Thread by @doratki

Happy Friday! I'm in San Jose for day 35 of the gov't's criminal fraud trial against Elizabeth Holmes. Prosecutors are expected to rest their case-in-chief today. The parties are up arguing before Judge Ed Davila about Holmes' 1st witnesses. Full steam ahead! (Knock on wood.)

Prosecutor Jeff Schenk notes that Holmes' defense team has spent 65 hours of trial time already examining witnesses so far, and prosecutors have taken 53 hours. "The defense case has begun," he says.

Holmes' attorney, Amy Saharia, is up for the first time during this trial arguing over the admissibility of certain witness testimony. She argued many of Holmes' pre-trial fights, but she hasn't made any arguments or any done witness cross examinations to date.

Prosecutors want the judge to bar ex-Amgen exec Fabrizio Bonanni from testifying. He joined Theranos' board in May 2016, but the feds say that's outside the alleged investor fraud period, which runs from 2010 to 2015. But Holmes' counsel says Bonnani will rebut key allegations.

Saharia says Bonnani has personal knowledge of Holmes' actions and can offer insight into her state of mind in 2016, which prosecutors have opened the door to during their examination of other Theranos board members.

For the legal nerds, the parties just quibbled over Jencks Act disclosure requirements. The DOJ says the defense hasn't met its requirements, and Saharia repeatedly says it's only required for written statements.

The judge asks if it's fair to interview a witness for 30 hours and not write down anything. "It’s not in the true spirit of reciprocal discovery," he says. Saharia replies, "I think that’s done all the time, your honor."

Prosecutor Jeff Schenk also complains that the defense team disclosed exhibits late last night and it's unfair. Saharia notes that prosecutors have done the same throughout trial and it's the nature of trials. The judge seems to be getting annoyed.

Another Holmes' attorney, Katherine Trefz, says she doesn't know what exhibit the gov't is concerned about, but suggests an adjournment to discuss the issue. The judge definitely doesn't like the suggestion and points out that the jury will get disinterested.

Judge Ed Davila tells the attorneys "I hope you're being strategic about timing." "My sense is you don’t want the jury to be deliberating during the 3rd week of December" during the holidays. "That doesn’t benefit either side."

The jury is back in the courtroom. The judge tells the jury that we're not going meet the Dec. 6 "deadline" (surprise!) that he told the jury at the outset of the trial, which was about three months ago.

Holmes' counsel John Cline continues Roger Parloff's cross impeaching him. Parloff said previously he "had the impression" that Theranos devices were in Afghanistan b/c Holmes told him he couldn't mention it in his story. Parloff: "That may be right, that must be what I said."

Parloff: It was a pretty strong inference. She was telling me 'Don’t tell Gen Mattis about the deployment in Afghanistan.'

Cline: She never actually told you that there was use in Afghanistan did she?

P: I thought she did... It may be a very strong impression. I’m not certain.

Cline highlights the difference b/w CPT codes, which are in the 1,000 range, and blood tests. Parloff's story referred to blood tests and not CPT codes, but he adds Holmes never corrected him after the story ran.

Cline: Are we finished with that topic?

Parloff: Up to you.

After a short break for Parloff to consult with his attorney, Parloff acknowledges he met with Theranos board members, physicians, various folks in the industry and "minimally" with the FDA in his reporting.

Cline points out Parloff emailed a physician asking him to respond to criticisms he heard from Theranos' rivals who were "pooh-poohing" the tech. The doctor responded to the q's and said it's "not surprising that the threatened entities would come back with these points."

After getting some dates into the record, Holmes' counsel wraps Parloff's cross. Prosecutor John Bostic is up for some redirect. He begins by pointing out Holmes said in a recorded interview Theranos' devices "might have use in the military."

Bostic gets Parloff the acknowledge that his written notes attempt to be "verbatim" and not "impressions." W/ that the parties wrapped Parloff's examination.

Prosecutors say one patient doesn't want to testify, so the government is dropping one fraud count related to that patient. And the government has rested it's case-in-chief. 🍾🥳We're taking a break before the defense calls it's first witness. Brb!

Oh wait. It's a break for the jury not for the attorneys. There are some "housekeeping matters." The defense plans to move for an acquittal, but they'll make the arguments on the motion on another date. (This is kind of like a JMOL motion and likely will get denied.)

Holmes' counsel again wants the judge to scrap the CMS report from trial. But prosecutor Robert Leach says this is the 3rd or 4th time the defense has made a motion to exclude the report, and the judge should deny it for all the same reasons he denied the previous motions.

