Daniel Mosley — Direct/Cross
1,395 linesDIRECT EXAMINATION BY MR. SCHENK:
MR. SCHENK: THANK YOU. MR. MOSLEY, IF YOU ARE FULLY VACCINATED, AND WITH THE COURT'S PERMISSION, YOU MAY TESTIFY WITHOUT YOUR MASK ON.
DANIEL MOSLEY: OKAY. THANK YOU.
MR. SCHENK: ONE HOUSEKEEPING THING. I THINK YOUR MIDDLE NAME WAS LYNN; IS THAT RIGHT?
DANIEL MOSLEY: LIN.
MR. SCHENK: AND COULD YOU SPELL THAT?
DANIEL MOSLEY: L-Y-N-N.
MR. SCHENK: AND DANIEL IS THE USUAL SPELLING?
DANIEL MOSLEY: YES, D-A-N-I-E-L.
MR. SCHENK: THANK YOU, SIR. GOOD AFTERNOON, MR. MOSLEY. IN AROUND 2013 DID YOU INVEST IN A COMPANY CALLED THERANOS?
DANIEL MOSLEY: YES, I DID.
MR. SCHENK: ABOUT HOW MUCH WAS THAT INVESTMENT?
DANIEL MOSLEY: JUST A LITTLE UNDER $6 MILLION.
MR. SCHENK: WE'LL COME BACK TO THAT IN A MOMENT. WOULD YOU NOW DESCRIBE FOR THE JURY YOUR EDUCATIONAL BACKGROUND?
DANIEL MOSLEY: I GRADUATED COLLEGE AT THE UNIVERSITY OF ALABAMA; LAW SCHOOL AT THE UNIVERSITY OF ALABAMA; AND I GOT A MASTER'S IN TAX LAW FROM NEW YORK UNIVERSITY.
MR. SCHENK: AND AFTER YOU GOT YOUR LLM, DID YOU BECOME A PRACTICING ATTORNEY?
DANIEL MOSLEY: YES.
MR. SCHENK: WHERE DID YOU WORK?
DANIEL MOSLEY: INITIALLY AT A FIRM IN NEW YORK CITY, SULLIVAN & CROMWELL.
MR. SCHENK: AND AFTER SULLIVAN & CROMWELL, DID YOU GO TO ANOTHER LAW FIRM?
DANIEL MOSLEY: I WENT TO CRAVATH, SWAINE & MOORE, ALSO IN NEW YORK CITY.
MR. SCHENK: HOW LONG DID YOU WORK FOR THE CRAVATH LAW FIRM?
DANIEL MOSLEY: I WAS AT CRAVATH FROM FEBRUARY OF 1984 UNTIL FEBRUARY OF 2018.
MR. SCHENK: OKAY. AND AFTER 2018, DID YOU CONTINUE WORKING?
DANIEL MOSLEY: YES, I DID.
MR. SCHENK: WHERE DID YOU WORK AFTER THAT?
DANIEL MOSLEY: BDT & COMPANY.
MR. SCHENK: AND WHAT IS BDT INITIALS FOR?
DANIEL MOSLEY: BYRON D. TROTT.
MR. SCHENK: OKAY. WHEN YOU PRACTICED LAW AT CRAVATH, WHAT TYPE OF LAW DID YOU PRACTICE?
DANIEL MOSLEY: TRUSTS AND ESTATES.
MR. SCHENK: AND IN YOUR TIME WORKING ON TRUSTS AND ESTATES, DID YOU ALSO GAIN EXPERIENCE REVIEWING VARIOUS CORPORATE DOCUMENTS?
DANIEL MOSLEY: YES, I DID.
MR. SCHENK: AND WHEN WOULD THAT COME UP? WHEN WOULD YOU, IN PRACTICE IN TRUSTS AND ESTATES, HAVE OR GAIN EXPERIENCE WITH CORPORATE DOCUMENTS?
DANIEL MOSLEY: WELL, IF -- YOU KNOW, IF A CLIENT WAS MAKING A CORPORATE INVESTMENT AND ASKED FOR MY ADVICE ON THE CORPORATE -- LEGAL ASPECTS OF THE INVESTMENT OR -- IT CAME UP ON A REGULAR BASIS.
MR. SCHENK: OKAY. NOW, LET'S TURN TO YOUR EXPERIENCE WITH THERANOS. WHEN DID YOU FIRST BECOME FAMILIAR WITH THERANOS?
