Thread by @MilesGCohen

#ElizabethHolmes trial day 38:

Closing statements.

Federal prosecutors will go first and then Holmes' team will get their chance.

Reporters/curious public huddle for cover from the rain around 2:30 a.m.

I pulled #6 in line w/ a 2:19 a.m. arrival

At long last. Line is over 60!

Prosecutors and defense attorneys are seated. So is #ElizabethHolmes. We're just waiting on the judge and jury.

Here we go. On the record in the Holmes Matter, says the judge.

The jury is seated in the courtroom.

Assistant U.S. Attorney Jeff Schenk is up in front of the jury and ready to begin his closing argument.

Schenk tells the jury Holmes had a choice to make in 2009, 2010 and again in 2013, when he said Theranos was running out of money.

Holmes, "Made the decision to defraud investors and then to defraud patients," Schenk said.

"She chose to be dishonest with her investors and with her patients," he continued. "That choice was not only callous, it was criminal."

Schenk asked the jury to consider what an honest pitch to investors would have sounded like in 2013.

"Ms holmes knew that these honest statements would not have led to any revenue," he told the jury.

Schenk is now going through the witnesses who testified, starting with the first So Han Spivey.

He cited Spivey's testimony, that she had talked w/ Holmes in 2009 about #Theranos financial troubles.

The next witness: Ericka Cheung.

Schenk brought up the reason she said she resigned.

"It was simple. She was uncomfortable processing patient samples," Schenk told the jury.

And the next: Surekha Gangakhedkar

"She told you that when she returned from a vacation in Aug 2013 she learned Theranos was about to begin testing [at walgreens]," he said. "Gangakhedkar felt that the validation process was being rushed… and she had some concerns bc of that"

The next: Dr. Audra Zachman, whose patient Brittany Gould had her HCG values tested (pregnancy test) by going to Theranos.

Keep in mind there were (i believe) 29 gov. witnesses. Seems Schenk will go through them all.

Gen. James Mattis: Board of Directors at #theranos

"He began to learn things about Theranos from the press," Schenk said.

"Mattis told you that that lack of transparency was concerning to him," he continued.

Next Justin Offen the forensic scientist who authenticated the 12k + texts between Holmes and Balwani, of which many were shown in court.

He pointed to texts shown during Holmes cross, which appeared to take place during the Nov. 2015 CMS inspection.

Holmes texted she was praying during that time.

"[Holmes] told you when CMS issued a report… that was sort of a lightbulb moment…she discovered the lab wasn’t the best lab in the country," Schenk said.

"But during the inspection, the prior year, she’s praying."

To Vicki Sung, scientist at Celgene.

"Pharma companies came into this courtroom and told you we didn’t comprehensively validate [theranos tech]," Schenk said, and moved on.

On the jurors screens are photo cutouts of the transcript portions Schenk is referring to, and a picture and title for the witness he is discussing

Steve Burd, former Safeway CEO.

Schenk clarifies the victims here are investors and patients, but that "False statements to these third parties" are relevant for 2 reasons:

"When the false statement is made, it's exactly like the false statement to the investor. You begin to see there is a scheme. …its all the same scheme that’s happening," Schenk told the jury.

"Ms holmes doesn’t need to hear someone from Walgreens tell her there are two many venous draws…she knows the relationship is destined to fail bc the tech can’t do what Ms. Holmes [XX] it can."

Then Wade Miquelon Walgreens CFO and Robert Amenta the Fedwire witness

Nimesh Jhaveri -- Walgreens executive.

"She knows about the info that was discussed in the meetings," Schenk said, in an attempt to rebut Holmes claim that Balwani dealt with Walgreens.

he pointed to texts between the former business / romantic partners

TEXTS (as schenk read- prosecutor may have paraphrased )

SB: However issue is we didn’t tell them in advance about switching

EH: Will have to present well that we hadn’t decided to

SB: Bad idea, at this point they know. So we need to be transparent

"[Balwani] is not surprised that Elizabeth Holmes is suggesting he say something other than the complete truth," Schenk said.

He moves to Sunny's ex dermatologist turned theranos lab director Dr. Sunil Dhawan.

Schenk emphasized how little Dhawan was present at the actual lab

Dr. Shane Weber of Pfizer

Schenk brings up use of Logos.

Highlights this in transcript

“Would it be fair to say in 2010 or after that Pfizer comprehensively validated [Theranos tech]?



Weber disagreed

To Investor Bryan Tolbert of the HALL Group, who secretly recorded a call with Holmes. '

"During this call you heard ms holmes make reps to mr Tolbert," Schenk said. "Lets listen to one."

"When I started the company we knew it would take a long time to establish an infrastructure that could do any lab test that’s done in a Traditional lab...." she began.

"We could establish what has the opportunity to be ultimately the largest lab in the country."

Schenk pointed to the latter quote.

"In that clip you heard Ms. Holmes has the capability of explaining to an investor that something not yet has been accomplished," he said.

