Thread by @doratki

Today will be hella busy as in Elizabeth Holmes' criminal fraud trial. In addition to a full day of witness testimony, Magistrate Judge Nathanael Cousins will be holding hearings on separate motions by @JohnCarreyrou & @rparloff at 1:30 so I'll have a foot in 2 courts. Party on.

I'm back in San Jose a few mins late (thnx Amtrak). Judge Ed Davila is on the bench and he's discussing potentially breaking trial for the hearing before Judge Cousins. The attorneys say it's not necessary b/c some attys can leave and argue the motions while trial continues.

The parties turned to arguing over Holmes' request to limit certain testimony from the third witness called today, ex-Theranos lab director Sunil Dhawan, and a letter w/ certain CMS findings on Theranos. Prosecutors say it's relevant and fair game.

Holmes' counsel says the letter, which addresses certain quality control tests, was a "back-and-forth" b/w Theranos and CMS following the agency's report, but it doesn't constitute the actual findings of the CMS agency and it's pretty "far afield" and downstream from CMS report.

Judge Davila says he can hold off today on deciding whether he'll admit the letter to see where testimony goes.

The jury is in the courtroom and Robert Amenta, deputy chief investigator at the New York Federal Reserve Bank, is on the stand presumably to testify about $$$ wire transfers made to Theranos. His exam should be pretty quick (ie. ~20 mins).

Amenta's exam wrapped with him testifying about a bunch of multimillion-dollar wire transfers to Theranos. The gov't's called its next witness, ex-Walgreens exec Nimesh Jhaveri, who worked for the company for 29 years.

Jhaveri said he first met Elizabeth Holmes and Sunny Balwani in 2010 when he gave them a 10-minute "tour" of a Walgreens store. He wasn't involved with Theranos again until late 2013/early 2014 when he was leading a team redesigning Walgreens' store design and layout, he says.

Jhaveri was promoted in early 2014, and part of his new job was to help Theranos "operationalize" the company's product, which he explains means taking an idea and executing it in a store.

Jhaveri says at Walgreens, he thought Theranos' finger-stick blood test was "extraordinary" and the small amount of blood required was important to the biz model. It "was the actual magic, which was intriguing to us," he says, adding Sunny Balwani was his main Theranos contact.

Prosecutor pulls up a 2014 slide deck prepared for the Walgreens' "diagnostic testing program governance" committee," which included Sunny Balwani and Jhaveri, but notably not Holmes.

The slide shows in Feb 2014, Theranos was in 3 Walgreens stores and served an avg of .8 patients per day. In May 2014 it was 11 stores serving 3.1 patients daily. It conducted 43% of the tests venously in Feb and 39% venously in May. Jhaveri says the goal was to do 0% venously.

The slide deck shows Theranos' goal was to do less than 10% test venously by Oct 2014, but Jhaveri says that never happened. Jhaveri adds Balwani gave him the projections, b/c "obviously Walgreens is not the lab. We are not the developers of this technology."

A slide made by Balwani says the reason for the high number of venous draws were b/c there was a "learning process" around ordering patterns from drs for Ariz and order patterns were dif than anticipated and Theranos was adding new cartridges rapidly to address the patterns.

Jhaveri says he didn't know that Theranos testing devices had technical issues and he didn't know that Theranos was doing blood-tests with modified non-Theranos devices. He says "no one" was satisfied with the high number of venous draws, in part b/c that required phlebotomists.

Jhaveri says in 2014 Walgreens cut its 2015 goal of rolling out Theranos stores from 500 to 200, b/c "some of the results of the pilots were good, some of the results were not good" so slowing down made sense. It was manageable to take a "crawl, walk, run approach," he says.

In Aug 2014, Jhaveri wrote Sunny Balwani that they needed to have a "documented detailed plan" to improve patient experience and cut the venous draws to 10% if they want to expand outside Ariz. "We just weren’t hitting the metrics that we set out to do," Jhaveri says.

In Nov 2014, Walgreens had launched Theranos in 40 stores in Arizona and 1 in Calif, but Theranos was still doing 40% of its tests venously, Jhaveri says.

