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Previously on The Dropout, Elizabeth Holmes shared shocking new allegations. Fighting back tears, Elizabeth told the court she was raped as a student at Stanford, and claimed she was in an emotional and physically abusive relationship. With her former boyfriend in Theranos' COO, Sunny Bellwani, allegations he's firmly denied. I personally was surprised at how far her testimony went in terms of bolstering the defense case. Sure, they lost a few battles, but maybe they're going to win the war.
While the claims were compelling, they don't necessarily negate the allegations of fraud. The problem though is that this is not an indictment of their relationship. This question is whether she swindled investors out of three quarters of a billion dollars. In this week's episode, Elizabeth is the last witness to take the stand at her own fraud trial. I'm not surprised that they decided that's actually the best strategy.
After three months of witness testimony, her fate is soon to be revealed. Will Elizabeth spend decades in prison? Or leave the San Jose Courthouse a free woman? The range of possible outcomes is huge. From ABC Audio, this is the dropout, Elizabeth Holmes on trial. I'm Rebecca Jarvis. The episode 17, The Defense Rests. At 10.15 am on Wednesday, December 8, after Elizabeth Holmes spent seven days on the stand,
the defense announced it would call no further witnesses. It was one more surprise in a trial of many. While the prosecution meticulously built its case with 29 witnesses, investors, scientists, patients, and doctors among them, the defense relied almost exclusively on the testimony of one.
Elizabeth. When she finished, Elizabeth walked away from the stand, a confidence in her step, and a smile on her face, turning to look directly at the jury box and eyeing the eight men and four women who will decide her fate. The Santa Clara University law professor Ellen Kreitzberg says, hanging it all on Elizabeth was a calculated call by the defense. It leaves that sympathetic tone, that image a half of her being vulnerable, and you cannot undo it.
But the decision also raised some important legal questions. Most significantly, by not including the testimony of Dr. Mindy McCannock, an expert on intimate partner abuse who evaluated Elizabeth before the trial, the defense may have handed the prosecution a small win.
The defense decision not to call their expert witness does have some consequences to it, and the judge has given some indication that he may be striking some of the testimony because of that, specifically the 2003 Stanford University incident. Remember, the Stanford incident refers to Elizabeth's bombshell testimony that she was raped in college.
Dr. McCannock would presumably have linked the incident to Elizabeth's behavior running Theranos, and legal experts assumed, without Dr. McCannock there to address this in court, the prosecution would move to have Judge Dovela rule the testimony retroactively inadmissible. But it appears the government isn't going to take that step. At least for now, a decision that baffles Professor Kreitzberg. I'm really quite surprised that they have not filed a motion or raised it in court.
They said something at the end of the hearing a week ago that they would at least be considering filing a motion. Its evidence which has questionable legal and relevance to this particular case, and the judge also seems somewhat predisposed to striking it without the testimony of an expert witness. But they haven't done it yet, so we have to assume they're not going to ask to have it struck and they'll proceed to closing arguments with that testimony intact. Is there a strategy here?
I'm a little baffled as to what the strategy might be, but perhaps they feel like the defense has overstepped its bounds by introducing that evidence, and they don't think that the jury will respond to it in a positive way in terms of how it has any connection to the particular charges, the events that occurred over a decade later. Do you think it's possible that they could have something to gain from leaving it in?
Perhaps they think they can best neutralize it, but I have to assume that lawyers of the caliber that these prosecutors are have a specific reason and strategy in mind. No one should be leaving these kinds of decisions to accident. Perhaps even more importantly, without testimony from Dr. Mechanic, the defense is constrained in how it addresses the role of the pervasive abuse Elizabeth allegedly suffered at the hands of Sonny, a claim he's firmly denied.
Recall that ahead of the trial, attorneys for Elizabeth had filed what's known in legal speak as a 12.2, essentially suggesting they intended to allege Elizabeth's mental state or condition, impacted her ability to form intent. What happens now that the defense didn't put forward an expert to make this case to the jury? When Elizabeth has already said in her own testimony, Sonny didn't force her actions when it came to conversations with investors, journalists, and Walgreens.
So 12.2 doesn't require an expert to testify, but the advantages that if an expert does testify, the expert can explain in general terms how to certain behavior impact individuals and how might it affect their decision making or mental process. Elizabeth Holmes, when she testified, spoke fairly generally about her relationship with Sonny Bawani, impacted her all over and in many ways, non-specifically.
So I assume the defense is going to argue that the nature of the emotional, psychological and even sexual abuse, if the jury believes that these things occurred, made her more trusting of him, made her less willing to check or verify information he gave her, and made her willing to follow him and follow his direction without really questioning it. Back in the courtroom, when the defense rested its case, after a very long three months, everyone seemed relieved to see things coming to a close.
