Thread by @doratki

Good morning from a chilly San Jose! Judge Edward Davila is on the bench and we're in the home stretch of the government's case-in-chief in Elizabeth Holmes' criminal fraud trial.

Judge Davila asks prosecutor John Bostic what the schedule is today, adding "I hesitate to even ask." Bostic says they have a "similarly short" witness to call after Tompkins' cross wraps & "we have witnesses planned for today" - meaning I think it's unlikely they'll rest today.

The parties are arguing over admitting various portions of @rparloff's Fortune Mag interview with Holmes during his examination. Sounds like Parloff will take the stand today. (For journos, who generally try to stay out of litigation, the fact he is testifying is significant.)

Holmes counsel notes that prosecutors haven't decided if they're going to call Erin Tompkins' doctor to testify today, but he's here, and the defense may call him if the government doesn't.

The jury is in the courtroom, and Theranos patient Erin Tompkins is back on the stand. Katherine Trefz is up for Holmes for some more cross.

Holmes' attorney gets Trefz to acknowledge that the government asked her to get another HIV test in August before the trial, and recommended places to get the test. The attorney points out that the test was done with a mouth mucus sample taken with a swab and not venously.

Holmes' attorney asks Tompkins if Theranos told her about the CDC algorithm for HIV testing. She says no. The atty pulls up her HIV results, which had four categories. Only 1 of the four (HIV1_2Ab) was reactive. The others (HIV1 ab, HIV 2 ab and HIV1 RNA +/-) were "nonreactive."

Holmes attorney notes that Tompkins said yesterday she only had one call with Theranos about her test results, but the attorney shows her a document, and she admits that she had a 2nd convo, which she says she's just remembering now.

Holmes' attorney asks her if she remembers Theranos personnel walked her through the CDC algorithm for HIV testing. She replies that she remembers "very little" from the 2nd call, and she was told about the "components," but "I don’t understand what this all represents."

Theranos patient Erin Tompkins says the more she looked at her HIV results from Theranos, the more she found it confusing and she couldn’t understand why three components would be negative but one would be positive.

Holmes' counsel pulled up the CDC's HIV graph and pointing out the path for interpreting various HIV results. (Needless to say, this is dense.)

Holmes' counsel wraps cross with the patient Erin Tompkins saying she had assumed the tests were done on FDA approved devices. The government has no redirect, and calls its next witness: Dr. Mark Burnes.

Burnes says during his 30-year career he's interpreted "over 10,000" PSA tests, which is a blood test used primarily to screen for prostate cancer, and he's treated roughly 200 patients with prostate cancer.

Burnes says in May 2015 he had a patient who was going out of the country for two years for missionary work and he ordered a Theranos PSA test before his patient left, because it was cheaper for the patient. His results came back "flagged as high" at 26.1.

Burnes wrote a note on his patient's lab results, "Very significant rise, recheck maybe lab error." His patient got another test four days later from Theranos, and the PSA results were 1.71, which the dr said were more consistent with his prior results.

Dr. Burnes wrote a note to his patient on his second results that he discussed it w/ Theranos and "clearly some form of lab error occurred and will work with them to make this right for patient and confirm accuracy. Most likely testing is error."

Burnes says he called Thearnos and spoke to its regional lab director, who said the first result was probably an error, and Burns said his patient would take the test for a third time, but he asked Theranos to reimburse the patient for the tests, and the company agreed.

Prosecutor Jeff Schenk points to internal Theranos email exchanges b/w Theranos exec Daniel Young and others in which he suggests it was a patient sample mix b/c the initial test was rerun & came back high again. Schenk notes the third PSA test in June 2015 came back high - 22.9.

Schenk points to internal emails b/w Balwani and Daniel Young. Balwani wanted the issue prioritized and Young said "This is looking like either a sample integrity issue, or some other interference in the patient sample affected the PSA test on Edison."

Young told Burnes it was likely a sample integrity issue & Young wrote Balwani the Dr "was talkative, shared that he likes our cost and really appreciates that we set out to take a smaller amount of blood than Labcorp, who he has used for 20+ years." The email was sent to Holmes.

Burnes said after the 3rd test came back high at 22, he grew concerned it was an testing issue. He asked to speak with the co's lab director & "I expressed a lack of confidence in their tests." He asked Theranos to pay for a 4th PSA test done traditionally. It came back low .95.

