Elizabeth Holmes Trial: Prosecution Witness A Gift to the Defense (Read Eisenman’s email)

Today, in the Elizabeth Holmes fraud trial, the defense may have been given a gift. Turns out, a prosecution witness, Alan Eisenman, whose testimony was necessary to prove count 3 of the indictment when he invested $99K in Theranos in 2013 relying upon the allegedly fraudulent representations of Holmes, may have just been discredited by the defense.

How?

By Eisenman’s own written words…. in an email he sent to the prosecution team in 2018.

Read Eisenman’s entire email

Specifically, the last sentence: “You know I am a faithful part of your team, and will do all I can to help your case”.

Ouch.

Why do his words matter?

It goes to the credibility of a witness.

It shows, arguably, that Eisenman has a bias and/or an interest in the outcome of the trial. Either way, the defense could use Eisenman’s own words to discredit Eisenman’s entire testimony and the jury or a juror could potentially throw out Count 3 of the indictment.

Yes, a juror may always assume a witness has an interest in the outcome, but, to see the following words…”You know I am a faithful part of your team, and will do all I can to help your case” leaves little doubt as to Eisenman’s intention which shows bias and could place doubt on his testimony. Another words, did he testify truthfully or is saying whatever to incriminate Holmes because he wants her convicted for losing his money?

Even with an expected response, “I told the truth in my testimony” from Eisenman on re-direct, his email certainly colors his testimony and veracity.

Furthermore, unlike the other investors, Mr. Eisenman is the only investor so far, who has relied solely on the representations of Holmes and the claims she made (or omitted) during their quarterly phone calls. He never visited the Theranos lab, never got a blood test demo, and never saw any financials. His testimony was a clear path to Holmes culpability. While 4 of the 5 other investor counts do not appear to have a clear path to Holmes. For instance, witnesses have testified that investment decisions, including the De Voss family investment of $99,999,984 and the $5,9999.997 investment made by Daniel Mosley, were not made solely upon the representations of Holmes, but rather, also, upon the advise of their personal advisers, other investors and or the Fortune article written by Roger Parloff. If so, it could raise possible reasonable doubt to defeat those investor fraud counts.

Let’s see what happens on re-direct of Eisenman tomorrow.

Simply my opinion, what say you?

Here’s my legal analysis on the Holmes trial today on KPIX 5 CBS San Francisco.


Elizabeth Holmes Trial: Roger Parloff Fortune Story May Sink Some Investor Counts

In June 2014, Roger Parloff, a journalist, wrote a glowing cover story in Fortune praising Elizabeth Holmes and her blood-testing company Theranos. The Fortune cover story and potentially Parloff’s testimony may be a problem for the prosecution in the US v. Elizabeth Holmes felony wire fraud trial currently underway in San Jose California.

Why?

Well, if the jury finds that an investor relied upon representations made by others regarding Theranos, namely, the statements and representations made by Roger Parloff in the Fortune cover story, prior to the investor’s investment in Theranos, then, the jury may find reasonable doubt as to some of the investor fraud counts.

Another words, it could be argued that the investors relied upon and decided to invest in Theranos because of the now allegedly “materially false and fraudulent representations” made by Parloff‘s story not by Holmes. Or, in the alternative, it was the “representations” of both Holmes and Parloff’s story that induced or caused the investors to invest in Theranos. Given the testimony of investors David Mosley and Lisa Peterson who both testified that they relied upon the Fortune cover story, in addition to the claims made by Holmes, prior to investing in Theranos, counts 1, 7 and 8 of the Holmes indictment may be in jeopardy, specifically, the conspiracy to defraud investors, the $99,999,984 investment from the De Voss family per Lisa Peterson, and the $5,999,997 investment from Mosley into Theranos in October 2014, respectively.

Interestingly, it does not appear that either Mosley or Peterson sued Fortune, Parloff or Holmes for the alleged fraudulent representations. However, Parloff and Fortune, did publish a retraction to the Holmes cover story, “How Theranos Misled Me” in 2015. Prior to Parloff’s journalist career, he was a criminal litigator in Manhattan.

