Thread by @doratki

Good morning from San Jose! There was no line today to get into the federal courthouse for day 6 of US v Elizabeth Holmes and boy was that a relief. It's unclear who will be testifying today, but we'll be going until 3 p.m. Standby for a deluge of tweets.

Another reporter pointed out to me this morning that one reason why Gould's testimony was so short yesterday is probably b/c Judge Davila limited what patients can say. (I forgot about that particular aspect of his sizeable 100-page MIL order.) h/t @EvanSernoffsky

Judge Davila is on the bench and the parties are arguing over Holmes' and Balwani's text messages. Defense counsel objects to some of the texts on relevancy grounds, but prosecutors want to show the jury all the text messages today.

Defense counsel notes that they've been asking prosecutors to identify the text messages the gov't plans to mention in trial for weeks, but the feds just got back to Holmes' team Monday w/ the texts. Judge Davila stops her argument: "That's ok, we don't have to do that."

The judge seems frustrated that the parties waited until 15 minutes before trial to ask him to decide Holmes' objections to certain text messages. He's taking a break to do that now, and told the clerk to let the jury know trial will be delayed this morning.

During the break, I'm reading through some of the texts from 2015 b/w Balwani and Holmes that prosecutors made public earlier this month. In one, Holmes tells Balwani she is "madly in love" with him and his strength. He replies "I am tired today."

In an earlier exchange, Holmes tells Balwani he is the "breeze in desert," her water and ocean, and they were meant to be together. He replies "ok."

Judge Davila is back on the bench. He says he reviewed Holmes' objections to prosecutors' plan to introduce a bunch of text messages b/w Holmes and Balwani. He's allowing more texts to be presented to the jury for rule "106-purposes" - or completeness.

Holmes' counsel objects to certain texts b/w Balwani and Holmes being shown to the jury about WSJ stories. Prosecutors claim the texts show Holmes deceived journalists and that is "inextricably intertwined" w/ the alleged conspiracy. The judge says they're admissible.

The jury is back in the courtroom, and PwC forensic expert Justin Offen is on the stand. Federal prosecutor Robert Leach is up for the gov't on direct.

Offen says in the fall of 2016, PwC was hired by the "large firm" WilmerHale to assist with legal services for the law firm's client Theranos. PwC also helped Theranos respond to SEC and DOJ probes, he says.

Offen says in 2017 he made 'clean forensic' copies of Holmes' cell phone, her multiple desktop computers and multiple laptops, and created a 589-page Excel spreadsheet of all her text messages w/ Balwani.

The prosecutor is showing Offen a diagram of PwC's process for making the clean forensic copy. He says there were 80,948 messages b/w Holmes and Balwani that they extracted from the devices.

Offen clarifies that the 80,948 messages included messages b/w Balwani, Holmes and others, but PwC narrowed those down to messages b/w just Balwani and Holmes and ended up with 12,132 messages.

Offen explains how he used a bunch of other tech tricks to triple check the authenticity of the messages. After all of that, he ended up with the 449-page Excel spreadsheet w/ Balwani and Holmes' text messages.

Prosecutor points to a text message Balwani sent Holmes in November 2013 in which Balwani wrote "Pissing me off we don’t have anyone managing PwC...." Holmes replied, "I agree."

Another text, from November 2013, Balwani tells Holmes "we are at $15 million as of today. Free cash." She replies "I saw that."

Balwani wrote Holmes in November 19 2014 "need to focus on ops. getting hurt in market. customer service seems to be terrible. Everyone complaining." She replies "yes... lab customer service but all need director level people"

(fyi I'm sitting about five feet from the screen showing these text messages in the overflow room and I still feel like I need a magnifying glass to read 'em.)

In November 2014 Holmes wrote Balwani "Fundamentally we need to stop fighting fires by creating them. We need to focus on root cause."

Later that day Balwani wrote Holmes, "Need ctn fix. Our root cause of issues. I know seems like they r a mess." Holmes replied, "yes."

Nov. 28 2014, Balwani wrote Holmes "Normandy lab is a fucking disaster zone. Glad I came here. Will work on fixing this." ..."We built software to remove human error and human judgment all day I saw these people use their judgments to work around the processes."

Holmes wrote Balwani in April 21 2015, "WSJ guy might show up tomorrow." Balwani says "We need tomorrow to test and then the team can push it in production tomorrow night." Holmes replies "OK could just do for him only if he shows up..."

Holmes wrote Balwani re WSJ reporter: "Hard to know who he is and what order he brings. Better a perfect venus [draw] than bad fingerprick...Seems like this guy is looking to write something negative."