A happiest moment was when they both said they were going to rest. I think everybody breathed a sigh of relief and thought they all might get home for Christmas. You could tell everyone was glad the evidence was finally over. But the excitement was short-lived. Moments after Judge Dovel announced that all the evidence was complete, what can only be described as the kind of scheduling chaos that ensues towards the end of Zoom meetings began.
Dovel informed the court, attorneys for both sides still needed to hash out the jury instructions. Unfortunately, as it turned out, Judge Dovel had long before said he'd be unavailable December 14th and 15th. This meant pushing closing arguments to December 16th and 17th, a full eight days out from the defense resting its case.
But the new timetable, much longer than what jurors had originally signed up for, also meant deliberations likely wouldn't begin until December 20th, which, oops, was a holiday week. Dovel asked if everyone could go look over their schedules, make calls. They did. Juror number five had a doctor's appointment, December 16th, but could reschedule. And juror number seven was unavailable December 22nd.
In the end, Judge Dovela, guided by the jury, decided closing arguments would, in fact, begin December 16th at 9am, with deliberations almost definitely starting the following week. If the table was the possibility of pushing deliberations into the new year, the jurors were eager to go. But could the timing itself, a potential verdict happening right around Christmas, be a game change for the outcome?
It probably works somewhat to the defense advantage that there's a more merciful and sympathetic and positive view that often people take at that time of the year. Maybe all along the defense has had no interest in going to trial quickly, the fact that it's been delayed multiple years for a variety of reasons, even if they're good reasons, always works to the benefit of the defense. So they may not have planned some of the specific delays, but they certainly will benefit from all these delays.
This was all decided after the government concluded its cross-examination of Elizabeth. And the theme of the cross was a familiar one. Evasion. Elizabeth finished her testimony with a chorus of, I don't think I did, I don't know, and I can't recalls. Punctuated by, I would have done things differently. Over and over again. In the rare case when Elizabeth could remember, the blame would usually fall on someone else. Frequently, her former boyfriend and COO, Sunny Bellwani.
After Robert Leach began by returning to a familiar topic, Elizabeth's exaggerations about military partnerships. Elizabeth admitted, again, Theranos' analyzers were never deployed on the battlefield. Never sent to Afghanistan or the Middle East, were never used for clinical care for soldiers abroad, were never placed on Medevacs. But when Leach asked if they were ever deployed on military helicopters, Elizabeth replied a little more craftily.
Not for clinical use, no. So Leach read the following exchange from Elizabeth's SEC defosition to remind her, no such deployment had occurred for clinical or any other use. Did you tell Wade Micole on at Walgreens that Theranos had deployed his TSP on military helicopters? No. Did you hear Mr. Bellwani tell Mr. Micole on that? I did not. So that had been true any time from 2010 to 2014. We did not deploy on helicopters. You did not deploy on helicopters ever.
Correct. The facts were clear, Leach pointed out. In the end, you weren't able to deploy Theranos services with the DOD at the end of the day. We did not. Elizabeth responded. But less clear were Elizabeth's recollections about whether she'd conveyed these facts to investors. Thus began a monumental round of he said she says that stretched across all categories, military applications, financial projections, third-party machines.
Elizabeth carefully disputing the testimony of many government witnesses who came before her. Am I right that your testimony is that you never told investors or potential investors in 2013 or 2014 that analyzers that Theranos manufactured were deployed in the battlefield asked Leach? I don't think I did. Elizabeth said. You never told investors or potential investors that? I don't think I did. OK. And you wouldn't have told potential investors that because you knew it wasn't true.
Yes. Settle Elizabeth. You did not tell Steve Bird, Safeway CEO that Theranos had deployed its TSPU on the battlefield? Leach pressed? Correct. Settle Elizabeth. Leach then reminded the jury what Bird himself had said just weeks before, reading the Safeway CEO's testimony out loud to the court. Elizabeth told me that they had been doing some work for the Department of Defense, that her device was in Medevac units around the world in places, you know, a lot of Americans didn't know where we were.
Leach then turned to Elizabeth. You heard him testify to that, correct? I did, she said. And what about all the investors, Lisa Peterson, Brian Grossman, Brian Talbert and Craig Lucas who testified the same on the stand? Were they all misremembering, too? Elizabeth said she didn't think she told them Theranos devices were used for clinical care on Medevacs. Her testimony is that simply didn't happen. You would never tell an investor that, Leach asked?
My testimony is that I don't think I said that, Elizabeth said. Remember, just a few weeks ago, the government had played an investor call for the court that seemed to dispute Elizabeth's answer. Military is a big deal for us. And I can tell you, eventually, a couple of the areas in which we focus there.
One, in the context of work in the Middle East and specifically in Afghanistan, the ability to take a technology like this and put it in flight, specifically on a Medevac, has this potential to change survival rate. We've also been doing a lot of work for special operations, commands in the context of missions and remote areas. But under cross-examination, Elizabeth refused to budge. Here's Professor Kreitzberg.
