from folks watching in the overflow courtroom.)

Dorothy Atkins@doratki
1h

On redirect, Eisenman says he wasn't trying to get a competitive advantage over other investors by asking Theranos q's. He says he had seen a "barrage" of news that Theranos tech worked and thought it did in 2013 when he invested more into the co.

Dorothy Atkins@doratki
1h

Redirect wraps with a prosecutor recalling the various amounts of money Eisenman's Theranos stock was worth at different times. "What's your understanding of the worth of your Theranos stock today?"

Eisenman: "It’s not an understanding. It’s a conclusion. It’s worth zero."

Dorothy Atkins@doratki
1h

Judge Ed Davila tells Alan Eisenman that he's not excused yet. Eisenman presses the judge and wants to know if he'll be able to catch a 6:45 flight tonight. Judge Davila says he probably won't.

Dorothy Atkins@doratki
1h

Trial wrapped for the day until tomorrow morning at 9 a.m., where it sounds like we'll likely have a new witness. No word on who that witness might be.

 

[wendybtn]

I have been reading through your posts on this case today, UndiscoveredTruth, and I am fascinated! I have been following Theranos for years and I thank you for posting this!

 

[UndiscoveredTruth]

I have been reading through your posts on this case today, UndiscoveredTruth, and I am fascinated! I have been following Theranos for years and I thank you for posting this!

You're welcome, @wendybtn I've been posting Dorothy Atkins tweets here in the thread from day 1 of the trial so feel free to go back through the thread and read what's been happening in court on a daily basis. (If you already haven't that is.)

 

[Niner]

Tuesday, Nov. 16th:
*Trial continues (Day 28) (@ 9am PT) - CA – for *Elizabeth A. Holmes (34/now 37) (CEO of Theranos) charged (March, 2018) & indicted (6/14/18) & arraigned (6/15/18) with 9 counts of wire fraud & 2 counts of conspiracy to commit wire fraud and charged & indicted (4/11/20) with fraud relating to a patient's blood test. Another count of wire fraud was added in 2020, bringing the total number of felony charges to 12. Plead not guilty. No bond. Faces a maximum sentence of 20 years in prison & up to $2.75 million in fines, plus restitution, & $250K for each individual count of wire fraud & conspiracy.
Defrauding investors out of $700 million in funding for their blood-testing startup Theranos.
Trial began on 8/31/21 with jury selection. 12 jurors of 7 men & 5 women (6 Caucasians, 4 Hispanics & 2 Asians) with five alternates (3 men & 2 women). Juror #7 excused & replaced with alternate #1. Now jurors are 8 men & 4 women. Alternates 2 men & 2 women. 10/6/21: Juror #4 excused & replace with alternate #2. Now jurors are 8 men & 4 women. Alternates 2 men & 1 woman. 10/22/21: The judge excused Juror #5, moving up the third alternate to replace the juror. Both are women. No word on why the juror was excused. Now jurors are 8 men & 4 women. Alternates 2 men.
Trial began on 9/8/21.
The Court trial days will be Tuesday, Wednesday & Friday, possibly other half days. The Court may modify the trial time & set either 8:30am-2pm or 9am-2pm & possibly 30-minute breaks in between. Judge Edward J. Davila presiding. Jury selection was on 8/31 & 9/1 completed. Judge Davila said the juror whose mother-in-law died suddenly last week wants to travel for a few days next week for the memorial service, so trial won't be in session next Friday, Oct. 29. 10/20/21: Judge Davila notes that a juror can't be in court Friday, 11/12 & 12/3 & the judge has a conflict in November at some point due to a meeting in the Ninth Circuit committee. Motions hearing on 11/2/21. Trial dates: 11/16, 11/17, 11/18, 11/19, 11/22, 11/23, 11/24, 11/29, 11/30, 12/3 so far.
Indictment & court info from 4/11/20 thru 8/26/21 & on 9/30/21 & on 11/2/21 & jury selection (Day 1-3) 8/31/21 to 9/2/21 & trial (Day 1-26) 9/8/21 to 11/10/21 & motions hearing on 11/8/21 reference post #799 here:
CA - Elizabeth Holmes (Theranos) Wire Fraud
11/15/21 Monday, Trial Day 27: Judge Ed Davila is on the bench. He says we'll be going until 1 p.m. with Holmes' counsel continuing the cross examination of investor Alan Eisenman.
Government witnesses: Theranos investor Alan Eisenman. Holmes' counsel Kevin Downey is up to continue Eisenman's cross-exam.
for more info see post #800 here:
CA - Elizabeth Holmes (Theranos) Wire Fraud
Alan Eisenman continued. Cross continued and re-direct.
for more info see posts #801 to 803 here:
CA - Elizabeth Holmes (Theranos) Wire Fraud
Judge Ed Davila tells Eisenman that he's not excused yet. Eisenman presses the judge & wants to know if he'll be able to catch a 6:45 flight tonight. Judge Davila says he probably won't. Trial will continue on 11/16/21 @ 9am.
*Ramesh “Sunny” Balwani (53/now 56) (CFO & President of Theranos) – Pretrial conference hearing on 12/16/21 & trial set to begin on 1/11/22 with jury selection & trial starts on 1/18/22.

