🩸 "Our Holmes Matter" continues in San Jose. 🩸
Holmes lawyer Lance Wade is questioning Dr. Das, Theranos's final lab director. Yesterday he testified that he decided to void as many as 60k Theranos tests.
Holmes lawyer Lance Wade is questioning Dr. Das, Theranos's final lab director. Yesterday he testified that he decided to void as many as 60k Theranos tests.
(Me and the judge are trying to make "Our Holmes Matter" happen
https://twitter.com/eringriffith/status/1447957954662002688)
Before Dr. Das joined Theranos, CMS inspected Theranos's labs and issued a damning report about lab deficiencies, which we saw yesterday.
https://twitter.com/eringriffith/status/1458183876497457157
Wade is deflecting blame to Sunny Balwani, who was in charge of the lab. Before Dr. Das, lab directors reported to Balwani. When Das joined, he reported directly to Holmes, and Wade elicits testimony that this was a change designed to address the issues.
We talk about all the people working on addressing the problems. Wade: "All these people were working hard and in good faith as they were undertaking these efforts is that fair?" Das says yes (obviously).
Now Wade blames Das:
You’re familiar with Holmes' background and training?
She wouldn’t be qualified to serve as a lab director in a high complexity lab?
But you were qualified?
Ultimately the judgements were yours?
You were responsible for the ppl working under you?
You’re familiar with Holmes' background and training?
She wouldn’t be qualified to serve as a lab director in a high complexity lab?
But you were qualified?
Ultimately the judgements were yours?
You were responsible for the ppl working under you?
Now Wade attempts to blame former lab director Adam Rosendorff (without mentioning that he resigned in frustration and leaked to WSJ).
You recall the laboratory was not well-run when you joined? And that was why you were working to improve it?
You recall the laboratory was not well-run when you joined? And that was why you were working to improve it?
Wade makes it seem like Theranos was heroic for voiding the tests, given media scrutiny and stakes:
It was a big decision to make to void all of the assays for their analyzers?
It wasn’t necessarily something anyone wanted to do?
The preference would be not to have to do that?
It was a big decision to make to void all of the assays for their analyzers?
It wasn’t necessarily something anyone wanted to do?
The preference would be not to have to do that?
During a break the lawyers are fighting over the upcoming testimony of Alan Eisenman. ⤵️
One issue: Eisenmen, who invested in Theranos, apparently said something about punishment of Holmes in the hallway and defense is concerned about that. And secondly, they're redacting a line from an email that says he had most of his net worth (‼️) tied up in Theranos
Now they're doing a sidebar about scheduling, which I really wish would be a main bar so the press could have any sense whatsoever of what to expect and plan around...
Back to cross-exam. We see an email in April 2016 from Dr. Das to Holmes titled "some good news, for once"
data from 2 valuations looked "excellent" he wrote, even tho he was not "a fan of the studies themselves"
data from 2 valuations looked "excellent" he wrote, even tho he was not "a fan of the studies themselves"
This was interesting! ⤵️
https://twitter.com/saraashleyo/status/1458534753443983361
Dr. Das testifies that he joined Theranos after the WSJ article had been published but was aware of it. We don't get to hear why or what his mindset was around that decision.
He testifies he was not aware of the reasons Dr. Rosendorff left, or any of the prior red flags that had been raised by Tyler Shultz and Erika Cheung.
Dr. Das was asked in cross-exam about whether his decision to void the tests was "conservative." In redirect, he was asked about it again and he said, "I was just following the data."
We also heard more about the Holmes excuse for the lab problems - she blamed it on quality control issues, not the machines. Apparently that excuse was given to CMS in a letter that Das signed, even though he disagreed with that part.
Defense has spent time in testimony painting Holmes as an inexperienced person who could never have understood the details of how a lab works. Prosecution pointed out that she was CEO of the company and touted the patents she claimed to have written.
Das testimony ends with a very awkward exchange where Wade prompted him to recall a quote from the Best Exotic Marigold Hotel. "Everything will be alright in the end and if it's not alright, it's not yet the end." Why was that relevant? I dunno.
Alan Eisenman, a Theranos investor, is now on the stand. He was introduced to the company by David(?) Harris, the Holmes family's financial advisor in Houston.
Eisenman testifies that, around 2006, he was told that Larry Ellison was on Theranos's board and was taking $20m of an upcoming $30m fundraise.
"My understanding was these international pharma companies had adopted this tech in some of their clinical trails."
"My understanding was these international pharma companies had adopted this tech in some of their clinical trails."
Eisenman had many 1-1 calls with Holmes and she was the main source of info on the company.