Holmes counsel wants the judge to scrap Erin Tompkins' testimony interpreting her HIV test results, b/c she's not an expert, and her more recent test result wasn't the same type of HIV test, so the jury can't compare the results.

Holmes' counsel also renewed motion to suppress Theranos customer complaints, which the judge previously denied. This is just a motion to preserve Holmes' rights on appeal.

We're taking a 30 minute break now before Holmes' defense calls their first witness, a paralegal who's a summary witness and will read some stuff into the record.

And we're back! The parties are arguing over whether 176 Theranos patents can be admitted into the record. Prosecutor Robert Leach says some of the patents were issued this year, and they're "pieces of paper and they're not proof that the technology works."

Leach says to dump a list of patents without tying them to the blood-testing devices, "really serves no purpose from a relevance point of view." Holmes' counsel says the gov't just raised the issue now and they won't bring in patents issued after the alleged fraud period.

Holmes' counsel Katherine Trefz says the patents are relevant b/c in part it goes to her state of mind. Judge: "I’ve been hearing that a lot and I’m not sure what it’s for... What's the state of mind? That she's smart?" Treftz replies no, it goes to her knowledge of the tech.

Judge Ed Davila is usually pretty even keeled, but today he seems extra testy with the length of Elizabeth Holmes' criminal trial.

"We're not going to have Markman hearings about any of these patents," he quips.

After a break, the jury is back in the courtroom. Judge Ed Davila is on the bench. Holmes' counsel calls the defense's first witness: Trent Middleton, who is a paralegal at Williams & Connolly, which represents Holmes.

Middleton is a summary witness and he says he reviewed "easily thousands" of pages of docs in preparation for his testimony, including Theranos patents.

(Get ready for a bunch of stats comin' at ya.) Theranos has a total of 159 patents and from 2010 to 2016, it had 59 patents issued, while 134 patent applications were pending. The co reported $217.8M "customer receipts" from Jan 17 2011 to Jan 12 2014.

In 2013, Theranos received $58.6M in option/stock proceeds, and $114.5M in 2014, and Theranos received 275 separate investments, which included investments from Holmes.

A doctor's lab reports show that he had 233 patients who used Theranos' labs, 110 of those had multiple visits for a total number of 490 visits, and the total number of tests ordered were 1,969.

Holmes' counsel points to pricing data that shows 23.8% of Theranos tests were under $5, 55.4% were under $10 and 96.7% were under $50. The point here seems to be that they were cheap.

This data and testimony is about as dry as the glass of wine I hope to have once this trial day is over.

And we're done with the paralegal's direct exam. Prosecutor Robert Leach is up on cross, asking Middleton to explain how he got the assignment. He says he got it in Aug, it's his first time testifying, and he gets paid by the law firm and gets a bonus that's merit based.

Leach seems to be trying to suggest that Middleton would've gotten fired if he didn't take the assignment, which seems like a strange line of questioning. Summary witnesses aren't super common in my experience, but they're not unprecedented.

Middleton acknowledges that he didn't make the template of the slideshow containing the data that he was asked about, and he's not a patent expert or patent attorney.

Leach points to a slide titled "Entities that invested in Theranos," which shows there were 275 investments. He asks "It's more than just entities isn't it?" Middleton says he doesn't know, so Leach pulls up another document showing individuals, like Alan Eisenman, who invested.

Middleton agrees lawyers suggested using the word "entities" to describe the investors, but he points out there were funds that invested as well as individuals. (At this point the jury def knows both individuals and funds invested, so this seems like not a great use of time.)

OK, the parties wrapped with Middleton. The defense calls its next witness: ex-Amgen exec Fabrizio Bonanni, who joined Theranos' board in 2016.

One note, most of witness cross during the gov't's case-in-chief was done by Lance Wade and Kevin Downey. Now that the defense is presenting its case Katherine Trefz and Amy Saharia have been asking the q's & making arguments. The gender shift may/may not be a legal strategy.

Bonanni says in early 2016 his former boss told him about Theranos' "regulatory and compliance issues." "He thought that I could help out." He says he met with Holmes in May 2016 for several hours and she asked him to be its COO, but he said to her "I was too old for that."

Instead, Bonanni agreed to be on Theranos' board, starting in June, but he says he wasn't paid. Bonanni says he knew Sunny Balwani was Theranos' former COO, and that he had left the company.

Trefz pulled up an image of Theranos' miniLab blood-testing device and Bonanni is describing its various components.

We're taking a 30 minute break. Brb!