 

[Niner]

Looks like a motion hearing @ 8am was inserted!

Tuesday, Nov 16 2021
08:00AM
5:18-cr-00258-EJD - USA v. Elizabeth Holmes
Motion for Miscellaneous Relief

09:00AM
5:18-cr-00258-EJD-1 - USA v. Elizabeth A. Holmes
AUSA: Jeffrey Schenk / DEF: Kevin Downey
Jury Trial

link: CALENDAR

 

[Kittybunny]

Dorothy Atkins@doratki
4m

Holmes' counsel points out that Broadmark investment co later offered to buy out his Theranos shares that he had bought for $1 million for $30-$35 million. Eisenman said he didn't follow up, bc he didn't know if the offer was legitimate.

Dorothy Atkins@doratki
2m

Holmes' counsel notes that in Aug 2015, Theranos offered to buy back Eisenman's shares for $15 per share, but he responded that the shares were probably worth "well in excess" of the $15 offered. "We had no financial information to make a rational decision," Eisenman explains.

Dorothy Atkins@doratki
8m

Eisenman then went to a market maker, SharesPost, in Sept 2015 and tried to see how much his shares would go for in a secondary market. They told him the shares were going for $14.75 per share, and Holmes' counsel points out he could've gotten $20-$25M on his $1M investment.

Dorothy Atkins@doratki
2h

Holmes' counsel pulls up a Dec 2018 email Eisenman wrote an FBI agent. He said "You know that I am a faithful part of your team, and will do all that I can to help your case.” The atty asks if the statement is accurate. Eisenman won't answer directly and says it's "subjective."

Dorothy Atkins@doratki
2h

Holmes' attorney Kevin Downey wraps cross asking Eisenman if he's ever asked the DOJ to investigate other companies he's lost money in. Prosecutors objected, and Eisenman states loudly, “I have no bias in this case." (Got a laugh from folks watching in the overflow courtroom.)

Dorothy Atkins@doratki
1h

On redirect, Eisenman says he wasn't trying to get a competitive advantage over other investors by asking Theranos q's. He says he had seen a "barrage" of news that Theranos tech worked and thought it did in 2013 when he invested more into the co.

Dorothy Atkins@doratki
1h

Redirect wraps with a prosecutor recalling the various amounts of money Eisenman's Theranos stock was worth at different times. "What's your understanding of the worth of your Theranos stock today?"

Eisenman: "It’s not an understanding. It’s a conclusion. It’s worth zero."

Dorothy Atkins@doratki
1h

Judge Ed Davila tells Alan Eisenman that he's not excused yet. Eisenman presses the judge and wants to know if he'll be able to catch a 6:45 flight tonight. Judge Davila says he probably won't.

Dorothy Atkins@doratki
1h

Trial wrapped for the day until tomorrow morning at 9 a.m., where it sounds like we'll likely have a new witness. No word on who that witness might be.

I think this witness was relatively neutral for both parties, possibly more helpful for the defense, because he sounded like a royal pain in the butt. I don't have enough experience to know what sort of information is provided to early seed investors, but this guy was definitely asking a lot of questions which certainly annoyed Holmes and Balwani. But despite the fact that he did not get all the answers he wanted, he still chose to invest more money.

I hope the prosecutors have really strong witnesses to close with next week that really drive home that this wasn't just bad luck with devices that poor little Elizabeth was just trying her heart out to get to work, but that she knew what was happening and was actively committing fraud.

 

[UndiscoveredTruth]

Dorothy Atkins@doratki
2h

Theranos investor Alan Eisenman came under fire yesterday for his many emails - both to Holmes and federal prosecutors, who repeatedly told him they couldn't talk to him about the case during a trial break. Here's my recap of the courtroom drama!