DANIEL MOSLEY: I BELIEVE IT WAS JULY OF 2013.
MR. SCHENK: YOU SAID 2013?
DANIEL MOSLEY: OF 2014, I'M SORRY.
MR. SCHENK: OKAY. IN JULY OF 2014, YOU THINK YOU FIRST BECAME FAMILIAR WITH THERANOS?
DANIEL MOSLEY: YES.
MR. SCHENK: AND HOW SO?
DANIEL MOSLEY: THROUGH A CLIENT OF MINE, DR. HENRY KISSINGER.
MR. SCHENK: DR. KISSINGER WAS A CLIENT OF YOURS AT THAT TIME IN JULY OF 2014?
DANIEL MOSLEY: YES, HE WAS.
MR. SCHENK: AND DO YOU KNOW ROUGHLY HOW LONG HE HAD BEEN A CLIENT OF YOURS?
DANIEL MOSLEY: PROBABLY FOR WELL OVER 15 YEARS, MAYBE 20 YEARS. FOR A VERY LONG TIME.
MR. SCHENK: OKAY. AND YOU SAID IT WAS THROUGH DR. KISSINGER THAT YOU BECAME FAMILIAR WITH THERANOS. DESCRIBE THAT CIRCUMSTANCE TO US. WHAT DO YOU RECALL?
DANIEL MOSLEY: WELL, DR. KISSINGER EXPLAINED TO ME THAT HE WAS ON THE BOARD OF THERANOS AND THAT, YOU KNOW, THAT IT WAS A VERY INTERESTING COMPANY. AND HE SAID, YOU KNOW, IT WOULD BE TERRIFIC IF YOU WOULD TAKE THE TIME TO LEARN ABOUT THE COMPANY AND GIVE ME YOUR VIEWS ON IT.
MR. SCHENK: OKAY. AND WHAT DID YOU DO IN RESPONSE TO THAT WHEN HE MADE THAT REQUEST?
DANIEL MOSLEY: AS I REMEMBER, HE SAID, I'LL PUT YOU IN TOUCH WITH ELIZABETH HOLMES, WHO IS THE PERSON WHO FOUNDED THE COMPANY.
MR. SCHENK: GREAT. YOUR HONOR, MAY I APPROACH?
JUDGE DAVILA: YES.
MR. SCHENK: (HANDING.)
DANIEL MOSLEY: THANK YOU.
MR. SCHENK: SURE.
JUDGE DAVILA: YOUR COLLEAGUE OPPOSITE HAS THIS?
MR. SCHENK: YES.
BY MR. SCHENK:
MR. SCHENK: MR. MOSLEY, I'VE HANDED YOU A BINDER. IF YOU WILL TURN IN THE BINDER TO EXHIBIT 4163.
DANIEL MOSLEY: I HAVE IT.
MR. SCHENK: IS THIS AN EMAIL BETWEEN YOU AND MS. HOLMES IN JULY OF 2014?
DANIEL MOSLEY: YES.
MR. SCHENK: YOUR HONOR, THE GOVERNMENT OFFERS 4163.
JUDGE DAVILA: IT'S ADMITTED. IT MAY BE PUBLISHED.
(GOVERNMENT'S EXHIBIT 4163 WAS RECEIVED IN EVIDENCE.)
BY MR. SCHENK:
MR. SCHENK: MR. MOSLEY, I AM -- COULD WE BRING THAT -- OH, OKAY. THANK YOU. MR. MOSLEY, I'M SHOWING YOU AN EMAIL SENT IN JULY FROM YOU TO MS. HOLMES. YOU WRITE THAT "IT WAS A PLEASURE SPEAKING WITH YOU YESTERDAY." DO YOU RECALL A CONVERSATION WITH MS. HOLMES A DAY PRIOR TO THIS EMAIL?
DANIEL MOSLEY: GENERALLY, YES.
MR. SCHENK: WHEN YOU SAY "GENERALLY," WHAT DO YOU MEAN?
DANIEL MOSLEY: I MEAN, I DON'T REMEMBER SPECIFICALLY EXACTLY WHAT WAS SAID, BUT I DO REMEMBER HAVING A CONVERSATION WITH ELIZABETH THE DAY BEFORE.