The one thing the government did do somewhat effectively in their cross-examination was be repetitive on particular issues that Elizabeth Holmes said. I never told them, for example, about the Department of Defense deployment. I don't remember telling anyone that. And the prosecutor went through Byrd, Peterson, Grossman, Tolbert. He went through each of those witnesses and reminding Elizabeth Holmes, did you see them in court? Did you hear them testify?
Which was really a way to say to the jurors, remember they were in court? I know it was a long time ago, but you heard them testify. And all of them heard this incorrectly. All of them said the same thing about the Department of Defense representations. So in order to believe Elizabeth Holmes, you have to disbelieve multiple, very credible witnesses.
And that's why at the end, when they go into the jury room, if they can then be separated somewhat from the emotional tug of having seen her and listened to her testify, the evidence is there to convict her. And the question is how the jury then pulls the evidence together. Prosecutor Leach then moved to the technology. Elizabeth confirmed she was kept a prize of what all the devices could and could not do.
Leach referenced an email from Dr. Daniel Young, the number three at Theranos, that young had sent about a month after the company announced its Walgreens partnership. In it, young told Elizabeth that their test results for sodium, potassium, and chloride were still not as reliable as he wanted. Another email from the same time period showed just three tests were actually being done on Theranos' own device. That wasn't hidden from you, said Leach.
No, said Elizabeth. Yet again, Leach confirmed with Elizabeth that Theranos bought machines from third parties, including Siemens, Beckman Coulter, and DCA Vantage. Leach then brought up the financial projections Theranos provided to R.D.V., the Divos family office. Forecasting revenue would hit nearly a billion dollars in 2015, supposedly due in part to robust farm and hospital contracts. You had no revenue from pharmaceutical companies in 2014. Correct? Leach asked? We did not. Said Elizabeth.
You never recognized any revenue from hospital services. Correct? I'm not sure, Elizabeth said. And you never put a mini-lab or an Edison in a hospital, correct? Not for clinical care. No, said Elizabeth. Leach then turned to Brian Grossman, whose fund P.F.M. invested about $100 million in Theranos. Do you dispute that you and Mr. Bellwani told Brian Grossman that Theranos did a little over $200 million in revenues, mostly from DOD, that had sustained Theranos prior to the launch?
I don't think we said that, said Elizabeth. Here's Professor Kreitzberg. And asked about communications with investors and with others, she never testified, I did not say that. She always said, I don't remember saying that. And it's a subtle difference, but to me it's important because it makes her less abrasive. It made her less confrontational. She didn't take the government straight on. She was just, I don't remember.
It's been so many years, even though the years are because of delays implemented by the defense for the most part. And Leach moved his attention to the Roger Parlov fortune article, which turned out to be filled with misinformation about Theranos. You read the Parlov article after it was published, correct? I did, said Elizabeth. Okay, and you don't have a memory of forwarding the Parlov article to investors or potential investors, correct? I don't.
Okay, let's see if we can refresh your memory, said Leach. Leach pulled up an email sent to investors in June 2014 and began reading from it aloud to the court. With this email, we're very pleased to share with you this month's Fortune magazine cover story. Leach then confirmed Elizabeth had never told Roger Parlov that her company was modifying commercially available machines to conduct patient testing.
Then Leach returned to the Parlov article, Elizabeth had sent investors and began reading from it out loud. Importantly, it's not just the blood draws that are tiny. It's also the analytical systems Theranos uses to perform the tests. They take up a small fraction of the footprint required by a conventional lab today. Then Leach turned to Elizabeth. And you agree with me, that statement as of July 2014 was not true. It was not, said Elizabeth.
Leach returned to reading from the article Theranos, which does not by analyze the analyzers from third parties is therefore in a unique position. Then he looked back at Elizabeth. You agree with me, that was not true as of July 2014. Correct, said Elizabeth. Leach returned to reading from the article. It currently offers more than 200 and is ramping up to offer more than a thousand of the most commonly ordered blood diagnostic tests all without the need for a syringe.
Remember, the prosecution had previously played parlop tapes that show Elizabeth making and elaborating on these very claims. Our whole business is about eliminating the need for people to do venipuncture and let them, they want to, in which case they can. But this, I mean, everything that we do is about eliminating that. What is the difference then between the 200 that are listed and the 1000 you feel comfortable you can do? Yeah, absolutely.
So this gets into some of what we were talking about before in terms of when we do venipunctures and those types of things. So it's more that we have operationalized a certain set of tests expecting a certain set of ordering patterns with certain sets of inventory and workflows for those tests that are most commonly done. And so those ones on the website are the ones that are most commonly done. Actually, okay. And so those are the ones that we brought up first. But we are adding to it.
And in fact, before the article comes out, we may have a new batch that is going on the website. And you agree with me, that was not a correct statement as of July 2014, leach pressed. I don't think it is now, said Elizabeth. But the crucial thing is what Elizabeth said back then. And jurors had heard as much in those tapes directly from Elizabeth herself. One of the most powerful pieces of evidence for the government are her own words and tapes and recordings.