But said that Holmes said Theranos had the "present capability" of running any test on their tech.

"When she wants to communicate something aspirational, she can," Schenk punctuated his point.

Then -- Lisa Peterson of RDV (DeVos family wealth manager)
Then -- Dr Constance Cullen (pharma scientist)

Now-- Henry Kissinger's Lawyer Dan Mosley who connected many future investors w/ holmes

Mosley had the pfizer doc (w/ the drug companies logo affixed) in his binder.

"That Pfizer document wasn’t just sent to Walgreens it was sent to investors," Schenk said. "Mosley thought that it was the most valuable...independent valuation of the efficacies of Theranos tech."

Investor Chris Lucas:

"He would have been surprised if Theranos analyzer could never do more than 12 tests," Schenk cited from his testimony.

He asked the jury to look at all the exposure Lucas had to Theranos, that he once did work for them etc.

And yet still, "Some of the fundamental truth to Theranos was surprising," Schenk said.

To Lynette Sawyer, Alan Eisenman, now Brian Grossman of PFM

Grossman said Theranos told them they could perform over 1000 CPT codes w/ their technology, Schenk noted.

And other facts

Erin Tompkins, the patient who had a Theranos HIV test come back as reactive, but had a later test which showed she was negative for HIV.

"she questioned [if] the result that she got from theranos was accurate," Schenk said.

To Dr. Mark Burnes, whose patient had a prostate test which he presumed was inaccurate.

"inaccuracy is rare in my experience," schenk read from his testimony on cross.

To Roger Parloff who had "hours of tapes and notes," from his interviews with Holmes for a fortune mag front page piece.

Schenk said Holmes "Used the media to do some of the work for her."

She would make false statements to the media and then send those articles along to investors, Schenk told the jury.

We're listening to one of Parloff's recordings w/ Holmes.

He's asking about Siemens devices and he wants to tour the lab in AZ and Mr. Parloff is sort of Asking questions about what does it look like," Schenk said.

"If you’d like to see it…you’re welcome to come back out there and see it," Holmes said.

"Even if you accept for a moment the use of a third party device is a secret, she’s still making false statements to Roger Parloff," Schenk said.

"You shouldn’t accept the fact that trade secrets give her the permission to make false statements."

In regard to use of modified third party devices:

"That wasn’t a trade secret. That was just a secret," Schenk said.

They kept it secret because it was, "Inconsistent with the narrative they were pitching," Schenk added.

Schenk is now going through the counts Holmes is charged w/ and the elements of such counts.

(9 counts of wire fraud, 2 counts of conspiracy to commit wire fraud)

We are looking at a slide that depicts "Holmes' Role" in the conspiracy. This is how it reads:

HOLMES' ROLE

Agreement to get $ and keep Theranos alive ( to commit wire fraud)
Recruit investors
Make false statements to investors
-capabilities of tech
-military
-wag

BALWANI'S ROLE

Run the lab
-useful in recruiting investors
Also recruit investors
-Eisenman communication
Also communicate false statements to investors
-financial health of Theranos
—140m rev for 2014 (communicated in Oct 2014)
—spivvey said 0 revenue in 2014

Next topic, as a slide depicts: HOLMES EXCERCISED CONTROL OVER THERANOS

1. public relations/legal

2. Business development

Burd said she owned a room, presented to his board, thoughtful and articulate, Schenk said. "She knows how those relationships are going and what representations were being made."

3. CLIA Decisions

"Per elizabeths' request, in the short term, please do not put any comment/note on the result...," an email read, as schenk highlighted.

"Ms holmes knows certain tests like this may not get reported, and she's making the decision...,"Schenk said.

4. Investor Binders

"Please email me with all the contents of the two binders and what's not in them that was in others," she wrote to Dan Edlin and Jeff Blickman, as Schenk showed.

5. Department of Defense.

6. Website

7. financials

"EH wasn't ignorant of the financial statements," Schenk said, citing spivey's testimony that she reviewed financials with holmes, like the cash position.

8. Pharma

Dr. Connie Cullen's (pharma scientist) testimony that Holmes would interrupt others at Theranos when they tried to answer her questions

That's it for the excercised control section of his argument.

Now we are looking at more evidence that the prosecution has organized in a power point slide for "Count 1 (Investors)

A key element: intent, he said

"If she tells an investor Theranos isn’t a real company its a PO Box...If she had said that to an investor that would have been a knowingly false statement to an investor."

But that, Schenk said, would not be conducive to an intent to defraud

On the other hand: Statements that are "the kind that cause an investor to want to invest in Theranos," as Schenk put, those show an intent, he continued.

Onto fraud against patients. And the first element: Agreement.

To this he ascribes Holmes' role and Balwani's Role.

