Thread by @eringriffith

🩸 Elizabeth Holmes trial, Week 8 🩸

The lawyers are once again starting the day by fighting over evidence: Prosecution wants to show video clips of Elizabeth Holmes defending Theranos on Mad Money and elsewhere after the WSJ expose.

If there is one thing Judge Davila hates its getting into a "mini-trial" about side issues with no bearing on the issues being tried.

Today's first witness will be Lisa Peterson, who manages money for the DeVos family.

After her we will hear from Alan Eisenman, another investor.

Ugh once again the jurors are frustrated with loud typing from the press gallery. The judge says if he gets another complaint he will banish all laptops to the overflow room. A court marshal is going to enforce the "silent keyboard" rule (WHICH IS NOT A THING!).

(First of all the juror who finds the typing distracting should really wear the hearing aids provided by the court. Second, this is a pandemic problem. Jurors are spaced out and some are sitting in the first rows of the audience.)

Needless to say this is extremely stressful for the media here. Members of the press now policing bystanders to follow the rules (silence phones etc) so as to not piss off the judge.

Lisa Peterson has taken the stand and explained her role at RDV Corporation, the family office of the DeVos's. She manages their PE fund investments and co-investments.

She asked to work on the Theranos deal bc she'd had some healthcare investing experience.

We see an email from Jerry Tubergen, CEO of RDV, to colleagues. He attached the infamous Fortune cover story, writing "This morning I had one of the most interesting meetings I can recall with the women profiled in the attached Fortune magazine article."

fortune.com/2014/06/12/the…

Interesting how many of Theranos' investor materials came in the form of binders and not a data room.

When Peterson's team asked Holmes about the risks of investing in Theranos, she said the risk was in the "execution" of the Walgreens rollout. Was there a discussion of technology risk? Peterson says no.

Interesting point about power dynamics of investing in high risk startup unicorns: "Did you feel like Theranos was selecting you as an investor?"
Peterson: "Very much so."

"She was hand picking 5-6 private families to invest in her company. ... She was inviting us to participate in this opportunity."

Peterson says Holmes didn't want large PE firms / inst. investors bc they wanted Theranos to go public and she wanted to stay private.

We see a memo that hits this point again, stating that Theranos's goal was to find investors “with less emphasis on liquidity and more emphasis on long term capital appreciation.”

A familiar rundown of Theranos claims to investors. Its technology had been “comprehensively validated over the course of the last 7 years by 10 of the 15 largest pharmaceutical companies” and subjected to proficiency testing and audits from regulatory agencies.

Prosecution shows Peterson the falsified validation report we have heard so much about.

"Did you believe this report as prepared by Pfizer?"
"Yes."

Peterson says that endorsement was a big factor in investing.

Recall that a Pfizer exec testified it had nothing to do with that validation report. It never validated Theranos's tech. But Theranos put its logo on the report and showed it to investors. More on that here: nytimes.com/2021/10/22/tec…

We are looking at Theranos's revenue projections, including that bold $990m for 2015 (with a $230m profit).

Peterson said she did not know that Theranos had zero revenue in 2013 and 2012.

I don't have the loudest keyboard in the court but macbook pro laptops are not exactly silent. If there is such a thing as whispering into a keyboard with ones fingers, that is what I am doing today. I am typing in a pianissimo.

The name of the legal entity that made the DeVos family investment in Theranos was called DYNASTY FINANCIAL 👑

Judge Davila has overruled objections to playing clips of Holmes on Mad Money and we are watching the part where she says "This is what happens when you work to change things. First they think you’re crazy, then they fight you, then you change the world."

In the middle of watching a Today Show clip (today.com/video/theranos…) Judge Davila interrupts, stops the clip and says he needs to talk to the lawyers privately. 🤷‍♀️

This is an interesting trojan horse to play the jury videos that clearly and succinctly summarize what we have learned so far about Theranos's problems and also showing Holmes saying the buck stops with her - "I’m the founder and CEO of this company."

Defense is asking Peterson to explain the various roles and relationships of the DeVos family and their various investment vehicles. Not sure the broader point, perhaps that they're very very rich.

Lance Wade (Holmes lawyer) showed us the signed docs for the investment.

Peterson's name was not on that - point being (I think) to discredit, minimize, show she did not have investment making authority.

Wade is making the connection between the DeVos family office and Byron Trott.

"Mr. Trott is reputed to be one of the wisest investment bankers around in this space?"

"Uh.. yes."

Wade is not playing nice with Peterson, grilling her on whether the DeVos family actually ever read her memos and her past comments under oath in depositions about that fact.

Lots of discussion about Dan Mosley, a lawyer at Cravath. Some documents were emailed via personal gmail accounts, Peterson said, because "We didn’t know what his role was in all of this. We didn’t want to get him in trouble."

Fantastic unicorn content with defense and witness quibbling over the definition of a unicorn. They could have pulled up a certain other fortune cover story for that 😎🦄

🦄 Wade: Do you know what a unicorn is?
Peterson: Can you explain it?
Wade: You’re the investment professional
Peterson: It’s not something we normally invest in.

Wade: Unicorns are usually investments that can really pop, correct?
Peterson: That’s your definition
Wade: What’s your definition?
Peterson: I don’t deal in investing in unicorns, so, um.
Wade: Ok.

It went on and on, with Wade even reading notes from a deposition by RDV lawyers from years prior that used the term unicorn and Peterson insisting, "I would never use that word, unicorn."

Now a court martial is literally hovering over my shoulder watching and listening to me type. There is an overflow room but the sound is awful and unreliable. So.. I think I will save my keystrokes for my own notes and limit my tweeting for the rest of today. 😐

Ok breaking for the day. Wade impeached Peterson for contradicting past testimony on how the investment came about. He also poked other holes in her testimony and made the case that RDV Corp failed to do proper due diligence.

The confusing thing about defense's "investors failed at diligence" argument is that it sortof requires conceding that Holmes/Theranos lied. "You should have dug deeper before investing... bc then you would have discovered our fraud?"

The jury is gone (so I'm typing my ass off!) and the lawyers are fighting over what can be addressed in tomorrow's testimony from Alan Eisenman. Takeaway is personal feelings are NOT to be discussed in this case.

In a preview of tomorrow, when we will (likely) hear about how Mr. Eisenman pushed for more information from Theranos and also an IPO or share sale.

Kevin Downey is arguing very passionately against it. He also called the time period post-WSJ story the "conspiracy period."