The defense narrative is when you actually hear her words, whether it was in the phone call to the investor in Texas, whether it was in the phone call with Parlov, the questions there were pretty specific about, is this what your company does now? And her response was quite unequivocal, yes, it is.
If I were the prosecutor, I would be playing those tapes in my closing argument to just let that resonate with her voice, her words, and her representations to contrast it with her testimony that she gave in court. This is Brad Milky, host of ABC's Daily News Podcast. Start here. And drop out in a minute, but first. Today's podcast is brought to you by SimplySafe. If you're constantly thinking about the safety of the people and things that you value most, check out SimplySafe.
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A quick reminder, if you're looking for a daily recap at the day's news, including updates on the Elizabeth Holmes trial, join me over on Start Here, the daily podcast from ABC News. Again, that's Start Here, available wherever you listen. Following the damning testimony about Roger Parloff's article, Prosecutor Leach next turn to what Elizabeth told investors about Theronos' relationship with Safeway.
Did you tell investors or potential investors in 2014 that the Safeway contract was going well and that Theronos would be rolling out to Safeway stores in early 2015, Leachast? I don't remember saying that specifically, Settle-is-Beth. And would that statement have been true in 2014? Yes. I think so. That's what we were planning to do, yes, Settle-is-Beth. But Leach shared with the court Elizabeth's SEC deposition on the topic, which seemed to contradict her testimony.
Did you tell investors or potential investors in 2014 that the Safeway contract was going well and that Theronos would be rolling out to Safeway stores in early 2015? I don't think so. Would that statement have been true in 2014? I don't know about the second part in terms of whether we thought we would be rolling out and I don't think we would have thought it was going well.
So the relationship with Safeway didn't appear to be going well in 2014, but that's not what Elizabeth communicated to the Divas family office. Leach read aloud to the court an email sent at the time. Theronos is also under contract with Safeway for a national rollout to a substantial number of their stores with plans to open 300 Safeway locations during 2015. And prosecutor Leach turned to Johns Hopkins.
Remember when Elizabeth and her attorney and earlier testimony had gone over the report created by Johns Hopkins, they'd conspicuously glossed over the fine print. Leach went straight for it. That summary includes a disclaimer at the bottom, doesn't it? He asked. I'm not sure, but I'm sure you'll tell me, Elizabeth replied, with a small grin stretching over her face. Doesn't it have a disclaimer that this is not an endorsement by Hopkins, Leach asked? I don't know.
I don't remember, Elizabeth said. You don't remember? Leach said incredulous. I don't, Settle is Beth. It's a two page document that you don't remember Hopkins saying, we don't endorse this. Leach pressed on. I don't remember the disclaimer. Settle is Beth. Okay, well, in any event, you did not think that the Johns Hopkins assessment was validating the device, correct? I thought it was validating Theranos' technologies, Settle is Beth.
But Leach again turned to Elizabeth's own deposition with the SEC, where she'd essentially said the opposite. You read it out loud. Did you ever tell investors or prospective investors that Johns Hopkins invalidated Theranos' devices? I don't remember using those words, you know. Did you ever hear Ms. Rollin say that? I don't think so. Would that have been true in 2013 and 2014? As you know, they had done an assessment, and I don't think we thought of it as validating the device.
Then Leach turned to Walgreens. Elizabeth confirmed Theranos only ever opened 41 wellness centers. And later, in 2014, Mr. Balwani told you that Theranos could not scale with Walgreens, correct? Leach asked. I don't remember it like that, Elizabeth said. Leach, as he'd now done many times previously, moved to refresh Elizabeth's memory by pulling up messages between her and Sonny from November 2014. Messages you've also heard the SEC read out loud to Elizabeth in her deposition.
He says, we can't scale with Wag. Wag, you understand his Walgreens? Yes. Okay. And then in his next text message, he says, they are terrible and we need SWI and CDS. Do you understand SWI to be safe way? Yes. And then you respond, it is time. Let's get SWI done this week. We can do it. Leach then reminded the jury that during the period when the foreboding text messages were sent, Elizabeth was in fact raising money from investors like Rupert Murdock and the Walton family.
It also happened to be the same time Elizabeth was on stage at conferences like this one with Fortune, boasting about a national rollout. Are you able to say like in five years how many Walgreens you might be in? Sure. So there's 8200 Walgreens nationally. That would put us within 5 miles of every American's home and that's what we're working to do. Leach then turned to the Walgreens launch and testimony we heard from Theranos lab employees Surreca Ganga Kedkar, an Adam Rosendorf.
Your testimony is that you don't recall Surreca Ganga Kedkar coming to you in September of 2013 saying that Theranos isn't ready. I do not. And do you deny you told her that Theranos didn't have much of a choice that you have a promise to deliver to the customer? I don't remember saying that but that's something that I could have said. You just have no memory of it. Leach said a familiar refrain throughout the questioning. I don't. Settle Elizabeth.
