CA - Elizabeth Holmes (Theranos) Wire Fraud Thread *Guilty* #2

[Seattle1]

Here Are All Of Elizabeth Holmes' Criminal Charges

The long, winding, and often unbelievable journey of Holmes has been at the forefront of people’s minds as of late, particularly as her story has been made into a podcast, a documentary, and soon a feature film.
But while Theranos is no more, Elizabeth Holmes's fate still hangs in the balance. Below are her current criminal charges.

Charged with massive fraud
The SEC charged Holmes and former Theranos chief operating officer and president Ramesh “Sunny” Balwani in March 2018. According to the complaint, the pair stood accused of “raising more than $700 million from investors through an elaborate, years-long fraud in which they exaggerated or made false statements about the company’s technology, business, and financial performance.”
Indicted on nine counts of wire fraud
In June 2018, following a long investigation (which included a deposition by Holmes in 2017) by the U.S. Attorney's office in San Francisco, a federal jury indicted her, along with Balwani, on nine counts of wire fraud.
Specifically, these charges pertain to the allegation that Theranos defrauded its investors out of millions of dollars while also deceiving — and putting at risk — the lives of hundreds of patients and doctors.
Both Holmes and Balwani pleaded not guilty to these charges.
Indicted on conspiracy to commit wire fraud
Along with nine counts of wire fraud, Holmes and Balwani were also indicted on two counts of conspiracy to commit wire fraud. Both also pleaded not guilty to these charges.
The road ahead
Holmes and Balwani each face a maximum sentence of 20 years in prison and a fine of $250,000, plus restitution, for each individual count of wire fraud and conspiracy, according to the U.S. Attorneys office.

Thread #1

 

[Seattle1]

https://www.justice.gov/file/1072521/download

USA vs ELIZABETH A. HOLMES..

Indictment pgs 1-15

 

[Sillybilly]

ADMIN NOTE:

The Behavior Panel episode with body language / speech analysis experts Greg Hartley and Scott Rouse has been approved for discussion and posts have been reinstated.

This is also blanket approval for The Behavior Panel as an approved source on a regular basis at Websleuths.

 

[RickshawFan]

@LinasK quoted some paragraphs from a New Yorker article called "Blood, Simpler", including these sentences:

Some observers are troubled by Theranos’s secrecy; its blood tests may well turn out to be groundbreaking, but the company has published little data in peer-reviewed journals describing how its devices work or attesting to the quality of the results. “It’s trying to apply the Steve Jobs way of keeping everything secret until the iPhone was released,” Lakshman Ramamurthy, a molecular biologist and a former associate director at the F.D.A., told me. “But a health test is more consequential than a consumer product. It needs to be clinically valid and provide useful information.”

This idea of EH's—to keep everything secret like Steve Jobs did—is another dimension of smoke and mirrors. She took the idea of it, and not the reality, and then cast a great big fog cloud over whatever was going on inside her labs.
The "reality" was that the iphone grew organically out of 2 decades of ideas and other products. It wasn't like Athena sprouting out of Zeus' head full-formed. There were thousands of details that were already in the arena, e.g. hyperlinks, buttons, the ipod, GUI, touch screens, miniaturizing, form factors, accessibility, portability, US cell-phone infrastructure, mistakes they made..... etc. etc. Apple was talking about all this stuff in 1984 (still now, products are arriving from that same vision). Sure, they have secrets, but no new product gets launched from nothing. And they have personnel with a long history thinking and interacting with technology à la Apple.
Theranos never had any of that. There never was organic evolution in the public eye, a history of products, no staff that was long-term brains trained to think and interact with equipment a certain way, no software history, no product history (except a little "nanotainer", which may have been essential, but it's a container; the nanotainer is not exactly a paradigm-shattering invention the Mac—or iphone, to use the example—was; it's more like the 3.5" floppy disk, which was a new look for a floppy disk in 1982, but not a new concept).

I want to throw in an extra mention about staff. Theranos seems to me to have had exceptionally high turnover. To be sure, it could be argued that was typical for tech. But IMO that's not a relevant argument if you're trying to make like Apple. In my experience, long term users of Apple equipment....their brains work a certain way; IMO this is crucial to Apple product development. Theranos never had that. EH wanted all the superficial stuff with none of the underpinnings that gave Apple new products.

