Thread by @doratki

Wade brings up a Dec. 2014 email showing Balwani asked Yam to defer $100 million from Celgene and Theranos' $165 million 2013 deal to 2014. "It’s not as if $100 million is going to fall out of the sky in 2014," Wade says. "That has been booked in cash [in 2013]." Yam agrees.

Wade gets Yam to acknowledge that Theranos received hundreds of millions of dollars from customers, including Safeway, Walgreens and Blue Cross and Blue Shield, and Theranos spent $68 million on R&D in 2013, which accounted for 69% of its $92 million operating losses that year.

Wade points out that Yam is a CPA licensed accountant and dif accounting methodologies can lead to different value ranges of a company. Wade points to a document in which Theranos was valued at $9.5 billion* or $1.9 billion depending on the methodology. (*Correcting prior tweet)

Before wrapping cross, Yam says Holmes never sold her Theranos stock. On a short rebuttal, prosecutor points out that deferred revenue is $ paid for services/products that haven't been received for and the $9.5B estimate was just that. And now onto the next witness: Erika Cheung.

Erika Cheung is a former Theranos lab associate who worked oct 2013-april 2014 and resigned b/c she didn't feel comfortable processing patient samples w/ Theranos' tech. Holmes' counsel had sought to limit Cheung's testimony on hearsay grounds.

Cheung says she graduated from UC Berkeley and Theranos had "probably the most popular booth" at a career fair, so she applied and interviewed first w/ Balwani and then Holmes. Cheung says she was "star struck" by Holmes at the time, b/c she "had charisma" and was articulate.

Cheung says before she started working at Theranos, she thought Holmes was a leader, symbol of female empowerment and example for women in STEM. "It seemed like a company that I wanted to be apart of ...And that I wanted to help grow," she says.

Cheung says when she joined Theranos in 2013, she had to sign an NDA, and was told by Holmes' brother, Christian Holmes, who was a lead project manager, that secrecy was important and workers couldn't post on LinkedIn that they worked at Theranos.

Cheung said she worked with Theranos' blood analyzers used to test patient blood samples. She's explaining Theranos' various blood-testing devices, including the Edison, the 4.0 and the "modified" Siemens' Advia 1800 machine.

Cheung said Theranos' Edison device could only perform 4 and "at max 12" tests offered in its "testing menu," which lists dozens of potential blood tests, and third-party modified devices could do more tests than the Edison.

Cheung says she and other Theranos employees gave their own blood in exchange for cash in order to test Theranos devices' accuracy.

The judge excused the jury for a break, and Holmes' counsel raised objections to "virtually all of the documents that are about to be offered and the testimony too do not involve our client in any way." He says Cheung is not an expert and Holmes was not aware of any the docs.

Prosecutor argues these are business records and the issues were raised "directly to Balwani," who is a co-defendant. The issues were "frequent and generally known," so they should be admissible. "Ultimately these issues do percolate up to these defendants in this case," he says.

Prosecutor says Cheung's emails are business records, b/c email was the primary means of communication workers at Theranos used. Defense counsel disagrees and wants to brief the issue: "The law on the ninth circ is clear... emails are not admissible. They're layered hearsay."

Holmes' counsel says Cheung's job interview with Holmes is the longest interaction she ever had with Cheung and she has no connection to Holmes that would allow her emails to come in. "The CEO is not responsible for every communication that occurs within the company," he says.

Holmes' atty says Cheung was an entry level employee, and there were several levels b/w her and the lab director. If these issues were raised to Holmes, prosecutors can call the person who raised them, but 'they can’t just dump every issue in the lab' on Holmes, he says.

Judge Davila is allowing prosecutors to spend the last 15 minutes of trial today questioning Cheung on 2 exhibits, but there's going to be an extended hearing on this issue tomorrow morning before trial.

Cheung is back on the stand and the prosecutor asks her about an email in which she wrote quality control tests weren't passing. The atty asks how she used emails at Theranos. She says she used email regularly and email 'groups,' like 'Normandy 911,' to troubleshoot problems.

Feds point to Cheung's Normandy 911 email re quality control tests failing. Balwani replied that "this is beyond acceptable performance" and Holmes asked if there was enough left in the blood sample to do another test on a non-Theranos device and how fast the issue can be fixed.

Suraj Saksena replied to Holmes that they resolved the issue by removing 2 outlier data points so that the tests could pass quality control. But Cheung says she doesn't think removing the data fixed the problem. "They were ignored and disregarded for quality control," she says.

The judge excused the jury and witness, and we'll be back here tomorrow. Before breaking for the day, Holmes' counsel tells Judge Davila he may submit a brief with case law about whether emails can be admitted as biz records before tmr morning's hearings. And w/ that we're out.

Today marked the first full day of witness testimony in Elizabeth Holmes' criminal fraud trial, and a Holmes fan stole the show. Here's my recap of today's action inside (and outside) the courtroom. law360.com/articles/14216…