You remember an email from Dr. Rosendorf where he said I can't vouch for the test or I'm being asked to vouch for results I'm not confident in. Yes, I remember that. Leach then asked Elizabeth about concealing Venus draws from investors, something she said she didn't do. But Leach again had evidence pulling up an email from Elizabeth's brother Christian Holmes sent ahead of an investor visit to Walgreens.
Assumptions here from EAH are that we must not do Venus draw and we cannot tell them that their order props Venus if it does. Did I read that sentence correctly? Leach asked. You did. Settle Elizabeth. And EAH is an acronym for you, correct? It's my initials, Settle Elizabeth. The email then laid out a plan if the situation should occur, including need to either tell the patient at the store that we will not run a few tests or tell them on the back end that we could not run certain tests.
Leach showed an email exhibit revealing Theranos even had customer service reps prepped in case an investor called in. Leach moved on to Theranos' decision to start modifying the third party machines in July 2013, about two months prior to the rollout in Walgreens. One of the reasons that you're pursuing modifying the Siemens machines is because the mini-lab isn't ready. Yes, it wasn't validated, answer to Elizabeth.
You were having demonstrations with the folks from Walgreens in July and August of 2013 with the mini-lab in the Edison 3.5, correct? We showed them those devices, Settle Elizabeth. OK, and you didn't show them any modified Siemens machines? No, Settle Elizabeth. Leach then pointed to a presentation to Walgreens from July 2013. At the time, Theranos had in fact already decided it wouldn't be using its own devices, and instead would rely on modified third party machines.
The final page of the deck read, overview, Theranos systems. And it included images of two devices, Theranos' 3.5 and the mini-lab. There was no picture of a modified third party machine anywhere on the page. At no point in time, did you tell Walgreens that you were modifying Siemens machines to go forward with the launch? We did not, Settle Elizabeth. And you didn't provide them the image like we have here of a Theranos analyzer consisting of a third party modified device, correct?
Leach then turned to Dr. Ian Gibbons, Theranos' one-time chief scientist. Recall from previous episodes, early in her testimony, Elizabeth spent a great deal of time focusing on Dr. Gibbons, and what she testified he'd led her to believe about Theranos' capabilities. What neither Elizabeth nor her attorneys had shared with the jury was that Ian Gibbons was dead, and that his wife or shellgivens had also raised concerns about Theranos. But the court was about to find out.
Leach began by telling jurors Dr. Gibbons passed away in 2013. Then leach dove into the February 2010 presentation Dr. Gibbons delivered to Elizabeth about Theranos' 4-series device. You understood that the 4-series device could do any blood test. Do I have that right, Leach asked? Yes, said Elizabeth. But then Leach confirmed that at the time of Dr. Gibbons' presentation Theranos didn't have a working device, only a prototype.
Then Leach pointed to language in the document like, System 4.0 will be capable of performing any measurement required in a distributed test setting. Leach called attention to Dr. Gibbons' use of the future tense. Dr. Gibbons is using the future tense and talking about things that are yet to be determined, correct? Leach asked? Yes, Elizabeth answered. OK, but you understood from this that Theranos could run any blood test?
I understood that this was the beginning of affirming we were capable of doing that. Yes, said Elizabeth. OK, so when you testified that after reviewing this, you understood that the 4-series could do any blood test, what you meant is that this was the beginning of something that might be able to do that. Leach said, when I testified that I believed this meant that we could do it, I was correct. I believe it meant that we could do it.
OK, you understood that this was something that you might be able to do in the future. Is that what you're saying? Leach pressed? I understood from the work that this team of scientists and engineers and Dr. Gibbons did, that we could do any method on the mini-lab the way that we were proposing to build it and take it forward. Said Elizabeth. Leach continued pressing, but it remains to be seen whether you're going to make it all come together. Is that a fair way of looking at this?
There was still work to be done. Elizabeth ultimately conceded. Leach then turned to the circumstances of Dr. Gibbons' death in 2013. OK. Dr. Gibbons passed away in 2013, he asked. He did. Said Elizabeth. Did you have any reason to think that his views of Theranos' technology had changed by that point in time? Leach asked. I did not. Said Elizabeth. Leach then asked about Dr. Gibbons' wife, Rachelle Gibbons, whom you heard from in previous episodes.
She told us she blamed Elizabeth for her husband's death by suicide. I feel like that should be in jail. They should not be allowed to destroy people's lives. Leach asked if Elizabeth's suspected Rachelle was one of the sources for the damning Wall Street Journal article in 2015. Did there come a point in time when you started to suspect that Rachelle Gibbons was one of the sources? Leach asked. I don't know if I suspected it. I know that I learned that she was at some point.