MR. SCHENK: OKAY. YOU CONTINUE, "ONCE I RECEIVE THE PRIVATE PLACEMENT MEMORANDUM, I WILL GIVE YOU A CALL OR SEND YOU AN EMAIL TO FIND A TIME TO GET A BRIEFING FROM EITHER YOU OR SOMEONE ON YOUR STAFF." WHAT DID YOU MEAN BY THAT?
DANIEL MOSLEY: WELL, I MEANT AFTER I GOT THE DOCUMENTS THAT WOULD EXPLAIN A LOT OF THINGS ABOUT THE COMPANY, THAT I WOULD FOLLOW UP WITH ELIZABETH TO FIND A TIME TO TALK MORE ABOUT WHAT I HAD READ OR LEARNED FROM THOSE DOCUMENTS.
MR. SCHENK: AND ARE YOU FAMILIAR WITH DOCUMENTS CALLED A PRIVATE PLACEMENT MEMORANDUM?
DANIEL MOSLEY: YES.
MR. SCHENK: WHAT WERE YOU LOOKING FOR WHEN YOU REQUESTED THAT DOCUMENT?
DANIEL MOSLEY: WELL, GENERALLY A PRIVATE PLACEMENT MEMORANDUM IS A DOCUMENT PREPARED BY A COMPANY WHEN IT IS RAISING FUNDS THAT LAYS OUT A LOT OF INFORMATION ABOUT THE COMPANY.
MR. SCHENK: AND WHY WERE YOU ASKING TO GAIN INFORMATION FROM MS. HOLMES ABOUT THERANOS, FOR WHAT PURPOSE?
DANIEL MOSLEY: WELL, AS I MENTIONED, DR. KISSINGER HAD ASKED ME, HE SAID IT WOULD BE TERRIFIC IF YOU WOULD TAKE THE TIME TO GET TO KNOW ELIZABETH AND GET TO KNOW THE COMPANY AND GIVE ME YOUR VIEWS ON IT.
MR. SCHENK: YOU TOLD US AT THE BEGINNING OF YOUR TESTIMONY THAT YOU WERE AN INVESTOR EVENTUALLY IN THERANOS.
DANIEL MOSLEY: YES.
MR. SCHENK: WAS THAT IN MIND AT THIS TIME? WERE YOU REQUESTING THESE DOCUMENTS TO EVALUATE A PERSONAL INVESTMENT OPPORTUNITY?
DANIEL MOSLEY: NO, BECAUSE I DIDN'T, I DIDN'T REALLY KNOW ANYTHING ABOUT THE COMPANY, SO I COULDN'T HAVE DEVELOPED ANY VIEW.
MR. SCHENK: OKAY. YOU CONTINUE WITH A STATEMENT ABOUT SOMEBODY NAMED GREG PENNER. DO YOU SEE THAT?
DANIEL MOSLEY: I DO.
MR. SCHENK: YOU SAY THAT HE'S ROB WALTON'S SON-IN-LAW AND IS THE CURRENT VICE CHAIR OF WAL-MART?
DANIEL MOSLEY: RIGHT.
MR. SCHENK: HE WOULD LIKE TO REVIEW THE PPM. IS THE PRIVATE PLACEMENT MEMORANDUM ALSO KNOWN AS THE PPM?
DANIEL MOSLEY: YES.
MR. SCHENK: AND THEN YOU PROVIDE SOME CONTACT INFORMATION. DO YOU SEE THAT?
DANIEL MOSLEY: I DO.
MR. SCHENK: AND WHY DID YOU SEND MS. HOLMES CONTACT INFORMATION FOR MR. PENNER?
DANIEL MOSLEY: WELL, IN MY -- AS I REMEMBER, IN MY INITIAL CONVERSATION WITH ELIZABETH, SHE SUGGESTED THAT SHE WAS LOOKING FOR A FEW INVESTORS THAT WERE, YOU KNOW, HIGH QUALITY FAMILIES THAT WOULD HAVE A GOOD LONG-TERM RELATIONSHIP WITH THE COMPANY.
MR. SCHENK: OKAY. AND WHAT DID YOU UNDERSTAND THAT TO MEAN? I THINK YOU USED THE WORD "HIGH QUALITY"?
DANIEL MOSLEY: WELL, YOU KNOW, PERHAPS FAMILIES AND COMPANIES THAT WERE ENGAGED IN COMMERCE IN THE U.S., AND IT MIGHT BE HELPFUL TO HAVE THEM SUPPORTIVE OF THERANOS.