In Dec 2014, Jhaveri wrote Balwani that Walgreens and its board "are asking for transparency on the following: financial condition of the company (need it for our auditors), technology/process points so we can represent Theranos in a more comprehensive manner."

Jhaveri says the board wanted the info and the people were asking questions "both internally and externally" about Walgreens' partnership with Theranos. He also asked how long they would need phlebotomists in Ariz.

Jhaveri says after news articles publicized potential problems with Theranos' tech in late 2015, Walgreens stopped Theranos services at one store in Jan 2016 and "turned off" the rest of Theranos' services in its other stores the following June.

Jhaveri and a prosecutor are reading through Elizabeth Holmes text exchanges with Sunny Balwani in Sept 2015. It's extremely difficult to follow.

In one exchange about Balwani's negotiation with getting Theranos in CVS stores, Balwani tells Holmes that "They are all lemmings, they only want if other want it." ("They" here presumably refers to CVS and Walgreens.)

In another text, Balwani says "we don’t want 1,000 stores with assholes 200 will be enough to prove our point."

Holmes: "I know."

In one exchange Balwani says he's "worried about the FDA and CMS," and Holmes says @jimcramer "wants exclusive no other tv." She told Rupert Murdoch she didn’t want to talk b/c accusations re patents and the "death and sex thing" (It's very unclear what that means.)

Balwani told Holmes: "I wouldn’t open up [your] personal life ... b/c enough people on Twitter will think there’s something there. It’s filth."

In another text Balwani tells Holmes Walgreens' lawyers told Walgreens "not to talk to us... in so many words."

Holmes: "wow."

Balwani: "It is going to be a very difficult 12 months."

Balwani wrote Holmes: "Our CLIA lab failed mpv pt at all five levels. Just figured it out dealing with it...Miss old days. These days are not worth whatever we are trying to do here." He adds later he'll put forward facts and "I am strong on facts."

Balwani wrote Holmes "Ok [Walgreens] freaking out. Lack of transparency why they found this all out thru media and not thru us. I told them we were surprised by the [WSJ] article as much they are."

Holmes re. Walgreens: How long has it been that we didn’t tell them?

Balwani: 3-4 weeks

Holmes: I’m trying to remember what our thinking was on that

Balwani: None we just didn’t tell them thinking under new model this doesn’t matter

Prosecutors clarify that the texts occurred between March 2015 and Oct 2015. Trial is now taking a 25 minute break (for all of us to try to make sense of those dang texts).

The jury's back. Kevin Downey is up for Holmes on cross. He starts by getting Jhaveri to acknowledge he wasn't directly involved in Walgreens' negotiations with Theranos.

Holmes' counsel gets Jhaveri acknowledges that he wasn't involved in evaluating Theranos' technology for Walgreens and he "had very little contact with Ms. Holmes. I met with Ms. Holmes maybe two or three times at most."

Holmes' counsel points to ex-Walgreens CFO Wade Miquelon's Sept 2013 email to Holmes, which stated that Walgreens was committed to rolling out Theranos services in 3k stores over two years.

Jhaveri acknowledges that he is not aware Walgreens ever had a specific agreement with Theranos that the blood tests would not be drawn venously. He was also aware of Walgreens paid Theranos a $100 million "innovation fee."

Holmes' counsel points out Walgreens' financial outlook projected its Theranos revenues would grow from $277,000 in FY 2014 to $181.42 million in FY 2020. He also agreed that Theranos paid the costs of hiring phlebotomists.

Holmes' atty shows a March 2014 Walgreens slide that says "key program risks" include obtaining regulatory approval and driving patient traffic to use Theranos' services. He notes it doesn't include venous blood draws, even though many at Walgreens knew about the draws.

Jhaveri says Walgreens received positive feedback from Theranos patients and "generally speaking, the experience was good." He agrees that patients didn't report concerns re venous draws. Defense counsel points to Jan 2015 survey results that showed patients gave it ~4.8/5.