Over an objection, prosecutor points to an April 2015 text exchange. Balwani wrote "there is too much hype around Theranos and you... I am worried about over exposure." She replied "I agree."

In April 2015, Balwani wrote Holmes "it is most maddening there is no focus in any chem teams and no product coming out."

Holmes replied "I know. Leadership. I am taking over all chem teams per discussion and will begin doing daily meetings daily meetings really is the only way."

Balwani responded "Most disappointing how bad these people are."

Trial is on a lunch break. We'll be back in ~45 min. Now excuse me while I go look for a magnifying glass...

We're back! Judge Davila asks the status of the next witness. Prosecutor John Bostic says they would like to get the next witness done today. (Sounds like he's important.)

Judge Davila suggests we break Offen's testimony to get the next witness up on the stand, whose examination is expected to take about 2-3 hours. Prosecutors are ok with that.

Jury is back and the next witness is former Defense Secretary James Mattis and ex-Theranos board member.

Mattis says he was on Theranos' board from Aug 2013 to December 2016 and he met Elizabeth Holmes in SF in 2011 or 2012 when he was backstage for a speech. "She pricked my finger to give me an idea" of the blood-test devices and what they could do, he says.

Mattis recalls his military career and commanding CENTCOM in the Middle East, which included overseeing 200k U.S. military troops.

Holmes emailed a message to Mattis in Aug 2011 about their meeting, and he responded that it was a pleasure to meet. "Young folks like you remind me why we need to keep hold of the freedoms we enjoy," he wrote her.

On Oct. 8 2011, Mattis emailed Holmes saying “I'm trying to find a way to employ your device on a swift ‘pilot project’ or 'proof of principle' to expedite its entry to our forces."

Mattis says "I was rather taken with the idea that one drop of blood and remote capability you could test for a broad array of problems." He says in triage it’s "very very helpful" for medical staff, "if it could do what she said it could do."

James Mattis says what he knew about the devices was "rudimentary" and the military could potentially use Theranos devices not for diagnosis, but to compare results.

James Mattis says in "both military and civilian world" the industry is "very regulated" and "You don’t take chances on something like that. It needs to prove itself before it’s brought in...but I wanted to get it started."

James Mattis says he was interested in Theranos' devices b/c it was "one device," that non-professionals could use in triage or medivac situations, and its size was small, and there's limited room in rugged environments "out in the field."

Mattis says Holmes gave him info about the technology and he thought she was "sharp, articulate, committed." "I had no other source of information on it at the time," he says, adding that he was impressed by her but that "didn't take the place of having the device prove itself."

Prosecutor points to a March 2013 email in which Mattis wrote Holmes "I'm a strong believer in what you have designed/built and hope that we can get it in theater soon to test it."

Holmes replied that they are "making sure our deployment is done right and are very close to activating our program."

James Mattis said in 2013, military "casualties had not relented," and "I was interested in anything" that would improve the care of casualties. "I was a strong believer to get this in theater for it to stand and deliver," or not, he says.

James Mattis said "I took her at her word. She moved - what I thought - forward on it and i was just trying to get the military to open the door." Mattis: This was not a sig issue considering all of the issues we were dealing with, but i didn’t want people to go to sleep on it.

Mattis says Holmes appeared "very aggressive" and "she never mentioned commercial launch in any context to me. I assumed it was going on but it was never a subject of our emails that I can recall."

Mattis says Holmes told him she had been working on the devices since college, "so I knew that she had been working on this for years." He says he's not aware of the military ever using the devices.

Mattis testifies that he asked Holmes why she wanted him to be on the board, b/c he's not a medical expert and he says she told him for his managing/personnel experience and for corporate culture.

Mattis said he invested roughly $85,000 and that was a significant investment for him, "as someone who has been in the government for 40 years."

Mattis said before his first Theranos board meeting, he thought the error rates on blood tests were "frankly quite startling” and Theranos' proposed accuracy was "one of the selling points" for him.

James Mattis says the first Theranos board meeting he attended in October 2013 was "90% Ms. Holmes," and he doesn't remember Balwani always attending.

Mattis said the info presented to him during the board meeting impressed him and he thought the devices were better, faster and cheaper than competitors. Had he known otherwise, "it would have tempered my enthusiasm significantly," he says.

Mattis said after he retired from the military in March 2013, it might have had a "cooling" effect on his contribution to Theranos due to safe harbour rules restricting what he could contribute to the military.