Theranos Investor Emailed Prosecutors During Trial, Jury Told - Law360

 

[UndiscoveredTruth]

Dorothy Atkins@doratki
1h

Good morning from San Jose! I'm in the overflow courtroom for another day of Elizabeth Holmes' criminal fraud trial. This one should be long. It's unclear who the gov't will be calling and the parties are already arguing before the judge over Theranos' infamous missing database.

Dorothy Atkins@doratki
56m

The parties are arguing over whether the gov't "opened the door" to telling the jury who's to blame for the missing database (which WilmerHale attys helped lose). The judge says "if the door is not open, the light is certainly shining through the cracks." (Lotta door metaphors)

Dorothy Atkins@doratki
49m

The parties moved on to another issue - Holmes' renewed request to introduce Theranos customer feedback, which she received. Her attorney argues that the data is important to her defense and it speaks to Holmes' understanding that Theranos' biz "was working."

Dorothy Atkins@doratki
41m

Judge Ed Davila notes that some of the customer feedback mentions that doctors gave patients $100 "gift cards" for Theranos testing services. (This is the first time I've heard about Theranos gift cards. Imagine getting one of those for Christmas.)

Dorothy Atkins@doratki
37m

Prosecutor John Bostic notes that patients looking at Theranos blood-testing reports weren't able to know if their test results were accurate before they filled out the feedback forms, so any positive feedback can't speak to accuracy of the results.

Dorothy Atkins@doratki
31m

Bostic also counters Holmes' argument that the customer feedback data shows that customers liked Theranos' low blood-testing prices. Bostic says there's no dispute that customers like lower prices.

Dorothy Atkins@doratki
23m

Judge Davila notes that one customer wrote that “I came here because I saw Elizabeth on TV," and another said she took a Theranos pregnancy test. The comment was submitted around the time a patient who testified said she got a result that wrongly suggested she had a miscarriage.

Dorothy Atkins@doratki
18m

Judge Davila says he's not going to change his mind on barring Holmes from introducing Theranos' customer feedback data during trial. He notes this isn't a price-fixing case, and the data isn't relevant to the testing accuracy issues in the case.

Dorothy Atkins@doratki
15m

Bostic says Holmes' counsel has agreed to rest on Alan Eisenman. (There were some outstanding issues over the legitimacy of his personal notes, but sounds like Holmes' counsel is giving up on that fight for now.) The judge excused him, and there'll be a new witness this morning.

Dorothy Atkins@doratki
20s

The jury is back in the courtroom. The gov't called former Theranos Controller So Han Spivey back to the stand. She was the first witness to take the stand ~3 months and 32 (!) trial days ago, and the feds just need her to testify to a doc so that it can be admitted as evidence.

Dorothy Atkins@doratki
6m

Prosecutors pull up a 2015 email in which she asked Holmes and Balwani to sign off on a $1.12M payment to Horizon Media Inc for ads. The ads included a People Magazine ad for $228k, $282k in radio ads, $14k ads in Phoenix Magazine and $25k for "DJ and TV host on air segments."

Dorothy Atkins@doratki
2m

On cross, defense counsel gets Spivey - who goes by Danise Yam - that she didn't play any role in the ads and she doesn't know if they ever ran. She just transferred the funds.

Dorothy Atkins@doratki
7m

The parties wrapped with Yam. The government's next witness up is PFM LP hedge fund manager Brian Grossman.

 

[UndiscoveredTruth]

Dorothy Atkins@doratki
4m

Grossman says PFM is an investment firm that is registered with the SEC and he is a managing partner and chief investment officer, who primarily does portfolio management and risk management. He recalls that he started his career at JPMorgan.

Dorothy Atkins@doratki
1m

Grossman says his firm manages a variety of funds - both public and private. He says he and his partner, Chris James, met Holmes and Balwani in Palo Alto for about an hour and they showed him a presentation on a laptop.

Dorothy Atkins@doratki
27m

Grossman says the meeting, which was in Dec 2013, was a "little unusual," and Holmes and Balwani told him that Theranos' devices could do "a thousand" CPT code blood-tests, and that they had spent 10 years in clinical trials developing the tech w/ the DOD and pharma cos.

Dorothy Atkins@doratki
24m

Grossman says "Holmes was very clear that they could match every test" on rival Labcorp & Quest menu blood-tests, "and those are probably the most well known." He adds "she did highlight that there was limitation they had around cultures," which relates to growing microorganisms.

