CA - Elizabeth Holmes (Theranos) Wire Fraud

[UndiscoveredTruth]

Dorothy Atkins@doratki
13m

Wade points to the different Excel spreadsheets and their revenue estimates and tries to get Grossman to concede his financial model was done independently. He refuses to concede the point, and says he added data to Theranos' projections and it was based on assumptions.

Dorothy Atkins@doratki
8m

Grossman says his hedge firm's financial projections were just "a sanity check" to see if their estimates were realistic, and "this was a secondary analysis we did to see how far we could go with Walgreens and to see if [Theranos] needed to go with other partners."

Dorothy Atkins@doratki
14m

Wade shows an email from Grossman's colleague saying there's a risk the FDA could issue a cease and desist letter to Theranos "anytime bc their tests are not cleared. The FDA has not done this so Theranos is correct that such an aggressive scenario is unlikely in the near future"

Dorothy Atkins@doratki
12m

The email goes on saying CLIA does not guarantee that the FDA will not go after Theranos, and "we also have to assume that there is a possibility that they will never be able to get certain tests approved by the FDA and they will remain venous blood draw tests."

Dorothy Atkins@doratki
10m

Holmes' counsel is trying to get Grossman to concede that he the email shows he knew Theranos was using venous blood draws and that there was a risk it always would. Grossman is trying to downplay the email and says regulatory issues are "just part of this industry."

Dorothy Atkins@doratki
1m

In another Jan '14 email, Grossman's colleague said he had a due diligence call with a scientist who develops lab tests and said Theranos would need FDA approval to put its devices in Walgreens. "There's a 10-20% chance that the implementation gets derailed by the FDA," he adds.

Dorothy Atkins@doratki
24m

In an interesting twist, Holmes' counsel shows hedge fund manager Brian Grossman an analysis that he prepared on Theranos, which he showed to investors. The attorney asks if Grossman got Theranos' approval to use the Theranos logo. He says no, but he didn't think he needed to.

Dorothy Atkins@doratki
20m

Holmes' counsel points to a "business outlook" page and notes that it doesn't mention the accuracy concerns expressed that the hedge fund's analyst expressed. Grossman says: "That was not a risk that we thought was a major risk at this point of the investment.”

Dorothy Atkins@doratki
14m

Holmes' counsel points to a page in the analysis that projects Theranos to have a $20.3 billion valuation by 2020. Grossman says he "wasn’t part of this meeting," but acknowledges the stat is in the presentation.

Dorothy Atkins@doratki
9m

We're taking a 30 minute break. It seems unlikely that we'll be getting to another witness today. 0_0

Dorothy Atkins@doratki
7m

The judge says Grossman's direct exam took 1hr and 30 mins and his cross has "exceeded 6 hrs." He says his estimate that this witness won't be done until Friday seems to be coming to fruition, which will "wreak havoc" on the trial schedule, "but that’s entirely in your hands."

 

[UndiscoveredTruth]

Dorothy Atkins@doratki
1h

The seasons may change, but us reporters will still be in the San Jose federal courthouse covering Elizabeth Holmes' criminal fraud trial.

Dorothy Atkins@doratki
1h

The jury is back, and Grossman is on the stand. Holmes' attorney gets Grossman to acknowledge that investors within his hedge fund invested in Theranos after seeing the presentation and analysis. Those investors included "friends and family."

Dorothy Atkins@doratki
1h

Holmes' attorney Lance Wade is now going through Theranos' slides, which describe the company's services and goal to have 95% patients w/in Theranos testing locations.

Dorothy Atkins@doratki
1h

Grossman concedes that Theranos' national rollout was "aspirational," and that some technology had patents pending. Wade points out Grossman was trading Walgreens' stock after he invested in Theranos, but the gov't objects and the judge sustained it. After +6.5 hrs cross wrapped.

Dorothy Atkins@doratki
1h

Prosecutor Robert Leach begins redirect by asking Grossman if anyone at Theranos ever told him in 2014 that 40% of patients had their blood drawn venously. He says no, he thought it was ~1-3%.

Dorothy Atkins@doratki
1h

Grossman says Theranos was in a better position to know the projected revenues than his firm, and Theranos' financial projections didn't mention that it was using modified non-Theranos blood-testing devices.

Dorothy Atkins@doratki
1h

Redirect wraps with Grossman saying the fact that Theranos said its tests had been validated in a CLIA lab was a "huge statement." The parties wrapped w/ Grossman. The gov't call the next witness Erin Tompkins

Dorothy Atkins@doratki
1h

Tompkins, who lives in Pheonix, Arizona, first heard of Theranos after "skimming" a Fortune Magazine article about it in 2013 and reading more about the startup on Facebook.