Mattis says after he retired from the military, he told Holmes that "I did not want to be involved in the military aspect at all."

Prosecutor turned to @rparloff's Fortune Magazine article about Theranos. Mattis spoke to the journalist and said he asked what he could disclose so that they didn't share confidential trade secrets.

Prosecutor asks James Mattis if he thinks he's capable of keeping confidential trade secrets. Mattis replies, "I have maintained confidentiality of a lot of secrets in my career."

James Mattis says in the military sometimes confidential things get publicized, and when they do, the response is "Don’t talk about it anymore. You shouldn’t talk about that.... I wasn’t going to talk about something I wasn’t an expert in anyway."

One of my favorite things about James Mattis' testimony so far, is that he said when he became a board member of Theranos, he went to the bookstore and bought books to learn about how to be a board member.

Mattis got an email from Theranos atty not to talk to then-WSJ reporter @JohnCarreyrou who Mattis says was "going after the co." Mattis says he doesn't know if Carreyrou tried to reach him. "I did not not take the phone call. I just don't remember him ever trying to talk to me."

Mattis recalls @JohnCarreyrou's WSJ stories about Theranos rolling out in 2015 and says they were "unfavorable." After they came out, board members and Mattis started raising qs internally about whether Theranos was using non-Theranos devices to analyze blood.

James Mattis says "up until this time I had assumed when we talked about Theranos... we were talking about Theranos analyzers standing alone. That had been my introduction to technology. That was the reason we could say 'we are faster, we are more accurate.'"

Mattis says using other non-Theranos devices made Theranos raised a "reputational problem and an integrity problem." "I thought all along that we were doing it on Theranos’ gear, and I was a member of the board," he said.

Holmes responded to the board's q's by pointing out Theranos was 'transitioning' from CLIA reg framework to FDA framework. Mattis says her response was confusing, but "we had at a minimum a problem w/ what we were saying, and [I thought] it’s time to go help the CEO."

James Mattis says at first he thought the problem was the WSJ reporter had gotten confused/bad info, but by early 2016 he was "concerned." "I take it on good faith what we heard, but there had been some surprises - some disappointing surprises," he says.

Mattis agrees that at some point he lost hope in Theranos' technology. "There just became a point that I didn’t know what to believe about Theranos anymore," he says.

James Mattis says looking back now he's disappointed in Theranos and the company had transparency issues. He also wonders if he could have been more available to help, "I couldn’t see why we had been surprised on such fundamental issues."

Feds wrapped direct, and we're taking a 10 minute break before cross. brb

During the break, James Mattis is chatting it up with the the court reporter maskless. She just directed him to her office - prob so that he's not mobbed by the press pool in the courtroom hallway.

For those who missed the start of this, here's my recap of James Mattis' direct examination on the stand. I'll update it at the end of the day w/ more: law360.com/articles/14241…

The jury is filing back in, and Mattis is standing at attention -- probably the only time you'll get a four-star general standing for a bunch of civilians.

Judge Ed Davila asks the people in the gallery to "type softly please" because the sound of the keys are making it hard to hear up front. lol

Kevin Downey of Williams & Connolly LLP is up for the Holmes on cross. It's the first time the attorney has examined a witness during this trial.

Downey asks Mattis if he participated in lab discussions or listened mostly during Theranos board meetings. Mattis replies he "did a lot of listening, not much talking."

Downey points to email July 2013 email in which James Mattis wrote that "Theranos is focused on the U.S. medical lab market here in the states (U.S. military may eventually be a customer but likely not immediately or in a big way.)"

Downey asks James Mattis about stock options in Theranos, and points to 500,000 shares that he was granted for $85,000 while at Theranos in Jan 2014. He says he signed the doc, but he doesn't recall receiving any paperwork at the time.

James Mattis says he received $50k annual salary to serve on the Theranos board, but he notes that he told Holmes the company didn't have to pay him. Downey shows him a doc that says he received a $150k annual salary.

James Mattis says he learned his board obligations from David Boies and other board members, and he learned Theranos would offer blood tests to the public at Walgreens. "I assumed the central Theranos lab would be the Theranos machine," he says.

Downey asks James Mattis if he's aware of the IP litigation Theranos was involved in and the importance of protecting trade secrets. Mattis replies that he was aware, and IP protection is an area that was highlighted in the "boardroom books" he read.

James Mattis says the late Secretary of State George Shultz called Mattis and said he was concerned Holmes' public profile was going to "create danger for her." Mattis connected her w/ his former body guard to give her personal security.