Dorothy Atkins@doratki
21m

Grossman says he was told Theranos had "something over $200 million in revenues from the Department of Defense" during the period when they were building tests. He says he primarily talked with Holmes and Balwani and Holmes never disagreed w/ each other during the meeting.

Dorothy Atkins@doratki
19m

Grossman says Holmes and Balwani told him that Theranos was starting to roll out the tech in Walgreens' 8,100 stores, and they were using Theranos tech on humans at the time, which he thought was “very” impressive.

Dorothy Atkins@doratki
15m

In Jan 2014, Grossman sent Holmes and Balwani "due diligence" q's. Grossman says "we as a group came up with questions," and his "deal team" included himself, as well as a junior analyst, a healthcare services specialist and a diagnostics specialist.

Dorothy Atkins@doratki
11m

Grossman's multi-prong due diligence q's asked about the tech's accuracy, its competitors and IP, its Walgreen's partnership, the hospital market, regulatory issues and its financial projections. He says Balwani and Holmes responded to q's, but he doesn't remember who said what.

Dorothy Atkins@doratki
7m

Grossman says they wanted to know whether Theranos' risks were just commercial rollout/biz strategy, or if the technology had issues, so they asked in various ways about the tech, but they were told there were no limitations. He also asked if Theranos could sell minilabs to drs.

Dorothy Atkins@doratki
29s

The qs asked the gross margins on the analyzers, b/c Grossman says even if the tech was "incredible" if you can’t make it, then they needed "dramatically more capital to commercialize the tech or they would never be profitable." He was told it was 20% cheaper than rival devices.

Dorothy Atkins@doratki
5m

Grossman says Holmes never told him that Theranos devices could only perform a few tests or that Theranos was using modified third-party devices to do tests, even though it would have been responsive to his DD q's.

Dorothy Atkins@doratki
5m

Grossman recalls meeting with his team and Balwani and Holmes after he sent the DD q's, but Holmes left the meeting mid-way through. He says he was told Theranos could do tests in under 4 hours in retail stores and under an hour in hospitals. We're taking a 30 min break, brb!

 

[UndiscoveredTruth]

Dorothy Atkins@doratki
1h

We're back! Grossman is on the stand. He's wearing a suit with a light blue tie. He has a full head of grey hair, but I think he's the youngest Theranos investor (possibly by at least a decade) to testify in this trial to date.

Dorothy Atkins@doratki
1h

Gossman says after their in-person meeting, he emailed Balwani in Jan 2014 asking for financial projections, which Balwani sent him. It's unclear to me if Gossman ever received written responses to his team's "due diligence" questions.

Dorothy Atkins@doratki
55m

Prosecutor Robert Leach is flipping through various Theranos investor material that Gossman says he reviewed. Leach notes it has the same "Theranos runs any test available in central labs and process all sample types" language that was in binders given to other investors.

Dorothy Atkins@doratki
45m

Gossman says he thought that Theranos' CLIA lab meant that its devices were able to meet regulatory standards. He also thought that institutions like Johns Hopkins and the FDA had validated the tech, based on a page in Theranos' investor binder.

Dorothy Atkins@doratki
33m

On Jan 20 2014, Gossman wrote Balwani they wanted to "better understand" various aspects of Theranos' biz, like the FDA approval process for its tests and the manufacturing process for its devices. He also asked to see the facility where the devices were made.

Dorothy Atkins@doratki
32m

Gossman says Balwani told him Theranos had "slack" so they wouldn't have a problem meeting demands to manufacture the devices. Again, this sounds like Gossman received Balwani's answers to his q's verbally at a meeting, and not in writing.

Dorothy Atkins@doratki
30m

Gossman says he asked Balwani to talk to Walgreens and United Healthcare representatives, but Balwani was hesitant, didn't like the idea and said "it wouldn't look good."

Dorothy Atkins@doratki
27m

Gossman says Balwani told him that the co had a contract w/ UnitedHealthcare, which Gossman considers the "smartest most sophisticated national health plan" and "we highly value their ability to vet tech cos." He also noted that United had a contract w/ Theranos rival Labcorp.

Dorothy Atkins@doratki
26m

Balwani again told Gossman he wasn't comfortable with investors talking to UnitedHealthcare. "He said 'no, we are not comfortable with that. It would look badly if investors are asking to speak with the company,'" so Gossman didn't reach out to UnitedHealthcare.