Dorothy Atkins@doratki
1h

Tompkins said she thought Theranos could run blood tests w/ blood drawn from a fingerstick and not blood vial, so she decided to get her blood tested. She noted that she was uninsured at the time, and paid in either cash or card.

Dorothy Atkins@doratki
1h

Prosecutor John Bostic asks if she cared more about accuracy or cost if she had to choose. She replies "accuracy is the most important any time you're getting a medical procedure, but cost is a close second."

Dorothy Atkins@doratki
1h

Tompkins got her blood tested in May 2015, and she received the results, which indicated that she had HIV antibodies.

 

[UndiscoveredTruth]

Dorothy Atkins@doratki
1h

Tompkins says she has never been diagnosed with HIV or AIDS and she never had symptoms and never received treatment. The report said the HIV antibodies "were not confirmed and HIV-1 RNA was not detected. No laboratory evidence of HIV-1 infection" and recommended a follow-up.

Dorothy Atkins@doratki
1h

Tompkins said she called Theranos to ask how it was possible to get the result, but the customer service couldn't help. "I was quite emotional at the time," she says. She didn't call back, but she got tested again and her HIV results came back negative.

Dorothy Atkins@doratki
1h

Tompkins said in August of this year she was tested again, and her HIV test results came back negative. Prosecutors finished direct. Defense counsel has a few questions, which will likely go until tomorrow.

Dorothy Atkins@doratki
1h

Holmes' counsel asks Tompkins if she remembers how much her blood test cost in 2015. She says she doesn't remember, but she received a refund check about two years later in the mail.

Dorothy Atkins@doratki
58m

Trial is breaking for the day and Tompkins' cross examination, which will likely be brief, will continue at 9 a.m.

 

[Niner]

per court site - trial starts at 8am not 9am.

Thursday, November 18th:
*Trial continues (Day 30) (@ 8am 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. Motions hearing on 11/16/21 & 11/17/21. Trial dates: 11/18, 11/19, 11/22, 11/23, 11/24, 11/29, 11/30, 12/3 so far.
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 1-28) 9/8/21 to 11/16/21 & motions hearing on 11/8/21 reference post #816 here:
CA - Elizabeth Holmes (Theranos) Wire Fraud
11/17/21 Wednesday, Trial Day 29: Motions hearing for miscellaneous relief at 8:30am.
Government witnesses: PFM LP hedge fund manager Brian Grossman. PFM is an investment firm that is registered with the SEC & he is a managing partner & chief investment officer, who primarily does portfolio management & risk management. Cross continued by Lance Wade.
for more info see posts #818 to 820 here:
CA - Elizabeth Holmes (Theranos) Wire Fraud
Brian Grossman cross continued & prosecutor Robert Leach on redirect.
for more info see posts #821 & 822 here:
CA - Elizabeth Holmes (Theranos) Wire Fraud
Erin Tompkins. Had a blood test thru Theranos. On direct & some cross.
for more info see posts #822 & 823 here:
CA - Elizabeth Holmes (Theranos) Wire Fraud
Trial is breaking for the day & Tompkins' cross examination, which will likely be brief, will continue at 8am (per court site) on 11/18/21.
*Ramesh “Sunny” Balwani (53/now 56) (CFO & President of Theranos) – Pretrial conference hearing on 12/16/21 & trial set to begin on 1/11/22 with jury selection & trial starts on 1/18/22.

 

[UndiscoveredTruth]

Dorothy Atkins@doratki
3h

Yesterday, jurors heard from the second patient to testify in Elizabeth Holmes' criminal fraud trial. She said she received an inaccurate test that suggested she had HIV or AIDS. Her cross will continue this morning. Catch up on yesterday's trial action!

Theranos Patient Got Incorrect HIV Test Result, Jury Told - Law360

 

[UndiscoveredTruth]

Dorothy Atkins@doratki
2h

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.

Dorothy Atkins@doratki
2h

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.

Dorothy Atkins@doratki
2h

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.)

Dorothy Atkins@doratki
1h

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.

Dorothy Atkins@doratki
1h

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.

Dorothy Atkins@doratki

1h

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.

Dorothy Atkins@doratki
1h

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."

Dorothy Atkins@doratki
1h

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.

Dorothy Atkins@doratki
1h

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."

Dorothy Atkins@doratki
1h

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.

Dorothy Atkins@doratki
1h

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.)

 

[UndiscoveredTruth]

Dorothy Atkins@doratki
1h

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.