MR. SCHENK: OKAY. DID SHE EXPLAIN WHY, DO YOU RECALL?
DANIEL MOSLEY: I DON'T RECALL.
MR. SCHENK: OKAY. HOW ABOUT WHAT THERANOS DID? AND LET'S TRANSITION FROM THE KINDS OF PEOPLE YOU MIGHT INTRODUCE HER TO. DID YOU HAVE ANY UNDERSTANDING AT THIS POINT OF THE TECHNOLOGY OR THE BUSINESS LINE THAT THERANOS WAS INVOLVED IN?
DANIEL MOSLEY: YOU KNOW, I THINK I KNEW FROM DR. KISSINGER THAT IT WAS BLOOD TESTING.
MR. SCHENK: OKAY.
DANIEL MOSLEY: AND I'M QUITE SURE HE TOLD ME IT WAS SORT OF REVOLUTIONARY IN ITS APPROACH.
MR. SCHENK: AND HOW -- FORGIVE ME. HOW ABOUT THE PHONE CALL THAT YOU HAD WITH MS. HOLMES? DO YOU REMEMBER THE SUBJECT OF THE LINE OF BUSINESS OR THE TECHNOLOGY COMING UP?
DANIEL MOSLEY: I DON'T REMEMBER SPECIFICALLY, BUT I SUSPECT THAT IT ABSOLUTELY DID COME UP. I SUSPECT IT CAME UP.
MR. SCHENK: OKAY. YOU JUST DON'T HAVE A SPECIFIC RECOLLECTION?
DANIEL MOSLEY: I DON'T HAVE A SPECIFIC.
MR. SCHENK: THANK YOU. IF YOU'LL NOW TURN TO THE NEXT TAB, IT'S 4173. IS THIS A LETTER THAT MS. HOLMES SENT TO YOU?
DANIEL MOSLEY: IT IS.
MR. SCHENK: IN AUGUST OF 2014, THE NEXT MONTH?
DANIEL MOSLEY: CORRECT.
MR. SCHENK: YOUR HONOR, THE GOVERNMENT OFFERS 4173.
JUDGE DAVILA: IT'S ADMITTED. IT MAY BE PUBLISHED.
(GOVERNMENT'S EXHIBIT 4173 WAS RECEIVED IN EVIDENCE.)
MR. SCHENK: THANK YOU.
MR. SCHENK: MR. MOSLEY, THIS LETTER WAS SENT TO YOU BY MS. HOLMES ON AUGUST 18TH, 2014. AND IT BEGINS, "DEAR DAN. "IT IS WITH GREAT PLEASURE I WRITE THIS LETTER AND ENCLOSE THIS PACKAGE FOR YOU." WHAT IS THAT A REFERENCE TO, "ENCLOSE THIS PACKAGE"?
DANIEL MOSLEY: I THINK THERE WERE A NUMBER OF DOCUMENTS ATTACHED TO IT THAT HAD A FAIR AMOUNT OF INFORMATION ON THE COMPANY.
MR. SCHENK: AND DO YOU REMEMBER HOW YOU RECEIVED THIS? AND WHAT I MEAN IS BY EMAIL OR BY PAPER COPY?
DANIEL MOSLEY: I BELIEVE IT WAS PAPER COPY.
MR. SCHENK: OKAY.
DANIEL MOSLEY: BUT I DON'T REMEMBER WHETHER IT CAME BY FEDEX OR REGULAR MAIL.
MR. SCHENK: YOU SAID THAT THERE WERE A NUMBER OF DOCUMENTS ATTACHED TO IT. DO YOU HAVE A RECOLLECTION OF -- DID THE DOCUMENTS FIT IN A SMALL PACKAGE OR WAS IT BINDERS OF MATERIAL?
DANIEL MOSLEY: IT WAS A FAIR AMOUNT OF MATERIAL. IT WAS SOME RATHER THICK PRESENTATIONS ON THE COMPANY (INDICATING).
MR. SCHENK: OKAY. AND FOR THE RECORD, YOU HELD UP YOUR FINGERS. CAN YOU ESTIMATE ROUGHLY ABOUT THE SIZE OF THE STACK?