In 2006 Holmes was already saying she was talking to bankers about an IPO in the next 12-18 mo and claiming $50-60m in revenue in '07 and $200m in '08.
In 2006 Holmes was already saying she was talking to bankers about an IPO in the next 12-18 mo and claiming $50-60m in revenue in '07 and $200m in '08.
Altogether Eisenman's family invested just under $1.2m into Theranos. ($900k for him and his wife, $90k for each of three kids)
His testimony follows a pattern that is very familiar by now: What he understood about what Theranos's technology could do and how he learned it.
His testimony follows a pattern that is very familiar by now: What he understood about what Theranos's technology could do and how he learned it.
In 09 Theranos was telling Eisenman about huge demand for its cartridges. "These are numbers that are pretty astounding and create a pretty significant value for this company," he said.
Theranos told investors it would become cash flow positive by the end of 08.
Now we're going on a break.
Now we're going on a break.
Over time Eisenman asked Holmes to keep her quarterly updates coming and was denied. "There was no information coming from the company. To me that's a sign of trouble."
His push for more information about Theranos's performance frustrated Holmes. "I was more proactive than most ... mgmt didn’t like the fact that I was trying to communicate and get information."
To solve that problem, Holmes offered to buy him out at a 5x return.
To solve that problem, Holmes offered to buy him out at a 5x return.
In a May 2010 email, Eisenman asks Holmes whether the company hit the $200m revenue it predicted for 2009.
In a later email, he testifies, Holmes said that goal was "stretched another year."
In a later email, he testifies, Holmes said that goal was "stretched another year."
From there things got spicy. Eisenman reached out Don Lucas asking for information. Lucas fwded it to Holmes and she responded:
"Alan, we have communicated about this multiple times before yet you choose to continue going down this path.
Elizabeth
"Alan, we have communicated about this multiple times before yet you choose to continue going down this path.
Elizabeth
He responded: "It has been over 2 years since you have communicated with your investors. ... Does this mean that you can't or won't communicate with me or the other investors?
Then Theranos was raising money again and it sounds like *despite all of this drama* Eisenman was willing to invest more money!
Before it was fundraising, Eisenman testifies that Sunny Balwani was "not only non-responsive but aggressive with me."
"To say minimally He was hostile for an extended period of time."
"To say minimally He was hostile for an extended period of time."
Then suddenly that mood changed.
And despite all that, Eisenman STILL invested $99,990 into Theranos in 2013.
Why? "This is called a seat at the table."
And despite all that, Eisenman STILL invested $99,990 into Theranos in 2013.
Why? "This is called a seat at the table."
Eisenman emails Holmes and Balwani a negative UBS report about Theranos. Balwani responds that it "sounds like an uninformed consultant"
Eisenman responds asking for more info and Balwani responds with this:
Alan.
I have no intention of responding to this email and explaining the tech and processes. Please stop sending me with emails everyday.
thanks.
Alan.
I have no intention of responding to this email and explaining the tech and processes. Please stop sending me with emails everyday.
thanks.
Guy was told an IPO was coming almost a decade earlier and now can't get a call back. He is now sending emails with PLEASE RESPOND!!! in the subject lines. And Balwani responds with "I already responded to you"
Eisenman emails again asking for more info about potentially selling his shares. Balwani's response:
“Your emails are insulting full of inaccurate statements and wasteful of our time.
Our next response to this email and all your future emails will come from our counsel."
“Your emails are insulting full of inaccurate statements and wasteful of our time.
Our next response to this email and all your future emails will come from our counsel."
Kevin Downey, Holmes's lawyer, is cross-examining Eisenman. Raising his voice a bit asking about his investment experience and about his conversations with Holmes. Pointing out that Eisenman only had 1 short call with Holmes before investing.
Eisenman: "Can I ask you what a 'service frame agreement is? I don't know what that means"
Downey: "You cannot."
Downey: "You cannot."
Downey pulls up Eisenman's investment agreement with Theranos which contains a legal disclaimer saying the company made "no assurances" it would ever go public.
Eisenman pushes back that Holmes told him Theranos was talking to Morgan Stanley about an IPO in the next year.
Eisenman pushes back that Holmes told him Theranos was talking to Morgan Stanley about an IPO in the next year.
Twice in a row, Eisenman goes on a rant that "This is what they call a boilerplate as you know" and Judge Davila cuts him off, telling him to answer the question asked.
"I'm trying," Eisenman says.
"I'm trying," Eisenman says.
This is why boilerplate legal butt-covering exists! It can (and will) be used as a weapon in court.
Wrapping up. That's all the blood for the week. Next week we're going all five days🩸🩸🩸🩸🩸🩸🩸🩸🩸🩸🩸🩸🩸🩸🩸
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