1. Holmes Role (as shown on gov ppt)

Agreement to get $ from patients and keep Theranos alive (to commit wire fraud)
Recruit patients
Make false statements to patients (press, website)
-blood tests
-accurate, reliable fast

2. Balwani's role (as shown on gov ppt)

Run the lab
Remove dissent
-dr rosendorff
Hire absentee lab directors
-dr Dhawan, dr sawyer

"Holmes had knowledge of the objective," reads another prosecution slide.

We looked at 11/28/2014 btwn Holmes and Balwani

We looked at slides from the theranos website

"Holmes Had Intent to Accomplish," reads another slide.

Holmes statements make it into the Fortune Magazine article by Parloff, Schenk cited, as shown on the slide,.

"Dan Edlin told you how involved she was in the website," Schenk said.

"She's informed about the misleading nature of these words," Schenk said of some of the website language. "Of how someone might get the wrong impression...by using these phrases.

Moving on to wire fraud counts.

Counts 3-8 (Investors)

First, Ms holmes knowingly participated in a scheme or plan to defraud, or scheme or plan for obtaining money or property by false representations (Scheme or plan and knowledge)

Second, the statements made were material

third...fourth... (these were from a ppt slide)

Schenk links the counts to investors + the sums they invested:

Count 3: Alan Eisenman
Count 4: Chris Lucas (BDV)

Count 5: Bryan Tolbert HALL GROUP
Count 6 PFM Brian Grossman
Count 7: Lisa Peterson
Count 8: Dan Mosley

Categories of False Statements-- another slide

Contents:

-Capabilities of Theranos proprietary analyzer
-full range of tests
-finger stick (FS)
-more accurate, reliable, faster
-automated processes reducing human error
Financial stability (generating revenue)
Misleading demos

Slide continued:

Walgreens partnership expanding
DoD/deployed on battlefield
Use of third-party devices
Validated by pharma companies
use of false statements in media

Another gov slide:

False statements Re: Capabilities of the Theranos Analyzer (SOURCES)

investor binders
Board of directors presentation materials
intvws of holmes by the media provided to investors
direct statements...

Schenk showed a slide w/ cutouts from investors mats including the baby picture that says “goodbye big bad needle”


Another that says "

Same tests, a whole new approach"

They were used to "paint the image or land the point that Theranos tech was different," Schenk said

“Misleading Demos” is another slide

"Dan edlin was involved in setting up those demos. The choice of what device to put in the conference room was made by either holmes or Balwani," Schenk said.

The demos involved "bringing a device in the room that isn’t the device that was being used to test patients blood," schenk continued.

False Statements Re: Walgreens partnership expanding

Schenk cites Lisa Peterson testimony and meeting notes

"Holmes and balwani were being told by walgreens that they werent going to expand further," schenk said.

"Also false bc holmes and balwani know that the Walgreens relationship will inevitably fail," Schenk said.

Walgreens, Schenk said, was "sitting there waiting for the venous numbers to drop. Because Walgreens thinks Theranos is a finger stick testing company."

Schenk moves to what he says are false statements Holmes made to DoD — specifically one doc which edlin testified "Everything in this document was reviewed and approved by Elizabeth."

"Each Theranos device can run every test currently available in a traditional lab," the doc transmitted to the military read.

Schenk read each word slowly. Enunciating.

He played another Holmes clip

"The military is a big deal for us...." she said. "So the ability to take the tech like this and put it in flight specifically on a medevac has the potential to change survival rates,” she said on the call

Schenk cited Holmes testimony that there wasn’t work in the Middle East and Afghanistan.

"She’s making false statement after false statement...," the prosecutor said.

Moving around -- to "Use of Third-Party Devices, Grossman Testimony" as the slide projected to the jury reads.

He again hits the not a trade secret, just a secret line.

"False statements in the media" reads another slide.

He's got the 2013 WSJ Joe Rago article projected

wsj.com/articles/SB100…

Schenk shows a slide which Holmes sent to investors with "recent press" including to the Fortune mag article which says that theranos does not use third party devices.

Schenk's logic on even if this does sit with the trade secret "excuse" as he characterizes.

She would have had to make a false statement for that phrase to appear in the article, Schenk said.

Holmes knowledge of "Capabilities of Technology" slides are being shown.

8/31/2013 email from Holmes to Surekha Gangakhedkar, she’s told 11 immunochemistry micro sample assays can be done, as Schenk shows

Schenk cited the meetings senior scientist Gangakhedkar's said she had w/ Holmes discussing reliability issues.

"More evidence that these weren't just false statements, these were knowingly false statements," he said.

And from Tyler Shultz emails -- "She becomes aware," Schenk said.

We are looking at So Han Spivey (Danise Yam) the Theranos' controllers financial charts.

A gov slide is titled: Financial Stability, Spivey Testimony

Schenk pointed out the total amt Theranos made from Pharma companies, as calculated by Spivey

Schenk said these sums show Holmes was not just making false statements, she was making knowingly false statements

"Walgreens Expansion"

Schenk attempts to refute Holmes testimony that even though Balwani texted her he didn't think they could scale with Wag, she had been communicating with another executive who was giving her positive info about the relationship.