So, anyway, I wanted to be sure that it's clear that the wish to emulate Steve Jobs was all about persona, the image, the $$$$; it wasn't the necessary conceptual and evolutionary underpinnings EH was emulating. What she was shrouding in fog wasn't there. For Apple, what was shrouded in fog was a new gizmo that had a rich, tried-and-true, history that was very public.

 

[Niner]

Motions hearing added for today, 12/7/21

Update!

Tuesday, Dec 7 2021
08:00AM
5:18-cr-00258-EJD - USA v. Elizabeth Holmes
Motion in Limine

09:00AM
5:18-cr-00258-EJD-1 - USA v. Elizabeth A. Holmes
AUSA: Jeffrey Schenk/DEF:Kevin Downey
Jury Trial

link: CALENDAR

 

[Niner]

Tuesday,, December 7th:
*Motions Hearing (@ 8am PT) & *Trial continues (Day 36) (@ 9am PT) - CA – for *Elizabeth A. Holmes (34/now 37) (CEO of Theranos) charged (March, 2018) & indicted (6/14/18) & arraigned (6/15/18) with 9 counts of wire fraud & 2 counts of conspiracy to commit wire fraud and charged & indicted (4/11/20) with fraud relating to a patient's blood test. Another count of wire fraud was added in 2020, bringing the total number of felony charges to 12. Plead not guilty. No bond. Faces a maximum sentence of 20 years in prison & up to $2.75 million in fines, plus restitution, & $250K for each individual count of wire fraud & conspiracy.
Defrauding investors out of $700 million in funding for their blood-testing startup Theranos.
Trial began on 8/31/21 with jury selection. 12 jurors of 7 men & 5 women (6 Caucasians, 4 Hispanics & 2 Asians) with five alternates (3 men & 2 women). Juror #7 excused & replaced with alternate #1. Now jurors are 8 men & 4 women. Alternates 2 men & 2 women. 10/6/21: Juror #4 excused & replace with alternate #2. Now jurors are 8 men & 4 women. Alternates 2 men & 1 woman. 10/22/21: The judge excused Juror #5, moving up the third alternate to replace the juror. Both are women. No word on why the juror was excused. Now jurors are 8 men & 4 women. Alternates 2 men.
Trial began on 9/8/21.
The Court trial days will be Tuesday, Wednesday & Friday, possibly other half days. The Court may modify the trial time & set either 8:30am-2pm or 9am-2pm & possibly 30-minute breaks in between. Judge Edward J. Davila presiding. Jury selection was on 8/31 & 9/1 completed. Judge Davila said the juror whose mother-in-law died suddenly last week wants to travel for a few days next week for the memorial service, so trial won't be in session next Friday, Oct. 29. 10/20/21: Judge Davila notes that a juror can't be in court Friday, 11/12 & 12/3 & the judge has a conflict in November at some point due to a meeting in the Ninth Circuit committee. Motions hearing on 11/2/21, 11/16/21 & 11/17/21. Motions in Limine hearing on 12/7/21.
Trial dates: 12/7, 12/8, 12/9, 12/10, 12/13, 12/16, 12/17 so far & no court from 12/21/21 thru 1/6/22. Charging conference on 12/3/21.
Indictment & court info from 4/11/20 thru 8/26/21 & on 9/30/21 & on 11/2/21 & jury selection (Day 1-3) 8/31/21 to 9/2/21 & trial (Day 1-35) 9/8/21 to 11/30/21 & motions hearing on 11/8/21 & 11/19/21 & charging conference on 12/3/21 reference post #988 here:
CA - Elizabeth Holmes (Theranos) Wire Fraud
12/3/21 Charging Hearing: Judge & attorneys - Holmes' counsel have raised a few objections to the gov't's proposed jury instructions, which are mostly based on the 9th Circuit model instructions.
for more info see post #995 here:
CA - Elizabeth Holmes (Theranos) Wire Fraud
Judge Davila won't rule on the “willful” language, but he notes that the gov't proposed including the word "willful" in their jury instructions, which are modeled after the 9th Circ. He also tells defense counsel that their proposed instructions "seem to be lengthy" & need editing.
Judge Davila asks the parties about scheduling. Holmes' counsel Kevin Downey says prosecutors told him they don't currently plan to call rebuttal witnesses & "evidence will likely conclude during next week." Judge Davila says the jury will get the case "certainly by the 20th." Prosecutor Robert Leach thinks they'll get it by at least the 17th. Trial continues on Tuesday, 12/7/21 @ 9am. Motions in Limine hearing on 12/7/21 @ 8am.
*Ramesh “Sunny” Balwani (53/now 56) (CFO & President of Theranos) – Motion in Limine hearing on 1/6/21 & trial set to begin on 1/11/22, 1/12/22 & 1/14/22 with jury selection & trial starts on 1/18/22.