Dorothy Atkins@doratki
21m

Gossman says he spoke to Sanford prof Channing Robertson who vouched for the company, and he saw the manufacturing facility where they were making and distributing the devices. He says he was never told Theranos was using modified non-Theranos devices.

Dorothy Atkins@doratki
15m

This seems like an appropriate time to drop this legal analysis of mine that has been a few weeks in the making. Fresh of the press, Elizabeth Holmes' trial testimony has revealed FOMO led many Theranos investors to bypass traditional due diligence.

Theranos Investor FOMO Is Due Diligence Lesson, Attys Say - Law360

Dorothy Atkins@doratki
6m

Prosecutor points to Theranos' financial rev projections, which estimated the startup would earn $260M by end of 2014. Gossman thought it was "strong" and impressive at the time he reviewed it ~Jan 2014, and he didn't know Theranos had zero revenues the prior year.

Dorothy Atkins@doratki
18s

Gossman says he went to a Walgreens store w/o telling anyone at Theranos to get a test. He said he was surprised when the phlebotomist drew his blood venously & not fingerstick & it took over 4hrs to get results. He told Balwani & Balwani said it was bc he ordered an unsual test.

Dorothy Atkins@doratki
12m

Despite Gossman's experience, within a few weeks of first meeting with Holmes and Balwani, his firm invested a total of $96.1M into Theranos in Feb 2014. The amount included $2.2M from a "friends and family fund," which Gossman said represents funds from "low income" folks.

Dorothy Atkins@doratki
8m

The gov't wrapped direct, and Holmes' counsel Lance Wade is up on cross. He begins by pulling up a calendar and showing Grossman** first learned about Theranos investment opportunity Nov 1, 2013, first met w/ Holmes and Balwani Dec 12 and Jan 10, and then invested Feb. 4-5.

Dorothy Atkins@doratki
3m

Wade gets Grossman to acknowledge he could've passed on investing. Wade asks Grossman if he ever met or interacted with Elizabeth Holmes after Jan 10, 2014. He replies "I don’t recall if I interacted with her again after," but he concedes he continued his analysis after.

Dorothy Atkins@doratki
2m

Wade points out that Grossman prepared an analysis that 2 funds - a partner fund and family and friends fund - reviewed before investing in Theranos. He also acknowledges that the "more risk you take, the greater the reward."

Dorothy Atkins@doratki
13m

Wade gets Grossman to acknowledge that his hedge fund charges fees and his firm makes money depending on how well it performs, but Grossman refuses to say outright that he makes money off investments doing well. We're taking another 30 min break. Brb!

 

[UndiscoveredTruth]

Dorothy Atkins@doratki
51m

We're back! Holmes' counsel points to a Nov 1 2013 email that Coatue Management firm founder Thomas Laffont sent Grossman with a link to Theranos' website. He wrote: "Let me know ASAP if this private co is of interest to you One of the most impressive boards I’ve ever seen."

Dorothy Atkins@doratki
51m

Grossman's partner Chis James replied to Laffont's email "Wowsy" and Grossman replied "Pretty cool. Never heard of it."

Dorothy Atkins@doratki
42m

Holmes' counsel asks Grossman if he understood from the email that Theranos was trying to raise money. He replies, "Sort of. Private companies are always raising money."

Dorothy Atkins@doratki
36m

In a Nov 18 email, he asked his colleagues if Theranos is something he should "work up on the private side." His colleague replied "very good feedback from WAG" (ie. Walgreens) and another firm gave it a bullish rating. Grossman replied “Wowzer. That’s quite an endorsement."

Dorothy Atkins@doratki
36m

(Wondering if any of these hedge fund dudes know the proper way to say "wow.")

Dorothy Atkins@doratki
32m

Holmes' counsel points to a Dec 9 2013 email to Grossman in which his colleague writes Labcorp thinks Theranos' tech "does not work" and that its blood test menu is limited, but Walgreens thought "it is very exciting and will likely bundle with their existing payor contracts."

Dorothy Atkins@doratki
8m

Holmes' counsel asked Grossman about Walgreens' earnings call and Grossman explains public companies and what quarterly calls are. (In case you're wondering why this trial has gone on for 32 days, this type of testimony might have something to do with it.)

Dorothy Atkins@doratki
5m

Holmes' counsel points to a Dec 19 2013 email to Holmes in which he was just "checking in to see if we can move the process forward." Grossman agrees that Theranos was not "banging on our door" to secure funding from the firm.