His argument:

That her tech would never get where it needed to be, and she knew it.

"It's only a matter of time before Walgreens figures out the problem. She doesn’t need to hear Walgreens tell her the relationship is failing," Schenk said.

"She knows further expanison of walgreens is dependant on something that is not going to happen. And that is, more fingerstick," Schenk hammers in.

Schenk points to 4/21/2015 texts between her and Balwani regarding what he says is a demo test for a WSJ reporter.

"Better a perfect venipuncture than bad finger stick," Balwani texted Holmes, as we saw during evidence.

Use of Media
Holmes/Rago email "Readback"

"Facts about theranos were provided to ms holmes beforehand. so when she is using the rago article to recruit investors...it is the use of statements that are knowingly false..."

Mr Parloff asks her why someone would get a venous draw when they go in to get a test, schenk began

"You as a jury know the answer," he continued, b/c the small amt of tests they could actually run on their analyzer and some on modified devices

He then played Holmes response to the question, as recorded by Parloff for all in the court to hear.

"
“At Walgreens…the biggest reason is that we're bringing up more and more tests and building up inventory and capacity in our lab," she answered him at the time.

"Is it that you would not yet have that particular test avail using your platform ?" Parloff followed up

"It's more how we can configure our own analytical systems, and the capacity that we have in those systems at any given point of time," she responded, as Schenk highlighted

Next element for Wire Fraud- Materiality (investors)

"Materiality doesn't require actual reliance, Schenk explained. It's the kind of statement that is capable of influencing [reliance]." (for investment)

Schenk is now running through all of the different statements that investors said were important to them.

A common one: accuracy

And on to the element of wire fraud: Intent to Defraud

Are there any materials in the binders you think should be removed for Murdoch/newscorp? Holmes wrote Balwani, as schenk showed, explaining this showed she thought about what should go in to these binders

The amt of revenue that ms holmes communicates to safeway, is another example Schenk said. (She sent proj rev numbers)

"Misleading Demos," as his slide reads, is another example of intent to defraud Schenk says.

Lucas testimony is another example

His understanding was that the partnership with Wag was going well, contrary to what Ms holmes and Balwani knew was in fact true, schenk said.

Lots of overlap here — again cites Lucas' testimony that he believed the theranos device had been deployed on a medevac

Regarding the understanding that Theranos did not use third party devices:

"It's in the [fortune] article, but Ms. Peterson also learned that from convos with Ms. Holmes," Schenk said.

Schenk hits Holmes' suggested logo defense — that she sent the docs to the pharma companies, logos affixed, and thus did not conceal them or use them for intent to defraud.

"It certainly isn’t on the Pharma companies to discover that or report that to Theranos," schenk said.

"Look at what use ms holmes is making of these documents," he said to the jury.

"As per our discussion please find three independent due diligence reports on Theranos systems," holmes wrote, as Schenk read.

"She wants Walgreens…and these were also sent to Peterson and Mosley - to conclude that they were independent due diligence reports. That the Pharma companies prepared the reports after their own technical validation..." he argued.

"Sending the article to investors to use to help them with their evaluation of whether to invest was also with the intent to defraud," Schenk said of the fortune article

Schenk shows the Fedwire transactions are interstate wires, as to counts 3-8, wire fraud against investors.

Breaking for 30 minutes.

"We will finish no later than 4," the judge updates the crowd.

Schenk is back in front of the jury. The 14 are in their seats.

Wire fraud counts as they relate to patients:

Count 10: Erin Tompkins, who had HIV test
Count 11: Mehrl Ellsworth, who had a PSA test
Count 12: "Facts of lab reports transmitted to doctors" (i believe w/ advertising funds)

Schenk showed the items he is alleging patients relied on

-Advertisements shown on Theranos website,
-Representations made in news articles,

Schenk shows this text from Balwani to Holmes.

We can market our lab and everything and people will talk about our finger stick without us talking about it, he sent

Yes, she replied

"The media has done the work," Schenk said.

On 5/2/2015 from Holmes to Balwani:

"I think we should show them the first ad that’s going to run in AZ it doesn’t mention nanotainers or finger stick just less blood which I will make a big deal about being about butterfly and smaller needles. Better for us to show than not."

"Ms. Holmes did not want to say there was a fundamental problem with the device," Schenk said.

Dr. Kingshuk Das, Theranos final lab director, reached a different conclusion, the prosecutor continued.

In regard to patient Brittany Gould's HCG test — Schenk shows slides titled "Inaccurate & Unreliable - HCG Timeline"

Some ex he showed:

Rosendorff ordering all HCG tests to be halted
Christian Holmes noting a problem with the HCG test

"She's left with asking, 'how did that happen?'" Schenk said, reading from a Holmes email regarding HCG results

Now an "Inaccurate & Unreliable - tPSA Timeline" -- which has to do with Mehrl Ellsworth, the man who got a prostate test from Theranos

Schenk showed Das' testimony about bringing a tPSA concern to Holmes to further his point. (tPSA values were coming up in females which was cause for suspicion)

"Wire fraud first element: Knowledge," reads the heading of a new slide.

