#ElizabethHolmes trial day 25:

T-1.5 hours until #Theranos co-lab director Lynette Sawyer is back on the stand.

Enough time to listen to our latest episode of #TheDropout: Patterns.


@RebeccaJarvis @VicThompsonABC @TheDunnDunn @TheOrdonezTimes
Short week - only today and tomorrow.

Pre-trial arguments will begin at 8 a.m.

Some "thorny legal issues" will be discussed, as defense attorney Lance Wade put last Thursday.
Yesterday there was an hour-and-a-half convo between the parties regarding the scope of questions permissible to ask former Fortune writer Roger Parloff.

He could testify as early as this week, attys said.

His article has been frequently referred to throughout the trial.
#ElizabethHolmes is in the courtroom wearing a royal blue dress and a black blazer.

Joining her in court today: her partner Billy Evans, her mother Noel, and two other friends.
First evidentiary matter: a Jan 2016 CMS document, resulting from a 2015 inspection of Theranos — which the next witness, Dr. Kingshuk Das, may testify to.
"That inspection report triggered a series of adversarial communications between Theranos and CMS regarding Theranos’ efforts to remediate the deficiencies found by CMS," a document showed

Prosecutor Robert Leach argued the comms show a "desire to minimize" via #ElizabethHolmes
Defense attorney Lance Wade argued against the admission of the CMS report, through Dr. Das, because Das didn't author the report.

Thus, Wade wouldn't be able to cross examine the former lab director on the context and preparation of it, he told Judge Davila.
“I appreciate your concern,” Judge Davila told Wade, “It’s a wait and see. Let’s see what happens.”
Prosecutor Robert Leach said the defense is suggesting "the buck stops with the lab director," in one of his evidentiary arguments.
And... two hours later we have a jury.

"Our video system is compromised," Judge Davila told the 14. Their screens are not working.

Court staff used the morning to set up a projector. Exhibits will be shown on one of the courtroom's white walls.
The lights have been lowered, and a table lamb has appeared in the witness box.
Judge Davila apologized to those in the courtroom.

"I’m embarrassed that the courtroom is having these problems," he said. "This is not supposed to happen."

"It’s regrettably a display of issues at this court that im not proud of."
Former #Theranos co-lab director Lynette Sawyer is back on the stand.
"Good morning Dr. Sawyer," Lance wade greeted the witness.

Sawyer was brought into #Theranos by a lab consulting company, he refreshed the jury.

Exhibit A-1 has been projected high on the wall.
“Services and compensation for Lynette Sawyer”

1. Contact, Consultant's principal Company contact: Sunny Balwani, President & COO
Wade pointed to the line in the document that denoted Lynette Sawyer as a co-lab director

"That was clear from the outset, correct?"

Sawyer was brought to Theranos to fill in after Dr. Adam Rosendorff quit.

She signed many SOP's when she came in — and Wade suggested why.

"...Improving the paperwork and its policies given some deficiencies with respect to a prior lab director?"

"No," she replied.
"A new lab director must sign SOP’s within a reasonable amount of time," she explained.

"So if there were no policies or changes of policies in place you were there to sign off on them," Wade followed up.


"You did that for 100s of policies."

"That was true."
We are looking at a "Standard renewal for a clinical laboratory license" signed June 12, 2015.

It lists Lynette Sawyer as a co-lab director and lists her hours: "1-5 hours (as needed)"

She testified that is "probably" an accurate representation of her hours.
"You had a convo with Balwani and you said he was pushy," Wade asked Sawyer, in a line about her departure from the #Theranos.

By pushy, she meant for her to stay.

"He was hoping I'd stay longer," she testified.
“You kindly agreed to stay until the end of May,” Wade asked Sawyer, pointing out her contract was due to end in the middle of the month.
But in fact she stayed until the end of June, Wade elicited.
We're going through an SOP which Sawyer signed in May 2015. It has to do with the LIS (the lab info system, which stores patient, lab testing, and QC data)
"What is a Nanotainer?" Wade asked

"I don't know," Sawyer testified.
Wade highlights this line in the SOP — which he has brought up with many witness.