Okay, you did tell Mr. CareyRoot that by 2013, Dr. Gibbons' work was not living up to what it had been in the past. Is that fair? I don't know. Said Elizabeth. Leach then provided an exhibit suggesting Elizabeth had described Dr. Gibbons as not a credible source for information about Theranos' technology, business plans, and any other information.
Leach then turned his attention to a patient whom Elizabeth had testified provided positive feedback in October 2015, pointing out that the test had been run on a third-party machine. So this would have been run on an ordinary FDA machine, he continued. This would not have anything to do with the Edison. Yes, correct, said Elizabeth. And it would not have anything to do with your small sample testing. I believe that's correct, she said. Leach then circled back to the negative CMS audit in 2015.
I believe you testified on direct examination that you came to the conclusion after receiving the CMS report that Mr. Balwani was not the business man you thought he was, and that you made the decision to push him out from Theranos and end your personal relationship with him. Is that a fair statement, Leach asked? Overall, yes, said Elizabeth.
Leach then challenged Elizabeth on whether she really ended her relationship with Sunny over her sudden shock about the bad inspection or for other reasons. First, Leach showed Elizabeth had known things were going poorly with the audit as early as September 2015 when Sunny had texted her as much.
Then Leach showed a travel log confirming Elizabeth came for the CMS inspection in November 2015, and they told you in this exit interview that they were contemplating finding immediate jeopardy at the Theranos lab, correct, Leach asked? I'm not sure, said Elizabeth. Well, let's see if we can refresh your memory, Leach said, pulling up another exhibit.
Elizabeth reviewed the exhibit and said she remembered a discussion of possible citations, but said she couldn't remember the CMS inspector telling her they were considering an immediate jeopardy finding. Leach reminded the court of the timeline. The CMS report had come out in January 2016, but it wasn't until April 2016 when Elizabeth made the decision to push Sunny out of her company. Leach then turned to how Elizabeth had represented the troubling CMS report to investors.
Had Elizabeth minimize the findings to Lisa Peterson, the investor linked to the divorce families investment, he asked? I don't think I did, said Elizabeth. Well, let me see if I can refresh your memory, Leach said, pulling up Peterson's testimony and asking Elizabeth to read the first paragraph.
Does this refresh your memory that Theranos told Lisa Peterson at this meeting Theranos can't trivialize the CMS issues in the press, but in reality, they don't feel the issues are major, and they would be shocked if sanctions were imposed. It does not, said Elizabeth, you are here when Miss Peterson testified about this meeting, correct? And you don't have a memory of trivializing the CMS inspection to her. Is that what you're saying? I don't think I did that, said Elizabeth.
And with that, prosecutor Leach rested his cross examination of Elizabeth Holmes. If you were grading the prosecution on their cross, what would you give them? Oh, boy. What is it in the Olympics? They get both style points and content points. Their content points were excellent. The style points, they could do a lot better. Having said that, it's challenging. They had to be very careful. I do think stylistically, they were correct in not going after her.
I know a lot of commentators said they should have put in the night. Twisted the knife, gone after her. She did not appear to be someone who the jury would give him permission to go after and to be that aggressive too. I think he would have lost that battle. So I do think stylistically, in that sense, the prosecutor took the right tone. I just think the prosecution lacks a cohesive, emotional narrative that the defense is going to be able to do from their perspective.
And that doesn't have you lose cases, but it just makes it harder for the jury to put it together. Today's podcast is brought to you by SimplySafe. If you're constantly thinking about the safety of the people and things that you value most, check out SimplySafe. Sleep better every night knowing SimplySafe's 24-7 monitoring agents are standing by to protect you if someone tries to break in and to send emergency help when you need it most.
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In the redirect, defense attorney Kevin Downey kept things sharp and simple, eliciting strong, short, yeses and noes from Elizabeth. Many questions were nearly exact repeats of what we'd heard before. He began by asking Elizabeth about Theranos' blood testing, attempting to minimize some of the prosecution's biggest wins on this theme. How many tests was Theranos offering in its clinical lab that used a small sample finger stick between 2013 and 2015? I think about 70, C-W-W-Solitaire.
To the patient who gets a blood test, does it matter in their experience what device their blood is being analyzed on? No, C-W-W-Solitaire. Do they see the analyzer that their blood test is being performed on in the central lab? They do not, C-W-W-Solitaire. Who was responsible for validating tests before they were offered in the clinical lab? Downey asked. The lab director. C-W-W-Solitaire. Did all tests have to be validated before being offered to patients? Asked Downey? Yes, C-W-W-Solitaire.
Was there any instance where you sought to overrule the lab director or any lab personnel as to what could and couldn't be offered? No, C-W-W-Solitaire. And what exactly did Elizabeth understand about her lab prior to the CMS audit? But it was excellent, she said. And between you and Mr. Balwani, who was responsible for the operational management of the lab? Mr. Balwani. Elizabeth also said Sonny was responsible for the financial models that made it into some investor presentations.