Schenk is showing examples, citing senior Theranos scientist Surekha Gangakhedkar's testimony.

"[#ElizabethHolmes] knew about the problems all through 2013, 14, and 15," Schenk alleged, after showing some Dr. Rosendorff emails and testimony which show the lab director saying he raised lab concerns to Holmes

Schenk showed an email from former lab director Dr. Adam Rosendorff to Sunny Balwani citing problems with a blood test, which was then forwarded to Holmes.

"The problems are not limited to one assay, and the problems are not hidden from Ms. Holmes,” Schenk told the jury.

The heading of all of these slides is still "Wire Fraud First Element: Knowledge"

Slides-->

This, Wire Fraud Second Element: Materiality
Then this, Wire Fraud Third Element: Intent to Defraud

Schenk very slowly read Rosendorff's testimony about a meeting he had with Holmes, where he said he explained certain tests were unreliable.

The CEO, rosendorff said, holmes seemed nervous and upset and not suprised.

Schenk is piling on examples of what he alleges is Holmes intent to defraud patients.

"We need to respond to him now and cut him Monday," Holmes wrote to Balwani about Rosendorff in fall 2014, as Schenk showed

"They're going to cut the lab director who actually raises concerns..and who do they replace him with? Mr Balwani's dermatologist," Schenk told the jury.

The fourth element now of wire fraud against patients: Electronic Wires.

Schenk is showing the patient's test reports that were faxed to the patient's docs, and shown during their direct examinations.

And finally the more than $1 million sent to Horizon media (count 12)

A few additional topics, Schenk said.

"The defense has made some arguments. The first argument is that business failure is not fraud," Schenk said.

Schenk agrees with the premise, but says it does not apply to this case.

"If ms holmes had just allowed theranos to fail, to not go down the path of fraud," that would not be fraud, Schenk said.

"But when faced with the potential of business failure, Ms. Holmes chose a different path," he added

"[The defense] would suggest if this was a fraud and she knew it was a fraud, then why didn’t she sell stock? ...There are as many different reactions to fraud as there are fraudsters," Schenk began

Well, Schenk said, "Ms holmes couldn’t sell her stock."

That's because Holmes owned stock w/ 100x the voting shares as her investors, Schenk said.

"She could not give someone the power that came with those voting rights," he argued.

"So if Ms. Holmes sold her stock, she was selling access to info," he continued.

"Theranos was a house of cards. It was fraud," he said.

"You can conclude that there was no witness that testified in this case, [with] more interest in the outcome of the proceedings than the defendant itself," Schenk said of #ElizabethHolmes.

"You've seen email after email where she is told negative things, poor developments...those things are not being conveyed to investors. She is deciding what's the type of information [to send] and what isn't," Schenk argued.

Schenk asked why witnesses didn't testify to those negatives. B/c Holmes controlled the info disseminated, he argued.

"There's another word for that, and that's intent," schenk said.

Schenk addresses Holmes' abuse allegations against Mr. Balwani:

"If you return a verdict of guilty you are not saying 'we the jury do not believe ms holmes claim of abuse,'" Schenk said.

"If you return a verdict of not guilty you are not saying we the jury believe ms holmes claim of abuse," he continued.

"You do not need to decide whether that abuse happened," schenk added.

"The case is about false statements made to the investors and made to the patients."

Schenk said in some ways this case is a tragedy -- as to "what happened with investors and patients"

"It is also the story of some individuals acting w remarkable integrity," he told the jury. He cited whistleblower Ericka Cheung.

"Ericka decided to quit."

Schenk also cited Gangakhedkar and Rosendorff as examples of those who acted w/ integrity — both witnesses in this case.

Schenk wraps up his argument with this line:

"Fraud is sort of like a head start," Schenk began. "For a long time holmes and Balwani knew the truth…and the people who they interacted with... did not."

"And they took advantage of that gap in info. And for that they were able to commit fraud."

"You shouldn’t find her guilty because of my words, you should find her guilty because of her words," Schenk said.

He showed her texts w/ Balwani from Dec. 27, 2014.

"This year is our year," Holmes texted Balwani. This was after every 2014 investor had invested, Schenk said

Here we go. Kevin Downey is up

"Elizabeth Holmes was building a business and not a criminal enterprise," Downey began.

"In fact Theranos was built and its business was conducted by a large group of people that shared many characteristics.... They believed in the mission that Theranos believed in," Downey said.

In openings, defense said there are two sides and the gov might be looking at events through a dirty lense.

Gov shot back today and said "
We can’t meet that challenge bc that is not that kind of case," Downey noted.

"I accept that challenge lady and gentleman,"

"I think you will see that the full pic reveals something very different than what the gov has been presenting for 3 months and the last 3 hours," he continued.