DANIEL MOSLEY: I DON'T REMEMBER SPECIFICALLY, BUT I THINK IT WAS AT LEAST THAT MUCH, SOMETHING IN THAT ORDER (INDICATING).
JUDGE DAVILA: WELL, LET'S GET YOUR BEST ESTIMATE OF HOW THICK THAT IS.
DANIEL MOSLEY: WELL, I THINK IT WAS AT LEAST THREE INCHES.
JUDGE DAVILA: GREAT. THANK YOU.
MR. SCHENK: THANK YOU FOR NOT MAKING ME ESTIMATE THAT, YOUR HONOR.
MR. SCHENK: THE NEXT PARAGRAPH CONTINUES, "BY WAY OF BACKGROUND." DO YOU SEE THAT?
DANIEL MOSLEY: I SEE THAT.
MR. SCHENK: MS. HOLMES SAYS SHE FOUNDED THE COMPANY TO MAKE A DIFFERENCE IN THE WORLD AND SHE'S RETAINED MAJORITY CONTROL OF THE SHARES IN ORDER TO REALIZE THAT VISION FOR THE LONG-TERM. SHE CONTINUES WITH THE PHRASE "VERY LONG-TERM MISSION." IT CONTINUES, "WE HAVE BENEFITTED GREATLY FROM THE ABILITY TO EXECUTE, SHIFT, TRANSFORMATIONAL AND DISRUPTIVE TECHNOLOGY." AND FINALLY, IN THIS PARAGRAPH, "THE COMPANY PLANS TO BE PRIVATE FOR THE LONG-TERM." DO YOU REMEMBER READING THIS AND LEARNING ABOUT THE COMPANY? AND BY "THIS" I MEAN THE LETTER.
DANIEL MOSLEY: I CERTAINLY REMEMBER READING THE LETTER AND READING THAT PARAGRAPH, BUT I THINK THAT WAS ALL CONSISTENT WITH WHAT ELIZABETH TOLD ME IN PREVIOUS CONVERSATIONS.
MR. SCHENK: OKAY. TWO PARAGRAPHS DOWN THERE'S A SENTENCE, OR A PARAGRAPH, THAT BEGINS WITH THE WORD "HISTORICALLY." DO YOU SEE THAT?
DANIEL MOSLEY: YES.
MR. SCHENK: "HISTORICALLY THERANOS'S WORK WAS FOCUSSED ON CONTRACTS WITH PHARMACEUTICAL AND MILITARY CLIENTS." WHAT DID THAT MEAN TO YOU, AND PARTICULARLY THE WORD "HISTORICALLY"?
DANIEL MOSLEY: WELL, IT MEANS THAT UP UNTIL THIS POINT THEY'VE FOCUSSED MAINLY ON THEIR CONTRACTS, WHICH MEANS BINDING AGREEMENTS, AND TO DO WORK WITH PHARMACEUTICAL AND MILITARY CLIENTS.
MR. SCHENK: WAS THAT IMPORTANT TO YOU? AND BY "THAT" I MEAN THAT THERE HAD BEEN WORK WITH PHARMACEUTICAL AND MILITARY CLIENTS?
DANIEL MOSLEY: IT WAS IMPORTANT.
MR. SCHENK: WHY?
DANIEL MOSLEY: WELL, I -- OBVIOUSLY THE PHARMACEUTICAL CLIENTS ARE, THEY'RE BIG COMPANIES, VERY SOPHISTICATED COMPANIES, AND OBVIOUSLY THEY'RE IN A POSITION TO MAKE JUDGMENTS ABOUT TECHNOLOGY. AND THE U.S. MILITARY ALSO IS A VERY BIG, SOPHISTICATED ORGANIZATION THAT WOULD ALSO HAVE PRESUMABLY ACCESS TO EXPERTS TO MAKE JUDGMENTS.
MR. SCHENK: THE -- THERE'S A PARAGRAPH TWO DOWN. IT BEGINS, "ONCE THE COMPANY." DO YOU SEE THAT?
DANIEL MOSLEY: YES.
MR. SCHENK: "ONCE THE COMPANY WAS READY TO LAUNCH ITS COMMERCIAL LABORATORY AND ANNOUNCED ITS NATIONAL CONTRACT WITH WALGREENS IN FALL OF 2013, THERANOS BEGAN OPERATING IN THE CONSUMER, PHYSICIAN, AND HOSPITAL LABORATORY TESTING BUSINESS IN THE UNITED STATES, WITH PLANS FOR INTERNATIONAL EXPANSION." WHEN THE PHRASE "ONCE THE COMPANY WAS READY" WAS USED, WHAT DID THAT MEAN TO YOU?