Downey again asked, who knew Theranos was using modified third-party devices instead of its own machines? The FDA, the Board of Directors, and CMS, Elizabeth said. Downey turned to the infamous doctored pharmaceutical reports, pointing out Theranos had in fact shared the altered Pfizer document with none other than Pfizer in 2014. As it turned out, the document had made its way into some of the ongoing conversations between the two companies. Did anyone from Pfizer have any reaction to this?
Downey asked, no, I remember it as being positive, said Elizabeth. Downey said Elizabeth had also sent the altered GlaxoSmith Klein report to GSK as well. Did anyone at GSK convey to you that they thought it was inappropriate that you'd attach their logo to this report? Not at all, said Elizabeth. Downey moved on to trade secrets, offering a new explanation for why Elizabeth had kept information about Theranos' third-party machines from Walgreens.
Even though Walgreens had a non-disclosure agreement with Theranos, all of their individual employees had not signed NDAs with Theranos. Then Downey wanted to know whether Elizabeth, as the CEO and founder of Theranos, was also subject to the requirement that Theranos not disclose trade secrets. I was, she responded. Did you actually sign a contract with the company that set that? I did. And was that a contract that you represented to investors that you had signed? Yes, said Elizabeth.
Downey referenced the list of investors left in the dark on the modified third-party machines. Is there a reason that you did not disclose that to those individuals? It would have been a violation of our own trade secret policy and my own agreement to protect our trade secrets, said Elizabeth. And why was it necessary for Elizabeth to be so aggressive in protecting the company's intellectual property, Downey asked?
I understood that if we didn't do it, we would lose trade secret protection, and that would be devastating to the company, said Elizabeth. Downey then turned to those Venus draws that Theranos often used at Walgreens. Elizabeth told the court that blood was drawn through what was called a micro sample, which was taken by a butterfly needle into a smaller tube than what would traditionally be used. And why did you use that method of drawing blood rather than a traditional Vena puncture?
Downey asked. Does it was less painful and more humane, said Elizabeth? Did Theranos try to hide the fact that Venus draws were being done at Walgreens? No, Elizabeth said. Did Theranos in fact disclose on its website that there were Venus draws at its service centers in Walgreens stores? We did, she said. Is it the case that sometimes when potential partners of Theranos came to the company or went to a Walgreens store, they wanted to get a finger stick experience. Yes, said Elizabeth.
And would the company take steps to try to accommodate their request that they have the finger stick experience in the store? Downey asked. We did, said Elizabeth. Downey turned to Tyler Schultz and Erica Chung. He suggested, as Elizabeth had before, that Tyler didn't really understand the complexities of the issues he was raising and reiterated Elizabeth wasn't really aware of Erica's concerns initially.
But once Elizabeth had become aware of Erica's concerns, because they showed up in the Wall Street Journal, Downey implied Elizabeth handled them properly. Did you ask that Theranos' human resources department reach out to her? Downey wanted to know. I did, said Elizabeth. How many times in your understanding did the head of personnel at Theranos reach out to Miss Chung multiple times and did Miss Chung respond to any of those calls? No, said Elizabeth.
Downey further, home did on the relationship with Walgreens, showing a PowerPoint presentation of patient feedback in the fall of 2015. The feedback Downey showed was overwhelmingly positive. He also pointed out that Aaron Tomkins, the patient who'd previously testified about an incorrect HIV test, had her test performed on a commercially available device.
Downey also circled back to Sunny in Elizabeth's text exchanges about Walgreens when Sunny called the drugstore chain terrible and said Theranos couldn't scale with them. Downey pointed out that Elizabeth, in fact, met with a senior executive from Walgreens a month after that text was sent. Can you describe what happened at that meeting?
Downey asked, yes, we discussed moving forward with a rent model in which Theranos would take ownership of the spaces in the store so that they could be designed and customized for the experience that we were trying to build and proceed with the national rollout. Was Walgreens amenable to that proposal? Downey wanted to know. Yes, said Elizabeth. Downey also brought up the Roger Parloff article. Did you ever say to Mr. Parloff that Theranos never in any context bought third-party analyzers?
No. Did you say to him that Theranos intended to seek approval from the FDA for its four-series system? I did, said Elizabeth. Downey moved on to Elizabeth's romantic relationship with Sunny. Did it end in a single moment or was it more of a process? He wanted to know. It was a process, Elizabeth told the court. And after you were able to end your relationship with Mr. Bellwani, did you see him again prior to, let's say, June of 2018? I did. On what occasions did you see him?
He showed up at the church I would go to at night and also where I used to run around Stanford. The places I would go outside of work. Danny also stated that when the house Elizabeth and Sunny owned together was sold, she didn't receive any proceeds. Downey concluded his questioning with Elizabeth's role as CEO. You testified when Mr. Leach was examining you that in your role as CEO, you thought that the buck stopped with you. And is that an accurate statement of how you feel?