We're back! Holmes' counsel plays a clip of Theranos' miniLab with a touchscreen. The clip shows a person with a glove inserting a cartridge into the device.

They're playing more video clips of the miniLab and its internal workings. At the bottom of the footage is a line that says, "This technology has not been cleared or approved by the FDA and is not for sale in the U.S."

This looks like one of the videos that the jury is viewing, and the witness is describing the process as it goes along.

Trefz tries to ask Bonanni about Theranos' device commercial use but the judge sustains multiple objections, and tells her to lay a foundation. She asks him about the board meetings and he says they were "lively."

Bonanni says he focused on Theranos' corporate compliance program and strengthening management and Holmes took his advice. He says David Boies' firm was representing the company "on a number of subjects," and the other board members were mentors to Holmes.

Bonanni says the other board members wanted to counter allegations made in press w/ disclosures & data from UCSF and Cleveland Clinic, but he disagreed. "My view was that the validation that matter was that obtained by the FDA and the co should pursue clearance by FDA."

Bonnani says none of the board members who were on the board before he joined the company told him that Holmes misrepresented Theranos' technological capabilities to them.

Bonnani says Theranos hired a corporate compliance head “in record time” based on his recommendation in July 2016 and created a corporate quality and compliance committee.

Bonnani says Theranos' new compliance program was "a complicated thing to put together," b/c the "high level documentation" and corporate compliance manual took 2-3 months to create, and it took the rest of the year to train people.

Bonnani says he was never denied an opportunity to implement the changes, and Theranos gave a presentation in an annual AACC conference to counter the claims the company wasn't transparent.

Bonnani says he admired Holmes "vision for the company, her technology and savvy and her mastery of all systems of technology being developed and the amount of energy enthusiasm and drive she had to bring this complicated thing forward."

Bonnani also says "I admired her lack of defensiveness and her ability to listen to others opinions," b/c often corporate founders will listen to other people's ideas but say "But," however "I never had a ‘but’ from Elizabeth Holmes, she was diligent in listening and willing..."

Bonnani said Holmes' weakness was her focus on one goal when there were "so many complex things being worked on. I thought that could have been improved." The defense wrapped direct. Jeff Schenk is up for the DOJ on cross.

Prosecutor Jeff Schenk points out that when Bonnani served on Theranos' board, the company was working on the miniLab 4.2, which wasn't FDA approved and had never been used commercially, and Theranos didn't have a CLIA lab.

Bonnani agrees that he never disagreed with ex-Theranos lab director Dr. Kingshuk Das' decision to void Theranos' lab results from previous blood-testing devices. "The decision was his to make," Bonnani says.

Bonnani says "results are voided for specific reasons, it doesn’t mean that the whole thing is wrong." He also admits that he didn't know Theranos voided all Edison tests, but he joined to influence the company's future and he had "no knowledge" of the Edison, only the miniLab.

Schenk asks if Bonnani changes his testimony direct now that he knows Theranos voided all Edison device data. He says no. Schenk says Theranos "hid" the fact from him and "why doesn’t that change your view?"

After a loooong pause, Bonnani replies, "I don’t know what to say."

Schenk gets Bonnani to acknowledge that he wouldn't have said some things about deploying Theranos' devices in Afghanistan if he had known all tests were voided. He also admits he doesn't know what Holmes said to investors who gave Theranos millions.

Schenk wrapped cross. Trefz is back up, pointing out that the decision to void tests occurred before he joined Theranos. He also says he never investigated reasons for voiding the tests, and never spoke to Das about them or reviewed the data. Bonnani's exam wrapped.

Elizabeth Holmes takes the stand. (!!!)

She's pouring herself a glass of water.

Elizabeth Holmes has been sworn in and says she's been vaccinated.

Holmes is using her hands as she talks. She recalls that she founded the company and its goal was to miniaturized tools to run blood tests.

Holmes says she was born in Washington D.C. in Feb 1984 and lived Texas for a while and moved back to D.C. and then went to Stanford to study engineering for undergrad where she met Channing Robertson and she later worked at the genome institute in Singapore in 2003, she says

Holmes says at the insitute she thought about minaturizing the technologies in the form of a pill to swallow to test blood or through a patch someone could wear and he discussed that with her mentor and she worked on a patent app at her parent's home in Houston, which she filed.

Holmes said Robertson reviewed her patent application and encouraged her to continue to do research at Stanford on "nanofabrication."

Holmes said she spent "almost all" of her time on her research, which is why she left Stanford in March 2004 and discussed her taking a leave of absence with Robertson. She then went on to start her own co, which she called "Real-Time Cures."