Burnes says he received an updated lab results months later, in March 2016, that voided his patients' high PSA results. The corrected report says the PSA results "should not be used out of an abundance of caution. Redraw is recommended as clinically indicated."

Prosecutor wrapped direct. Holmes' counsel begins cross by getting Dr. Burnes to acknowledge that he was initially excited about Theranos and that it charged 8 times less than other labs.

Holmes' counsel gets Burnes to acknowledge that a quarter or a third of his blood-tests were ordered with Theranos and he was ordering Theranos blood tests for about a year before the PSA issue came up and he hadn't had any prior testing accuracy issues.

Holmes' counsel is pointing out the various methods to test PSA and that different testing methods may have slightly different results, but the way she's asking her q's makes it confusing, and even the doctor says "I just don't understand the point we're trying to make here."

The wording of Holmes counsel's qs are hard to follow: "Do you understand that the harmonization of PSA results is particularly challenging bc the way that it's measured is different in different methods?"

The dr says he expects some variation, but they should be "pretty close."

Cross wraps with Holmes' counsel getting Burnes to acknowledge he wasn't provided with a full list of Theranos patients. Prosecutor Jeff Schenk is up on redirect pointing out that erroneous high PSA results could lead doctors to make treatment mistakes.

Dr. Burnes says agrees that wrong PSA results could lead doctors to make mistakes and send patients to get biopsies, which are more risky "if they’re not paying attention." He explains it's not necessarily the high result, it’s the rate of change that would signal a def problem.

The parties wrapped with Dr. Burnes' examination. We're taking a 30 minute break before the government calls its next witness, who will have a short exam as well.

We're back! Prosecutors called their next witness Theranos patient and retired Arizona dentist Mehrl K. Ellsworth, who says he's been vaccinated and got the booster shot, "three of them."

Ellsworth is Mark Burnes' patient, and he received the erroneous PSA blood test results. He said he got the tests, b/c he had volunteered to serve as a missionary in Thailand & Myanmar with the Church of Latter-day Saint and the church wanted his health checked before traveling.

Ellsworth said he paid out of pocket for his first three Theranos PSA tests, which were done via fingerstick, but he didn't pay for the fourth test, which was taken venously. There's no cross. On to the next witness: Fortune Magazine writer @rparloff.

Roger Parloff takes the stand. He's wearing a grey suit and tie and glasses. He recalls that he went to Harvard for undergrad and got a law degree from Yale, but only practiced as an attorney for 5 years and became a journalist in the late '80s.

He says he's now a freelancer and he been published in the online versions of the New Yorker and ProPublica, and currently does work for Yahoo business. He wrote a profile of Holmes for Fortune Magazine in 2014. fortune.com/2014/06/12/the…

Parloff says he tapes his interviews with his subjects and tries to get to know them well. He takes written notes in a spiral notebook and if its a longer feature he'll transcribe those notes to his computer.

Parloff says he recorded about 10 hours of tape of his interview with Holmes, and 2.5-3 hours of his interview wasn't taped. After, he continued to speak with her "from time to time." He said he took notes during "some not all" of the non-recorded interviews.

Parloff says he heard about Holmes and Theranos in March 2014 from Boies Schiller Flexner LLP's press person who pitched him a story on an IP case that Theranos had won. Theranos was represented by the firm's "eminent lawyer" David Boies in the IP litigation.

Parloff keeps coughing in his examination. He says he's received three vaccines and he's "feeling fine," but he has seasonal allergies every November and one of his symptoms is a dry cough.

Parloff first met Holmes in April 2014, and he emailed her before his visit that he wanted to shadow her & hear about the chronology of her life. He says he toured Theranos' HQ, which had offices, including Mark Zuckerberg's former office when the space was Facebook's HQ.

Parloff says he saw the devices, which looked like Dell computer towers, and he was told they could run a variety of blood tests tests using just a few drops of blood. "The specifics of how this was all done was a trade secret, probably multiple trade secrets," he says.

Parloff says Theranos arranged a blood test in a Theranos wellness center at a Walgreens, which had a "soothing environment" and a hi-def TV "with something soothing on it like an aquarium or something." He says the fingerstick test was "very good, it was very painless."