It is, said Elizabeth. It is also an accurate statement that between 2010 and 2016, were you aware of everything that happened at Theranos? Downey asked, no, said Elizabeth. And between 2010 and 2016, were you involved in all of the decisions that the company made? I was not. Said Elizabeth. Law Professor Ellen Kreitzberg thinks this constant casting of blame may not sit well with the jury.
The biggest problem for the defense and therefore one of the strengths for the government is Elizabeth Holmes is on the one hand blaming too many people. It's easy to say somebody else, maybe Sunny Bawani was at fault, but her blame extends to beyond Sunny Bawani. It's the lab directors who weren't giving her information. It was the board of directors who misguided her. It was the lawyer David Boyes who was more aggressive than she knew he would be. It was the media people who created the image.
She just followed there. It was even the investors who didn't do due diligence. So there's too much out there that you have to buy into in order to believe Elizabeth Holmes that everybody else involved in Theranos was either a wrongdoer, lying or mistaken in order for her to be truthful. But Downey wrapped up his redirect hammering home some very basic but powerful points. Did you ever at any time take steps to try to mislead people who invested in Theranos? Never.
Do you recognize that they lost money? I do, said Elizabeth. Was that the result of your attempting to mislead them in connection with asking them to invest in Theranos? Of course not, said Elizabeth. And did you at any time try to lead patients to believe that Theranos could offer accurate and reliable services when you knew it couldn't? Of course not. Elizabeth replied. Downey also reconfirmed for one last time Elizabeth never sold a single share in her company.
In some of her final words to the jury, Elizabeth slowly and solemnly restated her original vision for Theranos and how she thought she'd communicated this to investors along the way. I wanted to convey the impact the company could make for people and for healthcare. They were people who were long-term investors and I wanted to talk about what this company could do a year from now, five years from now, ten years from now, she said. They weren't interested in today or tomorrow or next month.
They were interested in what kind of change we could make. To Professor Kreitsberg, it was a forceful finish for the defense. I think given the evidence that they have, this has gone as well as it could for the defense, the government has certainly dotted all their eyes and crossed all their teeth and elicited all the specific facts that make up the underlying charges in the indictment.
But at the end of the day, it's often this intangible piece of it that makes the ultimate difference in the case, at least as to an individual juror. So at the end, we'll even one juror be feeling sympathetic enough towards her that they cannot convict or they won't convict. I think that's entirely possible. Kreitsberg, who is in the court for much of Elizabeth's testimony, also thinks the prosecution missed some opportunities.
The biggest error I thought the government made on cross-examination of her was giving her the emails between herself and Sunny Bellwani and asking her to read them. One of the fundamental rules of cross-examination is you don't turn center stage over to the witness. It should be about the lawyer. The lawyer controls the narrative, the lawyer controls the talking, to my love cross-examination. It's about me. And they gave it to her.
And the reaction was by her very emotional, very controlled emotion, which was seemed even more genuine. And it made the relationship seem even worse than it had on direct examination. They brought out this bizarre spiritual side to it. So I thought that was a big miss for the government on cross-examination. So what are the possible outcomes at this point? So the range of possible outcomes is huge. They obviously could convict her on all the counts.
And they could find her not guilty on all the counts. There's the possibility of a hung jury on everything, which means they are unable to reach a verdict. They may reach a verdict on some counts and not on others. The defense, they're looking at all or nothing. Even one count conviction still holds a significant sentence. And in federal court, the judge can take into account all kinds of other behavior and information that he has at his disposal and deciding what the sentence needs to be.
And even some of his decision making is guided pretty rigidly by the sentencing guidelines. So really the possibilities are endless. Both sides will have their final shot with closing arguments. And sometime after that, before Christmas, in the new year, frustratingly, no one knows exactly when, we'll have an actual verdict. What will the eight men and four women of the jury ultimately decide?
Tune in next Tuesday. Elizabeth Holmes and Sunnybae Wani did not respond or declined to comment for this podcast. Some material, including court depositions, were edited for clarity and time. The dropout Elizabeth Holmes on trial is written and reported by Victoria Thompson, Taylor Dunne, and me. Victoria's the executive producer, Taylor and I are producers. For ABC audio, Susie Lewis producer, and Madeline Wood and Marwell Milwaukee are associate producers.
Dia Athan and Miles Cohen are a court producers. For ABC's business unit, our associate producer is Victor Ordoniaz, and our production assistant is Lane Wynn. Mixing and scoring is by Susie Lou and Evan Viola. Evan also composed the music for the dropout. Our artwork is by Teddy Blanks at Chipson Y and Cedric Hanstad. For ABC audio, Liz Alessie is executive producer. Special thanks to Josh Cohen, Elizabeth Russo, Ian Rosenberg, Eric Abram, and Stacia Dishichku.
With hundreds of doors across Houston, you can get expert care everywhere. That's the difference between practicing medicine and leading it. Houston Methodist, leading medicine.