“Venous draw only” indicates that all visits for which that physician is the ordering physician will default to a venous draw for the collection method.
"I was not aware [about] the decisions for drawing venous or capillary blood," Sawyer testified.
Sawyer did remember Langly Gee — the Quality Control Manager.
We are looking at an email between Sawyer's boss Jerry Hurst to Sunny Balwani, a reminder to the COO that Sawyer was set to end her co-director duties at the end of June.
Balwani responds.

"Thanks Jerry and Lynette. Please let us know if anything has changed or changes...," he wrote.
Sawyer sent Daniel Young a scan of her Bioanalyst License in Aug. 2015.

"That bioanalyst license is what gave you the ability to serve as a lab director?"

"They wanted to make sure they had a copy of that in their files?"
Wade ends there. Prosecutor Robert Leach back on for redirect
Sawyer has chuckled frequently on the stand. A contrast from last Thursday when she appeared nervous.
Did you have any understanding that theranos was actually using fingerstick blood to be tested on modified third party devices?

Leach again emphasizes Sawyer — who was the #Theranos co-lab director — never went to the Theranos lab
Wade is back for recross.
And he's done. Sawyer is excused.
Next witness: Former Theranos Lab Director Dr. Kingshuk Das
In Dec. 2015 Dr. Das was the #Theranos California clinical lab director.

He testified he served as the lab director for approx 2.5 years
Leach is running through Dr. Das' education / medical training.

"So you went from UCLA to USC?" Leach asked.

Some laughs in the courtroom.
Dr. Das responded to a job posting on the #Theranos website. He interviewed with #ElizabethHolmes and was hired.

He did not start right away in Dec. 2015, rather in mid-March 2016.
Leach launches right into CMS

CMS- Center for Medicare and Medicaid Services. They oversee clinical laboratories in the United States, Das testified.
493.1840 Suspension, limitation or revocation of any type of CLIA certificate

a) Adverse action based on actions the laboratory's owner operator or employees. CMS may initiate adverse action to suspend, limit or revoke any clia certificate if CMS finds...
(6) Violated or aided and abetted in the violation of any provisions of CLIA and its implementing regulations.

Leach read out loud — defense objected twice to this line, overruled both times.
"Operator" means the individual or group of individuals who oversee all facets of the operation of a lab and who hear primary responsibility for the safety and reliability of the results of all specimen testing performed in that laboratory.
(All from the CLIA regulations)
"Describe for us what you did to orient yourself with the lab," leach asked.

Das went one day per week, during his first 3 months:

"Most of that time spent getting to know the physical space, the employees, the consultants, as well as dealing with some paper work for CMS."
When Das started at #Theranos he testified he was not aware the California lab was running any tests on the Edison, or on any non-fda approved machines.
“That was nearly the sole responsibility that I had,” Das testified about his preparing of paperwork pursuant to a a CMS audit.

He was working to respond to the Statement of Deficiencies, we heard about earlier in pretrial arguments.
Das had “many conversations” w/ #ElizabethHolmes about his response to the CMS Statement of Deficiencies.

He even traveled to DC with the CEO to meet with individuals from the CMS, Leach brought out.
Leach offered the four-page cover letter of the CMS Statement of Deficiencies into evidence. Accepted and projected.

Dated Jan. 25, 2016 - addressed to Dr. Sunil Dhawan

"The onsite survey was completed on Nov 20, 2015... As a result of the survey, it was determined that your facility is not in compliance with all of the Conditions required for certification in the CLIA program," the letter read.
"...Discussions with Ms. Holmes about the need to respond urgently to CMS?" Leach asked.

"Yes we did," Das replied.
“[Holmes] was part of some of those discussions,” about the specific deficiencies cited by the CMS, Das said.
Leach highlighted the Conditions cited by CMS:

Condition: Hematology

Condition: Analytic systems

Condition: Laboratories performing high complexity testing; laboratory director

Condition: Laboratories performing high complexity testing; technical supervisor
Judge instructed the jury the CMS report will come in for #ElizabethHolmes "state of mind" (her knowledge / intent) — not for its truth.

He initially forgot the truth part of the instruction, but Wade had him clarify
Long pause here. We've been sitting in silence for at least two minutes.
more technical issues, this time regarding prosecutor redactions.