Dorothy Atkins@doratki
6s

In a Dec 23 2013 email, Chris James wrote he thinks they needed to form a list of q's "like a big private equity deal...We need serious deal experience here.” Grossman replied "we get a presentation to review or is that asking too much? Some basic background on [Theranos] tech"

 

[UndiscoveredTruth]

Dorothy Atkins@doratki
27m

Holmes' counsel tries to get Grossman to concede that he knew Theranos was using venous draws to perform some tests. He eventually says yes, but he adds it would be "troublesome" if Theranos was using microsamples on non-Theranos devices, b/c they weren't FDA approved for that.

Dorothy Atkins@doratki
13m

In a Jan 2014 email before a meeting with Balwani and Holmes, Grossman wrote the hedge fund's analyst that "Bring your A game. U are the technical expert, need u to be skeptical (but not a A hole)." Grossman says the analyst spent most of the time talking to Balwani.

Dorothy Atkins@doratki
1m

Grossman acknowledges that he told the firm's analysts to "drill" into Theranos' data, and they hired consultants to review it. Trial is breaking until tmr at 9 a.m. Defense counsel says they have an update on a "sealed matter" so they're going to discuss it in chambers.

Dorothy Atkins@doratki
1m

Prosecutors want to know how much time the defense on cross. Wade says he'll let the gov't via email, but the judge seems annoyed and he also wants to know. He adds "there have been many questions that have been asked and answered on direct."

Dorothy Atkins@doratki
1m

Defense counsel says they'll be done with Grossman tomorrow, and the prosecutors should have another witness ready.

 

[Niner]

another motions hearing before trial today.

Wednesday, Nov 17 2021
08:30AM
5:18-cr-00258-EJD - USA v. Elizabeth Holmes
Motion for Miscellaneous Relief

09:00AM
5:18-cr-00258-EJD-1 - USA v. Elizabeth A. Holmes
AUSA: Jeffrey Schenk / DEF: Kevin Downey
Jury Trial

link: CALENDAR

 

[Niner]

Wednesday, November 17th:
*Motions Hearing (@ 8:30am) & Trial continues (Day 29) (@ 9am PT) - CA – for *Elizabeth A. Holmes (34/now 37) (CEO of Theranos) charged (March, 2018) & indicted (6/14/18) & arraigned (6/15/18) with 9 counts of wire fraud & 2 counts of conspiracy to commit wire fraud and charged & indicted (4/11/20) with fraud relating to a patient's blood test. Another count of wire fraud was added in 2020, bringing the total number of felony charges to 12. Plead not guilty. No bond. Faces a maximum sentence of 20 years in prison & up to $2.75 million in fines, plus restitution, & $250K for each individual count of wire fraud & conspiracy.
Defrauding investors out of $700 million in funding for their blood-testing startup Theranos.
Trial began on 8/31/21 with jury selection. 12 jurors of 7 men & 5 women (6 Caucasians, 4 Hispanics & 2 Asians) with five alternates (3 men & 2 women). Juror #7 excused & replaced with alternate #1. Now jurors are 8 men & 4 women. Alternates 2 men & 2 women. 10/6/21: Juror #4 excused & replace with alternate #2. Now jurors are 8 men & 4 women. Alternates 2 men & 1 woman. 10/22/21: The judge excused Juror #5, moving up the third alternate to replace the juror. Both are women. No word on why the juror was excused. Now jurors are 8 men & 4 women. Alternates 2 men.
Trial began on 9/8/21.
The Court trial days will be Tuesday, Wednesday & Friday, possibly other half days. The Court may modify the trial time & set either 8:30am-2pm or 9am-2pm & possibly 30-minute breaks in between. Judge Edward J. Davila presiding. Jury selection was on 8/31 & 9/1 completed. Judge Davila said the juror whose mother-in-law died suddenly last week wants to travel for a few days next week for the memorial service, so trial won't be in session next Friday, Oct. 29. 10/20/21: Judge Davila notes that a juror can't be in court Friday, 11/12 & 12/3 & the judge has a conflict in November at some point due to a meeting in the Ninth Circuit committee. Motions hearing on 11/2/21. Motions hearing on 11/16/21 & 11/17/21. Trial dates: 11/17, 11/18, 11/19, 11/22, 11/23, 11/24, 11/29, 11/30, 12/3 so far.
Indictment & court info from 4/11/20 thru 8/26/21 & on 9/30/21 & on 11/2/21 & jury selection (Day 1-3) 8/31/21 to 9/2/21 & trial (Day 1-27) 9/8/21 to 11/15/21 & motions hearing on 11/8/21 reference post #806 here:
CA - Elizabeth Holmes (Theranos) Wire Fraud
11/16/21 Tuesday, Trial Day 28: Motions hearing for miscellaneous relief at 8am.
The parties are already arguing before the judge over Theranos' infamous missing database. The parties are arguing over whether the gov't "opened the door" to telling the jury who's to blame for the missing database (which Wilmer Hale attorneys helped lose). The judge says "if the door is not open, the light is certainly shining through the cracks."
for more info see post #810 here:
CA - Elizabeth Holmes (Theranos) Wire Fraud
Government witnesses: former Theranos Controller So Han Spivey back to the stand.
for more info see post #810 here:
CA - Elizabeth Holmes (Theranos) Wire Fraud
PFM LP hedge fund manager Brian Grossman. PFM is an investment firm that is registered with the SEC & he is a managing partner & chief investment officer, who primarily does portfolio management & risk management.
for more info see post #811 to 814 here:
CA - Elizabeth Holmes (Theranos) Wire Fraud
Motions hearing for miscellaneous relief at 8:30am & trial will continue on 11/17/21 @ 9am.
*Ramesh “Sunny” Balwani (53/now 56) (CFO & President of Theranos) – Pretrial conference hearing on 12/16/21 & trial set to begin on 1/11/22 with jury selection & trial starts on 1/18/22.