Downey tells the jury Holmes is not charged with defrauding pharma companies.

"What ms holmes is charged with is making false reps to subsequent investors about whether Theranos had partnerships with Pharma companies. And whether those Pharma companies examined used and validated Theranos tech," he said.

Downey showed the jury 7 pharma company partners, which he noted the gov didn't ask a single question to her about.

Slide

Partners for which validations are entirely unchallenged
-7 companies

Partners where gov witnesses conceded they did not convey any negative feedback to ms holmes

-pfizer and Schering Plough

Partners where the government distracted from actual validation work.
-celgene

"government's pharmaceutical case was misleading" reads Downey's next slide.

Downey is talking about the 2006 pfizer study which had the logo affixed to it.

Slide quotes:

"gov did not tell you the entire story."
"Dr. Weber only minimally involved"

"So what's the sum total of what you saw in the gov case? You saw a 14 month partnership between theranos and pfizer. For which the first 14 months of the partnership dr weber was not involved at all," Downey said.

"Others at Pfizer knew about contact w/ Theranos. 2 of the principal persons who had been involved with the study between Pfizer and Theranos remained in contact with Theranos for the following 6 years," Downey said.

"And why did they contract w/ theranos? B/c they wanted them to do a clinical trial," Downey said.

"Im not criticizing dr weber, but dr weber had a very limited view of the relationship between Pfizer and Theranos," he continued.

Schering Plough
-contract for comprehensive validation of multiplex assay panel for 279k
-theranos to perform testing and draft report according to agreed-upon criteria
-gov witness (Dr. Constance Cullen) agreed to criteria ahead of time

-Dr Cullen conceded Theranos paid in full for validation

(from defense slide)

"If there had not been a defense case, you would not have known..." Downey said, and cited the following:

-"many many pharma projects"
-"dr weber had a very limited view"
-sucesses w/ pfizer and celgene

"When I ask you to wait…remember that example. Where the picture can change quite a good deal as a result of waiting for the full story and looking through the full material," he continued.

"Ms holmes admitted to you that she added the logos. And did it without thinking there was anything wrong with it," Downey said.

"Lets consider how Ms. holmes communicated with investors about these Pharma relationships," Downey said.

"She puts investors in touch with Pfizer," Downey said, showing an email.

"Ms holmes has no intent to deceive or hide from people things that were going on in those relationships contrary to the Govs assertions," Downey said.

Downey cited the three pharma witness the gov brought to court, who presented a particular view.

"That view is Theranos tech is no good. Ms holmes knew it. And she had no basis for making those statements," he said.

What do we in fact know:

"Theranos had at least 11 partnerships with Pharma companies they believed were succesfull, for many of those partnerships the gov has not disputed that those partnerships were successful," he said.

"…with the exception of Dr. Cullen, the witnesses weren’t even the people who were primarily involved in the relationship," he continued.

"That should cause you…to look at both sides of the story."

Downey's talking reasonable doubt. He notes the gov mentioned it only "in passing."

He's got a staircase projected to the jury. Its steps have the same names, though the overall image shown is different.

(I found this one on google images)

"If you have a reasonable doubt as to whether ms holmes committed any element of the offense, you should find her not guilty," he tells the jury.

"That is the highest burden in the law," he says of reasonable doubt.

"Mr. Schenk helpfully spun out for you the elements of the offense's," downey said.

Downey said he will just go into a few of the elements.

"let's focus on intent" downey said.

This is what the slide says:

Intent to defraud =- intent to Deprive Someone of Money or Property by Means of Deception

Good faith = no intent to defraud

"Good Faith = NO Willfulness, reads another bullet on a defense slide.

"if someone is acting in good faith you have no reason to find them guilty even if the other elements of the offense are fact," Downey told the jury.

"I think that the concepts of intent and willfullness are going to inform your evaluation of a lot of the elements of the case," Downey continued.

We're taking our afternoon break. Back by 2ish P.T and then court will run til 4

"good afternoon," downey told the jury.

"I wanted to take a moment before we resume to thank all of you for serving, for all that you have served the last 3.5 almost 4 months," Downey told the jurors, as he looked many of them in the eyes.

"You have a particularly important role. Because all of you have seen the evidence. The full evidence. And you will be in a position to decide whether ms holmes is guilty of an offense or not. It's not a light responsibility," he said.

Understanding Ms. Holmes' Intent Slide:

Interactions with the FDA and pursuit of FDA approval
Feedback over many years from Theranos' research and development team
Feedback from outsiders
Repeated willingness to have... tech evaluated by 3rd parties
Reforms implemented in 2016

First up: Interactions with the FDA and pursuit of FDA approval

"You know that, the FDA has been a subject of some discussion in connection w/ the case. But Ms. Holmes interactions w/ it profoundly informed her belief of where #theranos was as a company," Downey said.

-Ms Holmes worked proactively with the FDA, one bullet read.

A timeline is projected to the jury.