 

[UndiscoveredTruth]

Dorothy Atkins@doratki
7h

T-minus 12 hours until a bunch of reporters will be freezing outside the courthouse to hear more of Elizabeth Holmes' cross in her criminal fraud trial. ICYMI, here's my Friday coverage of her charging conference, which was pleasantly sparsely attended.

Holmes Attys Rip 'Confusing' Jury Instructions On Fraud - Law360

 

[UndiscoveredTruth]

Dorothy Atkins@doratki
2h

Good morning from a wet San Jose! Today is potentially the last day of Elizabeth Holmes’ cross in her criminal fraud trial, and there is - of course - a line to get inside. People are debating whether the defense will rest after Holmes. Stay tuned to find out!

 

[UndiscoveredTruth]

Dorothy Atkins@doratki
1h

Judge Ed Davila is on the bench, and Elizabeth Holmes is in the courtroom. There was a delay in getting the audio up in the overflow courtroom, of course, but it's working now. The parties are arguing over admitting some new documents during trial.

Dorothy Atkins@doratki
1h

Prosecutor Kelly Volkar says the defense has produced a bunch of docs and the gov't doesn't know where they came from. She says the docs are being admitted too late, and the gov't hasn't had a chance to counter them. "It's a very egregious violation," she says.

Dorothy Atkins@doratki
1h

Judge Davila asks Holmes' counsel Kevin Downey if the situation were reverse "you'd be out of your loafers screaming." He disagrees, and notes that the gov't "turned Theranos upside down" and didn't produce all docs to the defense before trial.

Dorothy Atkins@doratki
1h

It sounds like these docs at issue are ~40 emails from 2009 from GlaxoSmithKline that may counter the testimony regarding Theranos' use of GSK's logos. "We've never seen these documents until yesterday," Volkar says.

Dorothy Atkins@doratki
1h

Holmes' counsel says Robert Leach unfairly waited until the defense case to suggest Theranos misused GSK's logos. "If the gov't knew that it was going to make a big deal out of these logos," he doesn't know why GSK wouldn't have produced the emails to the gov't.

 

[UndiscoveredTruth]

Dorothy Atkins@doratki
1h

The judge says the gov't's objections "appear to be on solid ground." But Holmes' atty Kevin Downey says "this logo issue is a sideshow issue" from the indictment's charges, and there's no dispute GSK validated Theranos' tech, but they're focusing on the logos. Volkar disagrees.

Dorothy Atkins@doratki
46m

Holmes' atty Richard Cleary is up asking the judge (for the 3rd time) to admit Theranos' patient reviews, which Holmes reviewed, to speak to her state of mind. Kelly Volkar says "it's an exercise in futility," b/c even if Holmes reviewed the feedback, the substance is irrelevant.

Dorothy Atkins@doratki
42m

The judge held off on ruling, and we're taking a quick break before bringing in the jury and getting Holmes back on the stand.

Dorothy Atkins@doratki
36m

One note about the GSK logos: I think the defense's point this morning was that the gov't's case-in-chief focused on Pfizer and Celgene logos, which Holmes placed on validation reports, but not GSK's logos. But then a prosecutor focused on GSK logos in Holmes' cross.

Dorothy Atkins@doratki
33m

The whole logo debacle is extra confusing, because there are multiple pharma cos and each had different contractual relationships w/ Theranos, but the jury has only heard from two pharma reps during the 40 days of trial so far.