 

[UndiscoveredTruth]

Dorothy Atkins@doratki
5h

A hedge fund manager testified in Elizabeth Holmes' fraud trial yesterday that his firm and its affiliates invested $96.1M, even after he didn't get complete answers to due diligence q's and its rival said its technology didn't work. My recap!

Investors Gave Theranos $96M Despite Due Diligence Gaps - Law360

 

[UndiscoveredTruth]

Dorothy Atkins@doratki
4h

Good morning from a sunny San Jose! Judge Ed Davila is on the bench for yet another day of Elizabeth Holmes' criminal fraud trial. Holmes' counsel says they can hold off on arguing over admitting Fortune Mag writer @rparloff's interview w/ Holmes, b/c Parloff will testify tmr.

Dorothy Atkins@doratki
3h

The jury is in the courtroom & hedge fund manager Brian Grossman is back on the stand. Holmes counsel Lance Wade continues cross, asking him about his Jan 2014 meeting w/ Balwani & Holmes. He says "in the second half of the meeting Balwani def drove the meeting" b/c Holmes left.

Dorothy Atkins@doratki
3h

Wade asks Grossman to review notes, which Grossman says aren't his. The atty asks if it refreshes his memory that he was told 96% of blood test requests "fall within 7 assays." Grossman - clearly frustrated - tries to offer an explanation, but eventually says "No, it does not."

Dorothy Atkins@doratki
3h

Wade points to another note and asks him the same question. After Grossman talks over Wade and tries to explain that the tests were for the "hospital infection market," not retail, the judge tells him he just needs to answer the q of whether the note refreshes his memory.

Dorothy Atkins@doratki
3h

In a Jan 2015 email, Grossman's colleague, an analyst, said he wanted to run Theranos' tech by Labcorp and Quest Diagnostics (theranos' rivals) but "obviously without disclosing anything we should not be disclosing.”

Dorothy Atkins@doratki
3h

The analyst's email goes on, “I am not convinced on IP and competition" and "I think their projections are a bit aggressive for speed of ramp in 2015 and beyond, but with excellent execution are doable and can be exceeded." Gossman says "execution was a risk for sure."

Dorothy Atkins@doratki
3h

Wade pulls up another email from the analyst in Jan 2014 that said he checked with another company and Theranos would have to get FDA approved to use its device for testing outside a CLIA lab.

Dorothy Atkins@doratki
2h

The Jan 15 2014 email adds "not a big deal in my view, but something to keep in mind." Grossman says they asked q's re FDA approval in meetings and this is a "good example" of work they do in the "early process" of the due diligence. (They invested $96M less than 3 weeks later.)

Dorothy Atkins@doratki
2h

Wade asks Grossman if he recalls that Theranos could do 250 tests in its CLIA lab, which "represented 99% of the volume." "I do remember that yes," he says but notes Balwani and Holmes never mentioned another "reference lab."