"How did she deal with the FDA when she talked to them? First of all she made very broad disclosures," Downey said, saying she gave great deal about the goings on of Theranos business.

"She went to the FDA in 2013 and explained during the P1 process not that that was going to happen, but that was happening," Downey said in regard to which devices she was running tests on.

Holmes sought FDA approval for Theranos 4-series Nov. 2014 -- a key time in which Holmes was having convos w/ investors, Downey said.

"This was tech that was ready to be placed at local locations to conduct blood testing services," Holmes told the fda, as Downey told the jury.

He said he wants to dispel the notion that, "Theranos was reluctant to show its tech to really anyone."

His evidence: A video he said Holmes sent to the FDA of "the entire operation," he said.

"Feedback over years from Theranos' research and development team" is the next pillar of intent Downey is talking to the jury about

"She believed starting as early as 2010 that Theranos was going to be capable of putting in place this 4.0 tech that would be capable of performing any blood test," Downey said. She received updates over the next 3-5 years which were "fundamental and central to her thinking."

Downey asked how many witnesses testified who actually worked in the building where the Theranos device was developed.

"We were here for 3.5 months, he said. "the answer is one."

Surekha Gangakhedkar, he said.

"Extraordinary Technological Breakthrough in Early 2010" is the next slide. Where again we see Dr. Ian Gibbons slide deck which Holmes said she gleaned from, the 4.0 could run any test.

From five exhibits Downey listed, "[Holmes] took way that Theranos had a tech, that the tech had this capacity," he said.

Regarding her statements to others about its capabilities. "It's very difficult to evaluate that without hearing from the scientists and engineers who developed it," Downey said.

Feedback from outsiders, is the next category Downey is talking about with regard to holmes intent.

Downey shows these lines of testimony from Investor Brian Grossman regarding his convo with Holmes' stanford professor turned board member Channing Robertson.

“He did not see any technical risk at all, in their core technology.”

"There was nothing the technology couldn’t do."

"Johns Hopkins Evaluated Theranos' Technology in April 2010" is the next slide

"I want you to think about it from the perspective, what does it say about ms holmes? that she was willing to take the tech to Johns Hopkins and have it evaluated?" Downey said to jurors.

She also had the tech evaluated by UCSF, per the request of safeway, as downey pointed out.

"She thought the tech matched what she was saying about the tech, certainly to Walgreens Safeway but subsequently to others," Downey said.

Reforms implemented in 2016 is the fifth section of intent

She asked the former director of the CDC to lead these efforts to evaluate what the response should be, downey pointed out.

Consider Dr. Das, Downey told the jurors.

"Dr. Das came to holmes in March of 2016 and what did ms holmes do?" he asked. How long did it take her to react to the suggestion of voiding all the 3 series test results, he cont.

"no time at all. she turned on a dime," he said.

"She didn’t ask Dr. Das to come in and tell her what she wanted to hear. She asked Dr. Das to come in as he testified and turn over every rock." Downey said. "Turn over every rock."

"At the end of the day the question you’re really asking yourself, is what was ms holmes intent," Downey said. "Was she trying to defraud people?"

"I would say to you lady and gents," he continued, the evidence shows, "she believed that she had invented a very valid form of tech that she was submitting to the fda to take to the market."

"It says that others outside the company shared that view, and she had no fear of showing that tech outside of the company," Downey continued. "And it says to you, as soon as it says no, there are problems here, Her reaction was to invite people... to root those problems out"

"Are those the actions of someone who is engaged to act in the conspiracy to defraud people?" Downey asked

If not, he said, "This is the effect on your verdict form."

Projected to their screens: the final verdict form with red not guiltys plugged in for every count

Slide:Ms Holmes understanding of Theranos capabilities

1000 CPT codes covered by planned small-sample tests
300 small-sample tests validated in R&D across four methods
70 proprietary assays validated and used in the CLIA lab
43 common tests expected to cover 90% of retail orders

“She is talking about the 4.0 device..." Downey said.

"Roger Parloff's Article Did not Capture That Difference," another slide title read.

Between 1000 CPT codes and 1000 tests, downey tells the jury

This comment is projected for jurors. It's Holmes' comment on Tyler Shultz' email.

This is the definition of accuracy, Downey said, Holmes was talking about.

SLIDE 1 "Ms Holmes' Understanding of Accuracy: Pre-Analytical Error."

SLIDE 2 "Ms Holmes' Understanding of Accuracy: Variability over time"

"This concept was explained in a slide deck to many of the investors," Downey said referring to exhibit 4077 at pg 22

"Ms Holmes Emphasized That Analyze Decay Claims Must be Accurate," is the next slide.

"We should reflect that so we are making an accurate claim," Holmes said to a company scientist, as Downey showed.

"in addition to all these tech and scientific issues," Downey said there is a claim that, "Ms. Holmes did not disclose to investors the existence of the p1 central lab measure."

He cited Holmes convo with Parloff, as evidence and Joe Rago's article.