 

[UndiscoveredTruth]

Dorothy Atkins@doratki
30m

The jury is in the courtroom and Elizabeth Holmes is back on the stand. Prosecutor Robert Leach is up to continue Holmes' cross examination. He begins by getting her to acknowledge that the military never deployed Theranos devices on helicopters.

Dorothy Atkins@doratki
26m

Leach reads Holmes' SEC 2017 sworn depo in which she said Theranos' devices were never used on military helicopters and she and Balwani never told Walgreens' execs that. On the stand, she says again that Theranos never deployed the devices for medivac but adds "for clinical care"

Dorothy Atkins@doratki
18m

Leach asks Holmes repeatedly whether she told investors that Theranos blood analyzers were deployed in the battlefield or in Afghanistan. Holmes repeatedly says "I don't think I did," because she knew that wasn't true.

Dorothy Atkins@doratki
15m

Leach points out that writer Roger Parloff, investors Brian Grossman, John Bryan Tolbert and Lisa Peterson and ex-Safeway CEO Steve Burd testified she told them Theranos devices were used in military medivac. But Holmes denies saying that: "Again, I don't think I did."

Dorothy Atkins@doratki
12m

Somebody had a device that made noise in the main courtroom and the judge interrupted Holmes' exam and told the person to leave. "One free spot up there," someone says in the overflow room.

 

[UndiscoveredTruth]

Dorothy Atkins@doratki
6m

Leach pulls up an Oct 2013 email that Theranos VP Daniel Young wrote Holmes saying "there have been results for which all ISE results are out of range." Holmes acknowledges that Young's email was keeping her apprised of lab updates.

Dorothy Atkins@doratki
2m

Holmes agrees that she was generally kept apprised of what was happening in Theranos' CLIA lab in 2014 and had a general understanding of assays being run on Theranos devices. "I’m not sure at any point in time, but I was definitely given updates on an ongoing basis," she says.

Dorothy Atkins@doratki
11m

Holmes agrees that she knew between 2010 and 2014 Theranos bought analyzers from third parties and was using them to do tests. She also agrees she knew in 2014 and 2015 that Theranos could do 30 tests in its CLIA lab using fingerstick blood draws.

Dorothy Atkins@doratki
10m

Holmes says she doesn't think she told Lisa Peterson, the DeVos family's wealth estate manager, in late 2014 that Theranos projected $990 million in revenues by the end of 2015.

Dorothy Atkins@doratki
6m

Leach pulls up a projected statement of income that says Theranos pharma contracts in 2014 was $40 million and $990 million in revenues by end of 2015. Holmes says Theranos had a multimillion GSK contract, but it was years before.

Dorothy Atkins@doratki
1m

Holmes acknowledges that Theranos didn't make $990M in 2015, and Leach pulls up a Theranos Dec 31 2014 internal Theranos email that projects the co would make $113M in revenues by the end of 2015, which Leach notes is hundreds of millions of dollars less than $990M.

 

[UndiscoveredTruth]

Dorothy Atkins@doratki
20s

Leach is asking Holmes a series of q's about what she told hedge fund manager Brian Grossman. She repeatedly says she doesn't remember the specifics of their convo, and wasn't there for part of a meeting w/ him. ICYMI, here's my recap of his testimony.

Investors Gave Theranos $96M Despite Due Diligence Gaps - Law360

 

[UndiscoveredTruth]

Dorothy Atkins@doratki
9m

Leach points out that Holmes emailed shareholders a link to Roger Parloff's article in Fortune Magazine, and referred to the article in powerpoints sent to potential investors. She agrees she never told Parloff Theranos was using modified non-Theranos devices.

Dorothy Atkins@doratki
8m

Elizabeth Holmes acknowledges that she regrets some of her communications with Fortune writer@rparloff. "I do, I think I could have handled those communications differently."

Dorothy Atkins@doratki
6m

Holmes acknowleges multiple statements in Roger Parloff's Fortune Magazine article are incorrect, including that Theranos' devices "take up a small fraction of the footprint required by a conventional lab today" and Theranos "does not buy any analyzers from third parties."

Dorothy Atkins@doratki
4m

Leach asks Holmes if the statement in the article saying Theranos "currently offers more than 200 and is ramping up to offer more than 1,000" blood tests "all without the need for syringe" is inaccurate. "I believe that now," she says.