Holmes sent Parloff a Theranos presentation that has the same language that was in presentations given to investors. It claimed Theranos' devices could run "any test available in central labs" based on "1/1,000 the size of a typical blood draw" & has "highest levels of accuracy."

In a May 2014 recorded interview w/ Holmes, Parloff pointed out that Theranos' rival Quest can do 600 tests many dif kinds of samples, including tissue samples from biopsies. "Does your platform replace all of those?" Holmes hesitates.

Holmes says "we can do all of those tests, so we can provide data back to clinicians for all the same tests." Parloff asks why she hesitates to say "replace." She says "We’re processing the samples in different ways, let’s put it that way," but the data is the "highest quality."

Parloff asks why Theranos' website only has 200 tests, when it claims it can do 1k tests. She says Theranos can run more than 200 tests, but only advertises the 200 b/c they're the most commonly tests ordered.

During a May 2014 recorded interview, Fortune Magazine writer Roger Parloff asks Elizabeth Holmes if Theranos can do a variety of tests like HPV tests, pap smears and others.

Parloff: "All of this is stuff you can do?”

Holmes: "Yes."

Parloff: “It's so incredible."

Prosecutor points to various excerpts from Parloff's 2014 Fortune Mag article. They say Theranos runs a high-complexity lab, its devices can run 200 blood tests and the company is ramping up to offer more than 1,000 “all without a need for a syringe.”

Prosecutors are playing Holmes' recorded voice talking about Theranos' tests that are of the "highest quality." In court, as she listens, Holmes is looking across the courtroom and blinking quite a bit, but she's wearing a blue mask so you can't really see her expression.

In another recorded interview, Parloff asks Holmes about board members and their military ties. Holmes tells Parloff he's "welcome" to talk to them, including Henry Kissinger, about Theranos, and says it could have military uses, but she doesn't mention specific DOD contracts.

On the stand, Parloff says that Holmes told him Theranos devices were being used in Afghanistan, but he couldn't mention it in his story and he couldn't ask James Mattis about it in his interview w/ the four-star general and boardmember.

Prosecutor John Bostic pulls up validation reports that Holmes sent Parloff w/ Pfizer logos. (Earlier in trial, an ex-Pfizer scientist said Pfizer didn't validate Theranos' tests or authorize Theranos to use its logo.) Parloff says Holmes never told him it was Theranos' study.

Prosecutor points to two similar reports, but with Schering Plough logos and Glaxosmithkline logos. He says Holmes never told him Theranos made the reports.

Parolff explains Holmes "was very concerned about trade secrets and protecting intellectual property, which I thought was a very legitimate concern," so he would let her speak freely, and then ask her later if he could use certain statements in his article.

Parloff says Holmes never told him Theranos was using modified third-party devices to run tests. In another recorded clip, Parloff asks why Theranos was using venipuncture draws. Holmes replied it's b/c of "capacity" of the system, and how many samples it could handle at a time.

We're taking a 30 min break. Brb!

We're back! The gov't plays a recorded clip in which Holmes said Theranos used a single device to perform tests. Parloff says he asked Holmes if the co used non-Theranos devices to run tests and she replied "uh-uh." "It was a non-verbal response, but it meant correct," he says.

"Those were direct questions and direct answers. They had reinforced the answers that she had given me before," Parloff says. He adds that he didn't record that part of the convo, but made notes of it.

Parloff says after his article was published in Fortune Magazine in 2014, Holmes "praised it effusively" and linked to it on her website, and she never asked for any corrections.

Parloff says he spoke to Holmes again in May 2015, and she told him that Theranos started using third-party devices for "esoteric tests” via venipuncture, which she said were seldom ordered or highly complex, so Theranos wouldn’t have to refer those tests to another lab.

In a July 2015 recorded interview, Holmes told Parloff that there were "only a few tests that actually run on venipuncture," and Parloff says Holmes never told him that 40% of Theranos' tests were performed with blood drawn venously.

In July 2015, Parloff attended a Theranos demo at the Boies Schiller Flexner LLP law firm in which 2 devices ran a potassium test and an Ebola tests separately. "I was a little surprised they needed two machines bc I thought one could do everything," he says.