Venous testing was not a secret, Downey said.

His evidence:

-Theranos told the FDA
-Test menu in #theranos stores disclosed and offered oppportunity for venous tests
-Sept 2013 press release by Wag
-Nov 2013 press release by Theranos

Also published on the website, and separately on the walgreens website, Downey said.

"It's just not credible that investors were unaware about the provision of venous testing methods...Those who said so, for ex ms peterson, acknowledged that she had read the website."

Theranos referenced the use of venous draws in slides provided to PFM, read another slide.

"There's a suggestion that there were too many venous tests, and that was going to affect the Wag partnership," Downey said, citing Jhaveri's testimony.

Downey pulls up a diagram titled "Adding Single Venous-Draw Test Results in All-Venous Order"

The diagram:

Finger stick tests avail: 10
Draw method for all tests: finger stick

Whereas:

finger stick tests avail: 10
(1 venous test)
Draw method for all tests: Venous

"[The gov] combined a large body of evidence that does 2 things," Downey said.

They've taken some people who said they didn't know there was venous testing, and others who said i didn't want venous testing, he said.

"the truth is, in both instances, the gov claim doesnt really hold water to ms holmes intent," he said.

"The point at which that excitement of that invention was circulating in the company, where people believed they had actually broken through...that is the moment at which [the gov alleges] a criminal conspiracy began within theranos," Downey told jurors.

In 2010, Theranos was a "6-year-old company with a 26 year old CEO," Downey said.

"But the gov says Theranos came to negotiations and during the course of negotiations defrauded Walgreens," he continued.

The gov brought CFO Wade Miquelon Downey refreshed the jury.

Two bullets on a defense slide;

-Theranos told Walgreens it would customize the tech

-Theranos did not propose an immediate launch in March 2010

"When that agreement was negotiated its hard to see how Walgreens was defrauded," downey said, noting it's clear, "they got the better end of the deal."

In early 2012 Wag began to be uncomfortable that devices would be launched in their stores without FDA approval, Downey said.

They agreed on a phased approach, Downey said as he showed.

Downey pointed to that change -- as a cause for "confusion that has pervaded this case.”

He said it's clear when Holmes was talking about Theranos tech she was talking about the 4.0 and its "full implementation" its "full capacity," Downey said.

Another defense slide:

"Absent Witness: Dr. Daniel Young

Named in gov opening statement
oversaw all tech development at Theranos
Functioned as Chief Tech officer
Played a key role in the events at issue
Included on nearly 200 exhibits in the case
..."

Downey is flying through slides packed with information.

Another slide:

The Throughput Problem

Theranos initially planned to deploy 4-series devices in its central lab
4 series was designed for point-of-care
Phase 1 required high-volume testing capabilities

"Solution to The Throughput Problem

Siemens ADVIA and BD Fortessa allow for proprietary tests"

"No one at theranos testified they had any discomfort about that process being used," Downey argued, re modified third party machines.

Downey explained why Theranos needed to protect their modification of third party devices as trade secrets.

B/c these modifications were, "based on commercial machines that anyone could buy," he said.

And if a company knew those devices could be used to run the same [tests] Theranos was using. Then they could take the finger stick business, Downey said.

"Why do we need to have Theranos when we can use a central lab with this new form of tech," Walgreens might think, he said

A defining characteristic of trade secret is that it is never disclosed publicly, Downey pointed to this language in their trade secret policy.

"That’s how zealous Theranos thought it could be w/ respect to these modified devices," he said.

Downey said Holmes disclosed trade secrets in three key places:

1. Connection w/ board meeting that followed launch with Walgreens (oct. 2013)
2. To the FDA, "you can't be dishonest if the fda asks you to reveal the devices you were using," downey said.
3. CMS

Gov says you should have somehow disclosed this trade secret to investors, Downey said. But the investors knew about trade secrets, he continued.

He showed a Dan Mosley email to Holmes and Balwani about an article which he felt disclosed too much about the tech.

Downey said he doesn't think Coca Cola is signing NDA's with McDonalds and Burger King and sharing their recipe.

Draws the connection to Theranos, to rebut gov's point that theranos could have signed NDA's with partners/investors and shared the trade secrets

Walgreens and #Theranos had a contract under which theranos was to launch to 3000 stores in the 24 months following Sept 31, 2013, Downey said, noting Schenk did not go over that detail.

Downey said the thrust of Walgreens exec Nimesh Jhaveri's testimony was if the percentage of venous draws didn’t go down, they weren’t going to continue rolling out.

Which was not in the contract, he said, ascribing it, "not a metric that was defined by the parties at all."

"If ms holmes were a criminal, as the gov alleges, what kind of board of directors would she appoint? Would she appoint cronies? People who would follow her directions?" Downey asked.

She instead appointed an "illustrious" group downey said, showing their names

Judge says we are going to break for the day.

Defense will have more tomorrow at 9 a.m. and then if they finish, the gov will have the chance to put on a rebuttal argument.