Downey points to a February 2015 email b/w Holmes and Mattis about compensation for Theranos' COO and CEO. Holmes told Mattis that she and Balwani wanted to get paid in stock options instead of a salary.

Downey asks if he knew Theranos' goal was to perform 2k tests on its devices. Mattis agrees that he knew of the goal and that the device was still "coming on line," but "I assumed it would be more than a handful of tests -- obviously it would be worthless to us."

Downey gets Mattis to acknowledge that Holmes asked him and board members in an email not to talk "on or off the record" about "how our technology works (ie that there is a single device that does all the tests)."

Downey asks Mattis if he knew that Theranos entered into a limited objected experiment deal w/ the DOD. He says no: "we had a few other things going on in the Middle East at this point. I'm not trying to make light of it," but the issue was delegated to his chief of staff.

Downey points to Mattis' 2015 email he wrote from the Middle East after the WSJ articles came out. He agrees with the co's plan to respond to the article "before their repetition becomes accepted urban myth." "I concur with addressing each of the issues," Mattis wrote.

Mattis wrote in the email that Theranos should execute its response to the WSJ articles "rapidly, thoroughly, rapidily (x2) and in an anticipatory mode for the follow on attacks we know are coming…"

Mattis says he and other board members were "shown a lot of data in board meetings," but he wouldn't say the co was data driven. "When the article came out we were scrambling try to validate what Theranos would do. It was, 'Roll up your sleeves now' - we were under attack.'"

Downey points to a Feb 2016 email Holmes forwarded w/ positive dr reviews about Theranos' tests. Mattis replied to the email writing he was "heartened but unsurprised" and asked how long it would take to get the reviews to the press.

On the stand, Mattis explains that "if we had data that could refute [the WSJ stories] we needed to get it out there."

Downey wrapped with Mattis' cross examination pointing to his Dec. 2016 resignation letter. On redirect, prosecutor John Bostic asks him about Theranos' LOE deal w/ the DOD.

Mattis explains that the LOE agreement was just to determine if the devices could be used. "We needed to have the data and the best way to do it" was to put Theranos devices alongside other devices see if it can "stand and deliver," he said.

Mattis: "I took as good faith that what we were being told was accurate and I assumed that when we received Theranos results that was from the Theranos machines." He "would not have tried to deploy it into a different country" if he had known otherwise, he says.

Mattis says "By mid 2016, I didn’t know what to believe about the technology. There had been too many surprises" and Holmes didn't give the board the chance to tell her "don’t roll it out." "We only saw them in the rear-view mirror."

With that, Mattis' examination wrapped. The parties are going to finish w/ Offen's exam and the Balwani/Holmes text messages before ending for the day. What. A. Day.

Prosecutors show the jury Holmes' texts from May 2015 asking Balwani who he thinks talked to the WSJ. Balwani says "Tyler, Erika and Adam." He wrote "we need a better strategy for Normandy" and "we need to sue" Rochelle Gibbons (Ian Gibbon's wife) for defamation.

In July 2015, Balwani texted Holmes "I worked for six years day and night to help you. I am sad at where you and I are. I thought it would be better I know u r angry in ur way. And upset with me for not doing everything you wanted me to do." She replied, "???"

Balwani texted Holmes in July 2015: "I am responsible for everything at Theranos. All have been my decisions too. I won’t transition until u r in a perfect place. U know that. U r underestimating the challenges and being childish. I have been telling u for months."

Balwani texted Holmes in July 2015 "We need to commit to each other and get out of this hell so we can live in paradise." Holmes replied "I have literally been mediating on exact same. Whole time"

In May 2015, Balwani texted Holmes "very hostile so far. They say have complaints." Holmes replies "praying literally non stop." Later, Balwani says "Our validation reports are terrible. Really painful going thru this process. Same issues the FDA pointed out."

Feds finished on direct. Holmes' counsel is up for a short cross - pretty technical so far. The atty notes Offen collected the texts from January 2017 and points out that the timestamps on the text messages are in UTC, not PST.

The defense team's cross of Offen wraps with Offen acknowledging that the text messages don't show when the receiver read the messages. With that, the judge excused the jury until Friday morning at 9 a.m.

Court adjourned until Friday without offering specifics on who will testify. I'm out. Of. Here. ✌️.

In case you'd rather not scroll through a seemingly endless thread, here's my updated story, recapping James Mattis' testimony and today's many highlights in Elizabeth Holmes' criminal jury trial. (Last tweet from me tonight, I promise.) law360.com/articles/14241…