Dorothy Atkins@doratki
3m

We're taking a 30 minute break before turning to Holmes' conversation with ex-Safeway CEO Steve Burd. Brb!

Dorothy Atkins@doratki
9m

It is the 40th day of Elizabeth Holmes' criminal fraud trial and one juror still has her mask over her mouth, but under her nose.

 

[UndiscoveredTruth]

Dorothy Atkins@doratki
5m

We're back! Leach is back up asking Holmes about meeting with Johns Hopkins in April 2010 for a due diligence report that JH prepared for Walgreens. Leach asks if Holmes knew JH's report had a disclaimer: "I don't remember, but I'm sure you'll tell me," she says.

Dorothy Atkins@doratki
3m

Leach notes that the disclaimer says the report was only for Walgreens, and he asks Holmes if Balwani told her they couldn't "scale" Theranos devices for Walgreens. She says she doesn't remember, so Leach pulls up some text messages.

Dorothy Atkins@doratki
1m

In Nov 2014 text, Balwani wrote Holmes "fundamentally we need to stop fighting fires by not creating them." After a few text exchanges, Holmes wrote Balwani back the same thing, "fundamentally we need to stop fighting fires by not creating them."

Dorothy Atkins@doratki
8m

Balwani wrote Holmes "we can’t scale with [Walgreens]... They are terrible and we need" safeway and cvs. Holmes replied Let’s get Safeway done this week. "We can do it" Balwani went on and said Theranos missed Walgreens "integration deadline."

Dorothy Atkins@doratki
7m

Leach points out that Theranos trusted Walgreens to keep its secrets on this "very very important technology." Holmes agrees.

Dorothy Atkins@doratki
35s

Prosecutor Robert Leach points to some emails of Theranos' financial statements sent to Holmes in 2012.

Leach: "At the end of the day, you knew you were ultimately responsible for Theranos’ financial conditions as CEO?"

Holmes: "I did."

Dorothy Atkins@doratki
5m

Leach gets Holmes to acknowledge ex-Theranos project manager Daniel Edlin generally tried to get her "blessing" on material sent to investors.

Leach: If you disagreed with anything in the slide you had the ability to have them changed or not send them out?

Holmes: "Of course."

Dorothy Atkins@doratki
1m

A woman in the overflow courtroom w/ her mask hanging on her chin just blew her nose so loudly that I had to turn around and find the source. The overflow courtroom looks like it's at capacity today, & if we can make it through this trial w/o a covid outbreak, it'll be a miracle.

 

[UndiscoveredTruth]

Dorothy Atkins@doratki
35s

Leach has turned to the topic of CMS' inspection of Theranos in 2013. Holmes acknowledges that in between the CMS' 2-year inspections, Theranos was responsible for maintaining lab compliance.

Dorothy Atkins@doratki
4m

Leach asks Holmes if she denies that she told ex-Theranos chemist Surekha Gangakhedkar in 2013 that she "didn't have much of a choice," but to go ahead w/ the Walgreens launch.

Holmes: "I don’t remember saying that, but that’s something that could have been said."

Dorothy Atkins@doratki
2m

Leach asks Holmes about ex-Theranos lab director Adam Rosendorff's concerns about Theranos doing ebola tests. ICYMI, here's my coverage of that testimony.

Ex-Theranos Lab Chief Says Ebola Rumor Was 'Final Straw' - Law360


Dorothy Atkins@doratki
3m

Leach pulls up an email to Holmes from sept 2014 -- which was a couple of months before Rosendorff complained about Theranos' ebola tests -- that a DoD team was meeting w/ Theranos to "operationalize" ebola tests. Rosendorff didn't know about the meeting apparently.

Dorothy Atkins@doratki
8m

Elizabeth Holmes denies trying to hide from investors that Theranos used venous blood draws to run tests.

 

[UndiscoveredTruth]

Dorothy Atkins@doratki
6m

Leach pulls up an Oct 2014 email that Holmes' brother sent Balwani on "BDT" investors who were visiting. Her bro wrote assumptions here from Elizabeth Holmes "are that we must not do venous draw, and we cannot tell them that their order prompts venous if it does."