BTW, Parloff’s upcoming testimony in the Holmes trial may be limited subject to this Monday’s motion in limine hearing at 10 am. For example, the Fortune story, parts thereof, or Parloff’s opinion/findings may be excluded from his testimony. The Court may also revisit Magistrate Cousins ruling denying the defense’s request to release of Parloff’s notes for his cover story, presumably sought, to uncover, the exact words or statements made or not made by Holmes.

Simply my opinion, what say you?

BTW, I am providing legal analysis on the Holmes trial. Here are my interviews on CBS 5 KPIX San Francisco and CBS 5.


Elizabeth Holmes Theranos Trial: Lab Director Testimony Helps Defense Case

Elizabeth Holmes is currently on trial in federal district court in San Jose California. She is charged, as alleged, on 8 counts of wire fraud and 2 counts of conspiracy to commit wire fraud while she was CEO of Theranos, a revolutionary blood testing company. Each count of fraud carries a potential sentence of up to 20 years in prison.

Although prior witnesses in the Theranos trial have testified to the inaccuracy and unreliability of the Theranos testing technology, including former Theranos Lab Director Dr. Adam Rosendorff, the cross examination of Dr. Rosendorff has shed some doubt on the Government’s fraud case against Elizabeth Holmes.

Specifically, the below testimony could be argued to show Holmes’ lack of knowledge of the fraud and/or provide evidence to support a good faith defense, either of which, could support a not guilty or hung jury verdict.  

Here are some of the highlights I noted as I watched Dr. Rosendorff’s testimony: (I’m providing legal analysis on the case)

1              Accuracy tests (proficiency testing) were done on the Theranos Edison testing device.

2.            Dr. Rosendorff developed SOPs for proficiency testing and he signed off on the proficiency testing reports which tested the accuracy of the Edison and other testing devices.

3.            Proficiency testing was done weekly and separate quality control testing was done daily.

4.            4 out of 5 Theranos proficiency tests met CLIA regulations.

5.            Dr. Rosendorff admitted he had “ultimate responsibility” for accuracy of tests and responsibility for labs. (Per emails presented, discussions were mostly with co-defendant Balwani with no cc to Holmes. 2 emails shown where Holmes responded within minutes to follow up).

6.            Theranos Edison samples when compared to gold standard assays met acceptable criteria to pass CLIA regs.

7.            Sample accuracy testing done by witness Cheung resulted in “confusion” due to inappropriate testing procedures.

8.            Confusion in accuracy testing led to a SOP proficiency testing presentation to lab employees to address any testing procedure “confusion and misconceptions”.

9.            Balwani asked for more accuracy testing beyond the regulation requirements to include other assays beyond Vit D.

10.          Dr. Rosendorff kept Balwani posted on accuracy of Vit D tests (not Holmes?).

11.          Dr. Rosendorff failed to call several doctors back who had questions on results even though obligated to do so under CLIA regs.

12.          When Dr. Rosendorff had concerns that proficiency testing SOPs were not being implemented properly, the entire leadership team was willing to meet next day, but, Rosendorff delayed meeting.

13.          Holmes asked Dr. Rosendorff if he wanted meeting and if he “had other points to discuss”. Rosendorff didn’t request a meeting.

14.          Although prior testimony showed concerns regarding Theranos HCG tests, Dr. Rosenberg validated HCG tests for use. When he expressed concerns regarding HCG test result and accuracy, Holmes responded within minutes, “how did that happen”. He does not recall if he had meeting with Holmes to discuss.

15.          Although Dr. Rosendorff was opposed to deleting data points, he approved of the 6-tip practice at Theranos and testified that standard guidelines allowed for averaging 5 readings Theranos averaged 4 readings.

16.          In response to a doctor’s inquiry regarding test results and accuracy, Dr. Rosendorff empathetically assured the doctor that Theranos tests had “rigorous accuracy” and he was “confident on lipid panel results’ as he “checked the QC results”.

While Dr. Rosendorff’s testimony may have shed some doubt as to whether Holmes had the requisite knowledge of the inaccuracy or unreliability of the technology amounting to fraud, or lack thereof, the jury will be instructed that the doubt required is reasonable doubt, not just any doubt or a doubt as to the defendant’s guilt or innocence. And…it is up to the jury to determine what the facts are, weigh the credibility of each witness and determine whether a doubt is reasonable.