Holmes says from the outset, she met with everyone she could who worked in pharma about the tech. This was around 2004-2005 period.

For those who are wondering, Elizabeth Holmes' voice is as deep as it sounds in the videos. She's wearing a navy blue? maybe black blazer and white collared shirt.

In Aug 2004 "I started working all the time" and "talking to my family talking to my friends" and meeting with people who could help build this. She says she got money from her parents that they had saved for her college education and used it to work on her patents.

She said she started fundraising and obtained financing and got a team working on the software, assays and hardware. She said "the idea started with the pill," so someone could swallow it to absorb the technology. But she says people were more interested in a "table-top" device.

Holmes is sitting up straight on the stand and gesturing with her hands as she's explaining the various parts of the inside of an early prototype of the device. She describes how it works and seems to know the nuts and bolts of it, for a lack of a better phrase.

Holmes says she went out to fundraise for the company in series A round of funding and series B. She says she reached out to venture capitalists, including Don Lucas who helped build Oracle and Adobe. "I knew him as someone who built great companies for the long term."

Holmes said she met Don Lucas through someone she had gone to college with at Stanford. She met him and he "had a lot of questions." The due diligence process included Don Lucas hiring a law firm to review patents, its contracts and audited financials, she says.

Holmes says after due diligence, Don Lucas decided to invest in Theranos in a series B round, and he joined Theranos as a board member. Another VC Pete Thomas also invested in the same round and conducted due diligence as well, she says.

Thomas also looked at Theranos' audited financial statements and contracts. She said investors wanted to know what relationship Theranos would have w/ pharma cos, and she offered "to put them in touch" w/ the people she was working with at the pharma cos.

Holmes' counsel Kevin Downey pulls up an email from Dec 2005 in which Holmes introduced investor Pete Thomas with David Lester who worked at a pharmaceutical company. She says those introductions were "typical" at the time.

Holmes says she met Chris Lucas (who testified earlier in the trial as an alleged victim) through his uncle Don. But Chris Lucas never asked if he could speak w/ pharma cos at the time and she would have introduced them if he had, she says.

Holmes' counsel shows another image of an early prototype. It's another small plastic box with a cartridge insert, but this one has an antenna in the back to transfer data to the cloud, she says.

Holmes says she was talking Bristol Myers Squibb, Novartis, GlaxoSmithKline and Pfizer, and in Sept 2006 Theranos signed a contract with GlaxoSmithKline.

Holmes says Theranos also signed a contract with Pfizer in November 2006. Holmes says she told investors about the contracts when she spoke to investors in 2006.

Holmes says she did demonstrations for Eli Lilly and Co. and Novartis. The demonstrations ran tests on site and transferred data back to California, she says.

Holmes smiles occasionally and has apologized a few times in response to confusion over exhibits. She seems very focused either on the exhibits or Downey, but doesn't look around the courtroom.

Holmes' counsel points to an email from Nov 2005 in which Theranos' R&D head John Howard said Theranos' "first live demo" was successful. She said that she thought it had been.

In Nov 2006, Holmes wrote in response to Howard, "We nailed this one. You all did an incredible job in making this happen -- this is the Theranos way. We are on a roll." (The demo had happened in Switzerland.)

Holmes says Oracle founder Larry Ellison, who she met through Don Lucas, invested around that time. Bob Grady, a Carlyle investor, and Greg Hall also invested in the round.

In a July 2006 email, Holmes sent Grady contact information for people at Pfizer, GlaxoSmithKline and other cos, because he had asked for the info. She said not all investors asked for the info, but she provided it when they asked.

Trial is breaking for the week. Holmes' direct exam will continue Monday morning with her cross-examination to follow. Judge Ed Davila notes that he granted a request by the media to unseal portions of their jury questionnaires. He'll keep them sealed though through the trial.

One thing is certain: Monday morning outside the courthouse is going to be a dang circus smdh

Fwiw Holmes' counsel Kevin Downey says his estimate of how long the defense's case will be hasn't changed (he hasn't said this publicly, I don't believe, but I'm guessing that means that the case should go to the jury in December).

Holmes’ mom just left the courthouse and press is waiting for her to exit the building as well.

Holmes left the courthouse holding her boyfriend’s hand. They walked to a black SUV surrounded by cameras and she answered no questions. That’s all for now. ✌️

My updated story on Elizabeth Holmes' testimony in her criminal trial is up on Law360 for your reading pleasure. Now plz excuse me while I go hunt down that glass (bottle?) of dry red wine. law360.com/articles/14421…