Holmes' counsel asks Jhaveri if patients can get blood tests in Walgreens today. Jhaveri replies that thinks they do, but he's not at Walgreens and doesn't know for sure. Defense counsel says Labcorp offers venous blood-tests in some Walgreens stores.

Holmes' counsel asks Jhaveri if he knew that Theranos was pursuing a partnership with CVS. He says he knew Theranos had spoken to many companies in 2010 about potential partnerships, but he didn't know that Theranos was pursuing a partnership with CVS in 2015.

Holmes' atty shows Jhaveri's email to Holmes after she was on the cover of Fortune Mag: “This is great - congratulations! I want an autographed copy! I am sure Sunny and Christian are keeping you in the loop. Teams are working well together and a lot of progress is being made."

Defense counsel wrapped with Jhaveri and trial is taking a 20 minute break.

Just took some ibuprofen in preparation for the hearing before Judge Cousins on motions by @JohnCarreyrou and @rparloff that's about to start. I'll be watching that on Zoom while viewing Jhaveri's redirect on the tv in the overflow room I guess.

Jhaveri is back on the stand in trial. Meanwhile, the hearing has started with Judge Cousins apologizing to the attorneys for scheduling the hearing during trial. "It was not my intention to order you to be two places at once," he says.

Judge Cousins starts with @JohnCarreyrou's request for an exception to Judge Davila's order so that he's allowed to be in the courtroom to cover Holmes' trial even though he may be called to testify.

Judge Cousins says "I don’t think there’s much skin in the game for the prosecution," b/c the feds are ok w/ considering @johnCarreyrou an expert and allowing him to observe trial. But Holmes' counsel wants him kept out of court.

Judge Cousins notes that "I have not been following Mr. Carreyrou’s podcast," but he knows he's been reporting during trial "So what’s the need for the request at the moment, if he’s been able to do his First Amendment reporting activities?" "Why not keep status quo?"

Carreyrou's counsel replies that "we just want to make sure" that his client is allowed to be in court and cover the trial, b/c case law says reporters can't be excluded witnesses "just for doing their job" and "we're not asking for anything extraordinary at all."

Carreyrou's attorney tells the judge that any subpoena from Elizabeth Holmes issued to @JohnCarreyrou "would be bad faith and would be harassing." It would show Holmes has "bad feelings" toward Carreyrou b/c he's been dogged in his coverage of Theranos.

Meanwhile back in the trial, prosecutor is showing the witness a picture of Elizabeth Holmes on the cover of Fortune Magazine by Roger Parloff...

@JohnCarreryou's counsel says he understands that @rparloff is cooperating w/ the federal gov't but Carreyrou would object to a subpoena regardless of which party tried to subpoena him.

Judge Cousins asks @JohnCarreyrou's counsel what if his client knows more than everyone else and maybe he deserves to be a witness. His counsel replies that "he def knows a lot about this case, there’s no question about it," but he has no percipient knowledge of the facts.

Holmes' counsel John Klein says John Carreyrou's name is "woven through this case," and the defense doesn't know yet if they will call him as a witness yet.

Klein says one example of why they may call John Carreryou is b/c he was "peppering" CMS with requests about Theranos and some of CMS' questions for Theranos that may come into the record may stem "in part by the pressure Mr. Carreryrou was exerting."

Klein says @johnCarreyrou can also "very easily find himself on the witness list" if the government introduces a Mad Money CNBC segment that Holmes appeared on. "Mr. Carreyrou is right at the heart of significant issues in this case," and he's not being singled out, Klein says.

Back at the trial, Jhaveri's examination has wrapped and ex-Theranos lab director Sunil Dhawan is on the stand. Dhawan was Balwani's dermatologist and wrote him an email in Nov 2014 that they needed a Theranos lab director and "the time commitment is very minimal."

John Carreyrou's attorney says Holmes' CMS argument just shows Carreyrou was "doing what professional reporters do" in asking questions, and at the Wall Street Journal was just him doing his job.