The Defense is scheduled to continue their cross examination of Dr. Rosendorff on Tuesday.

Simply my opinion, what say you?      

Watch my legal analysis of the Holmes trial on KRON4, KPIX5 CBS, FOX KTVU. KPIX5 CBS.


Elizabeth Holmes Trial: Her Biggest Risk

Elizabeth Holmes, the CEO of Theranos, Inc, a Silicon Valley startup blood testing company previously valued at $9 billion dollars is currently on trial in federal district court in San Jose, California. Ms. Holmes, along with her ex-boyfriend and COO Ramesh “Sunny” Balwani are charged with 10 counts of wire fraud and 2 counts of conspiracy to commit wire fraud with each count carrying a possible sentence of up to 20 years in prison, $250,000 fine, 3 years supervised probation, and victim restitution. The defendants will be tried separately with Balwani’s trial scheduled to begin in January 2022.

In short, the prosecution alleges Holmes and Balwani defrauded investors and patients by misrepresenting that their Theranos blood testing technology and innovative methods for drawing blood, testing blood, and interpreting patient data worked, when it allegedly did not work. As reportedly claimed, with one finger prick of blood, Theranos could run up to 200 blood tests, revolutionizing the blood testing industry and a cost saving for patients. The indictment also alleges that the defendants misrepresented the company’s financial condition, approvals from government agencies to investors, and made false and misleading statements in marketing materials and to the media.

So, is this a “case about fraud, about lying and cheating to get money…out of time, out of money, Elizabeth Holmes decided to lie…”?, as stated by the prosecution in their opening statement. The defendants, reportedly, raised over $400 million from investors of which approximately $155 million is alleged to have been communicated/transmitted electronically (telephone, email, etc.) across state lines (ie. wire fraud).

Or, is this a case about another failed startup where “failure is not a crime”, as stated by the defense in their opening statement.

And…it appears the defense may argue Defendant Holmes, (and maybe her best defense and tragic, if true), was apparently controlled and abused by Defendant Balwani, thus, she lacked the intent to defraud, a required element of each alleged crime.

Yet, putting the defendant Holmes on the stand may be the biggest risk of her life. Her fate will lie in her hands. Holmes will have to convince the jurors (or a juror) that she was controlled by Balwani to the extent that she could not form the requisite intent to defraud. When I was a domestic violence prosecutor, many defendants took the stand to their detriment.

However, Holmes is not your average defendant. She is a charismatic driven committed risk taker who persuaded and convinced many sophisticated high profile tech leaders, venture capitalists, major healthcare corporations, to invest hundreds of millions in her company, and recruited former US defense secretaries, secretary of state, media giants, and politicians to staff her board of directors.

Will she take the risk? She needs one juror to believe her. Criminal cases require unanimous verdicts.

If Holmes doesn’t take the stand, after her attorneys in their opening statement portrayed Balwani as abusive, “had a temper, could lash out”, and “there was another side to it (their relationship) that most people didn’t see”, thus, implying that Holmes was also abused by Balwani, tends to leave the jury wanting to hear from Holmes. However, she has every right not to take the stand under the fifth amendment (right not to incriminate self) and the jury will be instructed not to consider her right remain silent in determining her guilt or innocence. Yet, in my experience, jurors tend to not look kindly on unproven assertions made in opening statement by either party, when they can be proven by evidence other than by the defendant. A doctor’s opinion as to whether Holmes was a victim of abuse may not be enough to convince a jury, especially, if it becomes a battle of the experts.

Ultimately, the jury will decide whether Defendant Holmes, the “girl genius”, as she has been nicknamed and celebrated as the world’s youngest billionaire, is a victim or a con-artist. Meanwhile, while the evidence unfolds, Holmes, like every defendant, is innocent until proven guilty beyond a reasonable doubt.

Simply my opinion, what say you?

Here are some of the text messages between Balwani and Holmes, and my recent interview with San Francisco’s KRON4 news. You decide….

Additional Interviews: NewsNation, KRON4 San Francisco, FOX5 San Diego, KPIX CBS San Francisco, NBC Bay Area News, KRON4 San Francisco, KPIX5 San Francisco, KPIX5 San Francisco. Worth the watch!