Dorothy Atkins@doratki
2h

Grossman says his firm tried to hire lab consultant to vet Theranos' technology, but in a Jan 22 2014 email, Balwani refused to give him access due to confidentiality concerns. Grossman said his firm also spoke to experts, but "more at a high level and not referencing Theranos."

 

[UndiscoveredTruth]

Dorothy Atkins@doratki
2h

In a Jan 21 email, Grossman's colleague wrote that “Theranos seems to be correct that CLIA certification does mean that their tests met a certain level of accuracy. This may or may not be sufficient to meet the FDA criteria, but I have no reason to believe it won’t.”

Dorothy Atkins@doratki
2h

The email goes on that he would "stick to the view shared by the lawyers we spoke with that the FDA will want to regulate testing, and will not buy into this idea of cloud data." Grossman explains that the lawyers are "more conservative" in their approach.

Dorothy Atkins@doratki
2h

Grossman explains his firm's decision to invest, saying Theranos execs "had very good answers" for all the regulatory issues they raised and the company had board members with "extensive" government experience.

Dorothy Atkins@doratki
2h

Wade points to another email from Grossman's colleague who reviewed Theranos' assay validation data and a proficiency stat, which was around .9. Grossman: "There are no hard and fast rules to these tests and getting CLIA certification, but in general a higher number is better."

Dorothy Atkins@doratki
2h

We're breaking for "about an hour," because the judge has something to do (I assume it involves another case, b/c judges in the district have hundreds of cases on their dockets that have nothing to do with Holmes' criminal trial.)

 

[UndiscoveredTruth]

Dorothy Atkins@doratki
54m

We're back! Wade pulls up an email from Grossman's colleague that says he took a Theranos test at Walgreens and it took 31 mins. He notes his fingerstick blood was drawn by a Theranos phlebotomist and not Walgreens staff and there's a "a bit of a question there."

Dorothy Atkins@doratki
53m

Holmes' counsel shows Grossman a 2014 email he sent after getting his blood tested at Walgreens. His blood was drawn venously. On the stand, Grossman says Balwani told him 1% patient of patients would require venous draws and it would take 6 months before that changed.

Dorothy Atkins@doratki
50m

Holmes' counsel Lance Wade wants to show the jury an exchange Grossman had with a doctor about his Theranos' blood test results. He asks if he can show the email to the jury.

"I would prefer not," Grossman says.

Wade agrees to withdraw the email from evidence.

Dorothy Atkins@doratki
48m

Wade moves on and asks if Grossman remembers Sanford University professor Channing Robertson told him he had never encountered anything like Elizabeth Holmes in his 50 years at Stanford. Grossman replies, yes, he remembers him saying "something like that."

Dorothy Atkins@doratki
43m

Wade gets Grossman to acknowledge that his father-in-law David Brady introduced him to Robertson. In Jan 2014, Brady wrote Grossman: "I talked to [Robertson] it’s his co & he can talk anytime Headed BioX Stanford’s engineers and biologists DNA. Smart nice says whatever he wants"

Dorothy Atkins@doratki
41m

On Jan 26 2014, Grossman wrote his partner, Theranos' "valuation and terms aside, which are obviously tough to swallow, I’m feeling even better about this now. I had a mind blowing call yesterday w/ Elizabeth’s professor who helped her start this. Was the original board member"

Dorothy Atkins@doratki
39m

Elizabeth Holmes' counsel asks hedge fund manager Brian Grossman if his Jan 2014 call with Sanford University professor Channing Robertson about Theranos was "mind blowing."

"It was a positive call," Grossman says.

Dorothy Atkins@doratki
30m

Holmes' counsel pulls up an Excel spreadsheet with a lot of data points, but he points out that Theranos had millions of dollars in deferred revenue. (A point the defense has made repeatedly, I'm guessing to counter the gov't's args that it had zero revenues in ~2013.)

Dorothy Atkins@doratki
24m

Holmes counsel pulls up a Jan 2014 spreadsheet that Grossman prepared that projected Theranos' revenues would grow from $25M to $249 million by the end of the year and to $1.558 billion in 2015. Wade asks if he knows of other cos that have grown that much in 2 years. He says yes.

Dorothy Atkins@doratki
19m

Holmes' counsel Lance Wade: "Do you recall that the revenue numbers that [Grossman's hedge fund] projected for 2014 were significantly higher than Theranos gave?"

Grossman: "That’s not my memory."