Parloff said both machines were taking a long time, so he left and got the results later. On a recorded call, Holmes asked Parloff not to mention the tests were run on different machines in any story on it.

Parloff says when the WSJ article came out in Oct 2015, he asked called Holmes and asked how many tests Theranos could do in Dec 2014 on its devices. She told him "50s, 60s.. I can get you that number," he says. She never told him it could only do 12 tests, he says.

Parloff's direct exam wrapped. John Cline is up for Holmes on cross, starting with Roger Parloff's background. Parloff says he was a prosecutor and then defense lawyer after he clerked for a federal judge.

Cline gets Parloff to acknowledge he met with David Boies in March 2014. Cline wants to know what they talked about. Parloff replies he wants to "invoke reporter's privilege." Judge Davila tells Cline to move on for now, and they'll come back to the issue.

Parloff acknowledges that Boies was "enthusiastic" about Theranos and Holmes and Boies connected him with Holmes. Parloff says he doesn't remember if he discussed the "ground rules" for off the record with Holmes.

Parloff says he thought the off-the-record rules changes depending on the convo. "Sometimes I was never allowed to use it, sometimes it was embargoed until a certain time."

Cline plays various clips from Parloff's interview w/ Holmes. In one, she tells him that Theranos transports blood off site to a certified facility.

Parloff invoked reporter's privilege again. Cline moves on asking him if he spoke to Boies for the Fortune Mag piece. Parloff asks if Boies was mentioned in his story. The judge suggests that he review his article.

After looking his article over, Parloff confirms he spoke to Boies for the story, as well as ex-Wells Fargo CEO Richard M. Kovacevich, who was a board member. Cline pushes him on it, but Parloff invokes reporter's privilege again.

"I'm not a media lawyer," and he doesn't want to waive reporter's privilege for some and not others. The judge asks if Parloff has his attorney in the courtroom. He replies that he does. The judge is breaking for 15 minutes to let Parloff consult with his attorney.

We're back! Parloff acknowledges that he spoke to Theranos' high-profile board members for his article, including Mattis, Kovacevich, Kissenger and Boies, and he spoke w/ Dignity Health and Blue Cross Blue Shield.

Holmes' counsel asks Parloff if some of his questions about Theranos' tech came from Theranos' competitors. "I did research and I heard various criticisms, and I asked her to address those questions and criticisms," he says.

Parloff pauses before answer a q and Judge Ed Davila interrupts, and says we'll take another break for Parloff to talk to his counsel. "If it's important to you, it's important to us, including Mr. Cline. He doesn't want to invade any privilege."

We're back. Parloff spoke to his attorney. On the stand he says he asked Holmes to comment on her competitors' criticisms of Theranos.

Cline tries to get Parloff to concede his handwritten notes of his Holmes' interview were verbatim of what was said. He disagrees, saying "it is meant to be a verbatim transcription of what was said," but he adds that he's not a skilled court reporter and does the best he can.

Cline turns to Parloff's "Siemens conversation," in which Parloff claims Holmes replied "uh-uh" when he asked her if Theranos ran tests in third-party devices. He says he asked her the q, b/c "I thought it was obvious but I didn’t want something like that slip by."

Cline gets him to acknowledge that his question wasn't recorded and any notes he had on it have been deleted from his computer.

Cline points out that Parloff turned over his tapes and notes to a grand jury. Parloff is muttering and hesitating a little bit, as he's seemingly thinking through his answer. He points out that at the time he wasn't represented by counsel.

Parloff says he highlighted certain things in his notes that he thought might be relevant to the prosecutors before he handed them over.

(This is a great example of why reporters and freelancers really need to have legal counsel on hand.)

Trial is breaking for the day. The jury left, and Judge Davila tells Cline to talk to Parloff's counsel during the break so that they don't run into reporter's privilege issues when his cross continues tmr.✌️

I peaced out too soon! Prosecutor Robert Leach says if the government rests its case-in-chief tomorrow, the defense informed the government their first witness will be a Williams & Connolly paralegal. (weird.) And now, I'm out of here.✌️✌️

Fortune writer and freelancer Roger Parloff told a California federal jury yesterday that Elizabeth Holmes duped him. And after 34 trial days, the government is expected to rest its case-in-chief today. Here's my recap of yesterday's testimony! law360.com/articles/14417…