"It seems to be the order of the day," Davila quirked.
After a long wait, Page 55 of the CMS Statement of Deficiencies report is projected to the jury.
Leach highlighted this finding:

#3: Based on review of quality assessment (documentation and QA procedures the laboratory failed to have a quality assessment (QA) procedure established to id and correct problems with the QC program for the Theranos Proprietary System (TPS)
"Was part of your job as lab director to investigate this finding..and to come up with the company response?

Prosecutor Robert Leach asked Dr. Das to explain Standard Deviation to the jury.

"Would you like the more technical definition?" the witness asked.

"I'd like the less technical definition," Leach replied, to some laughter around the courtroom.
"In July 2014, the data revealed the following tests showed percentage of QC samples with more than 15% of values greater than 2 SD: Testosterone 28%…" the report said

"At any point did you tell CMS the company disagreed with this particular finding?" Leach asked

"No" he said
Leach went through three other QC findings by the CMS, in their statement of deficiencies

After each, the prosecutor asked

"At any point in time did you tell CMS you disagreed with this finding"

The witness could not recall ever disagreeing.
"Did you give Ms. Holmes a reason hit the Edison was prone to erroneous results?" Leach asked.

"In reviewing the data, there ended up being an easily digestible answer," Das explained. "Female patients turning up PSA results which would be highly unlikely."
Females should not generally have PSA, Das testified he told Holmes.

But #ElizabethHolmes offered an "alternative explanation"

She cited an "article or two" which described a situation in which females with a "subset of a rare breast cancer" would turn up PSA results, he said.
"Was that explanation satisfying to you?" Leach asked.

"It seemed impossible," Das testified.

#ElizabethHolmes #Theranos
"The QC failures ID'd by this comprehensive retrospective analysis reflect a global and long-term failure of the QC program for this instrument," Das wrote in a doc about TPS 3.5 instruments.

“I found these instruments to be unsuitable for clinical use,” Dr. Das testified.
“Out of an abundance of caution, the lab has voided all patient test results reported from the TPS 3.5 instruments," Das wrote to the CMS.

"Did you have convos w/ ms holmes about how to communicate theranos’ voiding of tests?" Leach asked.

"Yes we did," Das replied.
I described our rationale," Das testified. "I tried to present it in a more understandable format. I described the issue in terms of the validation data…describing that these instruments were not performing from the very beginning."

Holmes offered an alternative explanation.
She described it as a QC or a QA problem, Das testified.

"The validation data had no bearing on the QC or QA program," Das testified.
We're on break while the gov't gets some of their redactions in order.
Back in the courtroom. The lamp is lit as well as the overhead lights.
"Based on review of QC data and Monthly QC Reports, the lab failed to have a QA procedure to ID and correct problems with the QC values for the Theranos Proprietary System (TPS) when precision did not meet the labs requirement for precision," another finding read.
Das testified he reviewed the precision data, as he compiled a response to CMS.
On Device E000110 (an iteration of the Edison) CMS cited the following "undesirable" results, as Dr. Das put.

QC Level 1 = 34.3 CV%
QC Level 3 = 48.5. CV%
(For VB12)
Dr. Das testified to voiding PT/INR tests (blood clotting tests). He told the CMS this was because of the following:

-Errors in the calculation of the values
-Deviations in the patient test distributions
-Quality Control Issues
"...Did you investigate whether there were instances where #Theranos reported patient results without passing quality control?" Leach asked.

"Yes," Das replied.
Did you find instances of that?


More than one?

We just looked at an example, cited by CMS.

And another which showed a "10x warning" on the Vitamin B12 test.

"In the course of your work, did you see #theranos continue to report patient results after this 10x warning?" Leach asked

"Yes," Das testified.
Leach ends his direct.

Wade has ten minutes to begin his cross examination.

I'd gamble his cross goes pretty deep into Wednesday as well.
“I'd like to start by just orienting everyone to some of the dates here," he began.

Mr. Leach asked you about that CMS inspection

... that inspection concluded in Nov 2015.

And you didn't interact with the company until Dec. of 2015
And you accepted your job in mid December of 2015

And you started on a contract basis

And then the report that Mr. leach showed you was issued towards the end of January

So there was a period of time between when you started and when you received the CMS report
And in that period of time — even before you got that report — #Theranos was working on strengthening their lab practice

^^ the culmination of Wade's line.
"This was all in a part of an effort to strengthen the CLIA lab in theranos," Wade asked, after eliciting that a "big" team was brought in for that matter.
Was it you observation that this team was working diligently?