Ooof, Holmes' counsel is John Cline*, not Klein. Cline acknowledges that this is a hardship for John Carreryrou but he notes that Holmes' father may be a witness and so he's had to stay out of his own daughter's trial, even though he wants to be in court.

Judge Cousins grants @JohnCarreyrou motion to be excluded from a pretrial order barring him and other potential fact witnesses from watching Holmes' trial. He says "pragmatically it's fair to treat him as an expert" b/c if he testifies, he'll be testifying on what others said.

Judge Cousins also notes that he's not imposing any additional restrictions around questioning @JohnCarreyrou if he is called as a witness, b/c those issues are premature and speculative at this point. Judge Cousins is taking a break before the @rparloff motion.

Meanwhile back in the trial, Dhawan says he was hired as a consultant to serve as Theranos' lab director in November 2014 and he only worked 5-10 hours in total for $5,000 monthly. Balwani told him the time commitment was "very minimal."

Judge Cousins is back for @rparloff 's motion to quash a subpoena. Holmes' counsel says they want to subpoena Parloff's notes so that the defense can rebut prosecutors' evidence on how he prepared for the Fortune article on Holmes to show he wasn't misled by Holmes.

Cline says he doesn't think reporter's privilege plays into this at all and says the notes will show that any errors @rparloff made in his Fortune article were his own and not Holmes' alleged misstatements.

Back at the trial, prosecutors point to emails in which Sunny Balwani asked Dhawan to sign about "300 SOPs" -standard operating procedures - in Sept 2015. Dhawan agreed to sign the docs and others.

Dhawan says he signed the docs in part bc he was "comforted" by the signature of ex-Theranos' former lab director Dr. Adam Rosendorff, who had previously signed the docs. He says he was never showed "critical values" for certain reports.

"Rosendorff's signature provided comfort to me - gave me some reassurance there had been some supervision before my arrival," Dhawan says.

In Sept 2015, Balwani told Dhawan that there was a lab inspection at Theranos & Balwani asked Dhawan if he could be present "for at least the first part of it." "I have a v capable team that has taken care of all the details as always..to make sure lab is flawless," Balwani said

Although Dhawan was Theranos' lab director starting in Nov 2015, he says he never met Elizabeth Holmes until Sept 2015 during Theranos' lab inspection. The gov't notes that in Sept 2015, Theranos sent Dhawan a job offer w/ a starting date of June 1 2015.

Feds show Sep 2015 text exchanges w/ Balwani during the inspection. Balwani wrote “v hostile so far. They say have complaints" and later "going bad so far. Pray." Holmes replied "Praying at my desk.." and later "praying continually." Dhawan said he didn't know they were praying.

In an Oct 2015 email, Balwani wrote Dhawan: "Thanks for the help and sticking by" ..."don't answer any questions as they will trap you or misquote you. We are trying to get on top of the situation and release our statements to refute the falsehoods but this statement take time."

Feds wrapped Dhawan's direct. Back before Judge Cousins, Roger Parloff's counsel says Parloff can talk about his discussions with Elizabeth Holmes, but not about anything else b/c the trial isn't about Parloff's state of mind and many of the notes Holmes wants don't exist.

Prosecutors note that the only communications the gov't requested from @rparloff involved Holmes but not others. Parloff's counsel also points out that he provided both parties w/ the entire transcript of his interview w/ Holmes.

Judge Cousins grants @rparloff's motion to quash Elizabeth Holmes' subpoena demanding Parloff's reporting notes. The judge says Holmes is "fishing" and speculating about what they may get from Parloff, but that's not sufficient for such a subpoena and it could prolong trial.

Meanwhile, trial before Judge Davila just wrapped for the day, with Holmes' counsel Lance Wade noting that Judge Davila is wearing an orange tie, although it's not Halloween. "Go Giants!" he says.

Reporting privilege and @JohnCarreyrou's WSJ stories took center stage in Elizabeth Holmes' criminal fraud trial today, along with a few panic-fueled text messages b/w Holmes and her former partner Sunny Balwani. Here's my reader-friendly, typo-free recap. law360.com/articles/14309…