Dorothy Atkins@doratki
3m

The email goes on listing various scenarios in which venous draws are "prompted" during blood-tests and what to do. Holmes acknowledges that she wanted to impress BDT investors and they decided not to invest.

Dorothy Atkins@doratki
28s

Leach pulls up a June 2013 email that Safeway general counsel Bob Gordon sent her summarizing notes from a meeting. In the notes, Gordon wrote that Theranos' devices don't have technical issues, "contrary" to the impression of some Safeway employees.

Dorothy Atkins@doratki
13m

Leach points to some more July 2013 emails from Edlin in which he said there were issues with ~5 assays. Holmes acknowledges that Theranos didn't tell Walgreens about the issues, adding "I haven't read all of this, but we would have followed Dr. [Daniel] Young's guidance."

Dorothy Atkins@doratki
4m

Prosecutor Robert Leach brings up Ian Gibbons. Holmes says he was hired as one of the first employees and he passed away in 2013. (The parties agreed not to mention his cause of death during trial.)


Dorothy Atkins@doratki

2m

Leach points out that slides that Gibbons made for Theranos used "the future tense" to describe Theranos' blood-testing capabilities. The slides also say Theranos has "less secure" info in some assay areas.

 

[UndiscoveredTruth]

Dorothy Atkins@doratki
1m

Holmes pushes back against Leach's efforts to get her to concede Gibbons' slides were proposals. Holmes says "there was still work to be done," but she understood the slides were saying that the MiniLab could do "any method" once it was built.

Dorothy Atkins@doratki
2m

Leach asks Holmes if she understood Gibbons' Feb 2010 slides described prototypes and Theranos couldn't sell them at that point. Holmes acknowledges that Theranos wasn't ready "to launch" in Feb 2010, but by March 2010, they were ready to reach out to Walgreens, she says.

Dorothy Atkins@doratki
1m

Leach asks Holmes if she knew Ian Gibbons' wife was a source for John Carreyrou's 2015 WSJ articles questioning Theranos' tech. Holmes says "I don’t know. I suspected it, but I learned she was at some point."

Dorothy Atkins@doratki
1m

Trial is taking a 30 minute break. Brb...

 

[UndiscoveredTruth]

Dorothy Atkins@doratki
11m

Outside the courthouse, the flags are at half staff in honor of the 80th anniversary of Pearl Harbor.

 

[UndiscoveredTruth]

Dorothy Atkins@doratki
13m

And we're back! Leach has some more q's for Holmes on Ian Gibbons. He points her to a doc (but doesn't show the jury it) and asks her if it refreshes her memory that Theranos told the WSJ that neither Ian Gibbons nor his wife were credible sources on Theranos' tech. She says no.

Dorothy Atkins@doratki
3m

Leach points out that Holmes was told in Sept 2015 during the CMS inspection that it was going badly, and that Holmes later flew on a corporate jet to Florida on Nov 17, 2015 to accept an award. (seems like the DOJ is wading into luxury lifestyle evidence...)

Dorothy Atkins@doratki
13m

Holmes' counsel objects, and Judge Ed Davila says if this is the "lifestyle of CEO" evidence, prosecutors need to lay a foundation for it. After some more background q's establishing traveling sometimes via jet was part of Holmes' job, the judge admits the evidence.

Dorothy Atkins@doratki
6m

This is confusing. I thought the inspection was in sept 2015, but they're talking about an inspection in Nov 2015. Leach says Holmes was traveling during part of it. (The parties should really have a timeline of major events up somewhere. Some judges require that kind of thing.)

Dorothy Atkins@doratki
4m

Leach tries to get Holmes to concede that CMS told her after the Nov 2015 inspection, Theranos was in "immediate jeopardy" but she says she only recalls they told her the co could face citations.

Dorothy Atkins@doratki
3m

Leach asks Holmes if she remembers a meeting w/ the DeVos fam investment arm that Theranos' in-house counsel Heather King. They were told John Carreyrou's sources were "2 disgruntled lower level former employees." Holmes says King primarily spoke, but she doesn't remember.

Dorothy Atkins@doratki
2m

With that, prosecutor Rober Leach wrapped Elizabeth Holmes' ~2 day cross examination, and Kevin Downey is back up for some more redirect.