Really hard?


in good faith?

Wade is running Das through the way the lab director familiarized himself with the lab when he first arrived. who he met, what he reviewed.

"Ms Holmes placed no limitations on you whatsoever as to what you could look at, right?"

"You were under a pretty tight timeframe to be in a position to respond to these issues right?"


"There were pretty firm deadlines in a desire to dig in and tackle those issues aggressively?"
Wade put his cross on pause, and Das was dismissed.

Das will return tomorrow for the last trial day of the week.

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More from @MilesGCohen

10 Nov
"Alan. I have no intention of responding to this email and explaining the tech and processes. Please stop sending me with emails everyday," Sunny Balwani responded.
"I had suspicions that things were not as they [had] communicated. I had a significant amount of net worth involved in the company," Eisenman answered, after Bostic asked why he wanted more info.

He wanted to "reduce his position," he said.
An April, 2015 from Eisenman to Balwani and Holmes has the subject: "PLEASE RESPOND!!!"

"It is really unfair for you to play this cat and mouse game with me...I cant make a rational decision to sell or hold my stock with the lack of info you have provided," Eisenman wrote.
Read 28 tweets
10 Nov
#ElizabethHolmes trial day 26:

The final Theranos lab director, Dr. Kingshuk Das, will be back on the stand when court begins.

Das testified on direct to voiding "50-60k" clinical tests and finding an Edison prototype "unsuitable for clinical use," following a CMS audit Image
Next week the prosecution will recall Danise Yam (the first witness) so that they can admit one email, we learned in pretrial arguments.

The gov asked the defense to stipulate to its admission, but Holmes' team refused.
Dr. Das is on the stand. Wade is back on for cross.
Read 101 tweets
4 Nov
#ElizabethHolmes trial day 24:

Thursday is the new Friday.

No indication on who will testify next other than the sighting of agents guiding an older balding man through the court's fifth-floor hallway

@ABC's @Athon04 caught me walking into court 😂
"The United States Calls Chris Lucas"

Lucas was a #Theranos investor, he founded Black Diamond Ventures.

We heard from Investor Bryan Tolbert earlier in trial whose HALL Group invested in Theranos through Black Diamond Ventures in 2006.
Read 121 tweets
3 Nov
#ElizabethHolmes trial day 23:

Dr. Henry Kissinger's longtime lawyer Dan Mosley, who personally invested $6 million in Theranos after the former Secretary of State asked him to vet the company, is back on the stand Wednesday morning where he will likely complete his testimony.
In pretrial arguments, Judge Edward J. Davila said he will "very well likely" grant the defense's motion to exclude testimony from patient "B.B." who received purportedly inaccurate results from an assay not included in the government's indictment or bill of particulars.
"It sounds like the government was confused as to its assays," Defense attorney Katie Trefz told the court.

“This is the U.S. government, this is a criminal case, they should be held to a higher standard.”
Read 66 tweets
2 Nov
Schenk pulled up the "Certification of designation of series c-2 preferred stock" and is going through it with Mosley.

Breaking until 2 ish PT.
Mosley is back on the stand, and Schenk is having him decipher some handwritten notes he took about #Theranos at an unspecified time.

His hand writing is worse than mine.
Schenk ran Mosley through a slide deck he received from #Theranos. He highlighted many of the statements we have seen from other slide decks in other investors' binders.

They touch on accuracy etc.

The AUSA is asking him if the statements are consistent with his understanding.
Read 38 tweets
2 Nov
#ElizabethHolmes trial day 22:

The water is back on in the courthouse.

Defense attorneys Kevin Downey and Lance Wade are sporting fresh cuts.

Pretrial matters first, and then DeVos family investment manager Lisa Peterson will return to the stand.
Today's witness list:

1. Lisa Peterson -- last week testified to a $100 billion investment by the DeVos fam

2. Dr. Cullen -- "a brief witness"

3. Daniel Mosley -- Investor / partner Cravath Swaine and Moore. (Dr. Henry Kissinger was his client, Wade said)

@FortuneMagazine writer Roger Parloff will testify next week at the earliest, Prosecutor John Bostic revealed.

This was his front page piece on then burgeoning #ElizabethHolmes:

Read 61 tweets

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