Dorothy Atkins@doratki
1h

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.

Dorothy Atkins@doratki
1h

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.

Dorothy Atkins@doratki
54m

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.

Dorothy Atkins@doratki
54m

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."

Dorothy Atkins@doratki
53m

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.

Dorothy Atkins@doratki
47m

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.

Dorothy Atkins@doratki
43m

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."

 

[UndiscoveredTruth]

Dorothy Atkins@doratki
41m

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.

Dorothy Atkins@doratki
39m

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.

Dorothy Atkins@doratki
35m

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."

Dorothy Atkins@doratki
33m

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.

Dorothy Atkins@doratki
27m

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.

 

[UndiscoveredTruth]

Dorothy Atkins@doratki
12m

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."

Dorothy Atkins@doratki
4m

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."

Dorothy Atkins@doratki
38s

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.

Dorothy Atkins@doratki
5m

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.

Dorothy Atkins@doratki
2m

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.

 

[UndiscoveredTruth]

Dorothy Atkins@doratki
6m

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."

Dorothy Atkins@doratki
3m

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.

Dorothy Atkins@doratki
2m

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.

Dorothy Atkins@doratki
38s

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.

Dorothy Atkins@doratki
10s

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.

This CEO is out for blood

 

[UndiscoveredTruth]

Dorothy Atkins@doratki
29s

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.

Dorothy Atkins@doratki
19m

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.

Dorothy Atkins@doratki
18m

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.

Dorothy Atkins@doratki
17m

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.

Dorothy Atkins@doratki
14m

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.

 

[UndiscoveredTruth]

Dorothy Atkins@doratki
12m

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.

Dorothy Atkins@doratki
10m

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."

Dorothy Atkins@doratki
3m

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."

Dorothy Atkins@doratki
13m

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.

Dorothy Atkins@doratki
11m

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."

 

[LinasK]

Dorothy Atkins@doratki
12m

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.

Dorothy Atkins@doratki
10m

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."

Dorothy Atkins@doratki
3m

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."

Dorothy Atkins@doratki
13m

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.

Dorothy Atkins@doratki
11m

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."

It's finally getting good. First person who asked hard-ball questions of them and wasn't snowed by their evasive answers. And IMO, Grossman? had every right to pester them for answers when he was investing so much money.

 

[UndiscoveredTruth]

Dorothy Atkins@doratki
10m

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.

Dorothy Atkins@doratki
7m

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."

Dorothy Atkins@doratki
25s

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.”

Dorothy Atkins@doratki
1h

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.

Dorothy Atkins@doratki
1h

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.

 

[UndiscoveredTruth]

Dorothy Atkins@doratki
1h

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.

Dorothy Atkins@doratki
55m

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.

Dorothy Atkins@doratki
50m

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

Dorothy Atkins@doratki
44m

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.

Dorothy Atkins@doratki
37m

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.

Dorothy Atkins@doratki
30m

We're taking a 30 min break. Brb!

 

[UndiscoveredTruth]

Dorothy Atkins@doratki
3m

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.

Dorothy Atkins@doratki
3m

"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.

Dorothy Atkins@doratki
15m

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.

Dorothy Atkins@doratki
13m

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.

Dorothy Atkins@doratki
13m

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.

 

[UndiscoveredTruth]

Dorothy Atkins@doratki
7m

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.

Dorothy Atkins@doratki
2m

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.

Dorothy Atkins@doratki
28s

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.

Dorothy Atkins@doratki
42s

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.

Dorothy Atkins@doratki
16s

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.

 

[UndiscoveredTruth]

Dorothy Atkins@doratki
15m

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.

Dorothy Atkins@doratki
13m

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.

Dorothy Atkins@doratki
12m

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."

Dorothy Atkins@doratki
6m

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.

Dorothy Atkins@doratki
4m

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.

Dorothy Atkins@doratki
1m

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.

 

[UndiscoveredTruth]

Dorothy Atkins@doratki
3h

"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.

Dorothy Atkins@doratki
2h

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.

Dorothy Atkins@doratki
2h

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.

Dorothy Atkins@doratki
2h

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."

Dorothy Atkins@doratki
2h

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

Dorothy Atkins@doratki
2h

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.

Dorothy Atkins@doratki
2h

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."

 

[UndiscoveredTruth]

Dorothy Atkins@doratki
2h

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

Dorothy Atkins@doratki
2h

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.

Dorothy Atkins@doratki
2h

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

Dorothy Atkins@doratki
2h

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

Dorothy Atkins@doratki
2h

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.

Dorothy Atkins@doratki
2h

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.