DANIEL MOSLEY: IT WOULD NORMALLY MEAN TO ME THAT WHEN THE TECHNOLOGY HAD SORT OF PROVEN ITSELF AND WAS CAPABLE OF BEING ROLLED OUT TO THE NEW CONSUMERS AND SUCH, THAT'S WHEN IT WAS READY.
MR. SCHENK: AND WHEN YOU READ THIS, DID YOU THINK THAT THERANOS HAD PREMATURELY LAUNCHED WITH CONSUMERS?
DANIEL MOSLEY: I DON'T THINK I THOUGHT ONE WAY OR THE OTHER. I DIDN'T KNOW ENOUGH HONESTLY.
MR. SCHENK: I'M SORRY. YOU WEREN'T THINKING ABOUT THAT YET?
DANIEL MOSLEY: I WASN'T THINKING ABOUT THAT.
MR. SCHENK: OKAY. WILL YOU NOW TURN TO THE NEXT PAGE, PAGE 2. THE SECOND PARAGRAPH DOWN, IT READS, "THERANOS HAS GROWN FROM CASH FROM ITS CONTRACTS FOR SOME TIME." DO YOU SEE THAT?
DANIEL MOSLEY: I DO.
MR. SCHENK: AND WHAT DID THAT MEAN TO YOU? DO YOU RECALL THAT?
DANIEL MOSLEY: WHAT IT WOULD MEAN TO ME IS THAT UP UNTIL THAT POINT THEY HAD RECEIVED CASH FROM THE CONTRACTS THAT THEY HAD IN PLACE AND THAT IT HELPED THEM SUPPORT THE COMPANY AS IT GREW.
MR. SCHENK: OKAY. AND NOW ABOUT THREE PARAGRAPHS DOWN THERE'S A PARAGRAPH THAT BEGINS, "WITH THIS LETTER." DO YOU SEE THAT?
DANIEL MOSLEY: YES.
MR. SCHENK: "WITH THIS LETTER AND AS PROMISED ON OUR CALL, I WOULD LIKE TO FORMALLY EXTEND TO YOU THE INVITATION TO PARTICIPATE IN THIS EQUITY TRANSACTION TO WHATEVER EXTENT YOU ARE INTERESTED." WHAT DID THAT MEAN?
DANIEL MOSLEY: I THINK AT SOME POINT IN OUR CONVERSATIONS I SAID TO ELIZABETH, THIS SOUNDS LIKE A VERY INTERESTING IDEA AND A VERY EXCITING COMPANY AND IT'S SOMETHING THAT I MIGHT LIKE PERSONALLY TO INVEST IN.
MR. SCHENK: DO YOU RECALL WHEN THAT HAPPENED? YOU DESCRIBED FOR THE JURY ORIGINALLY REACHING OUT TO MS. HOLMES BECAUSE OF YOUR RELATIONSHIP WITH DR. KISSINGER; IS THAT RIGHT?
DANIEL MOSLEY: RIGHT.
MR. SCHENK: BUT AT SOME POINT IT TRANSITIONED OR PIVOTED TO YOUR EVALUATING AN INVESTMENT OPPORTUNITY FOR YOURSELF?
DANIEL MOSLEY: YOU KNOW, I DON'T KNOW IF IT PIVOTED IN THE SENSE THAT I WAS STILL LOOKING AT IT WITH AN INTENT TO TELL DR. KISSINGER WHAT I THOUGHT ABOUT IT, AND I THINK MY COMMENT WAS SIMPLY THAT, YOU KNOW, IT REALLY DOES SOUND EXCITING AND THAT'S SOMETHING THAT WOULD PERSONALLY INTEREST ME. SO, I MEAN, IT WAS JUST A -- PROBABLY UP UNTIL THAT POINT IT WAS JUST SORT OF A, A COMMENT ABOUT HOW INTERESTING I FOUND IT, AND THAT I MIGHT FIND IT PERSONALLY INTERESTING AS AN INVESTMENT.
MR. SCHENK: I SEE. SO YOUR WORK FOR DR. KISSINGER DIDN'T STOP?
DANIEL MOSLEY: IT DID NOT.
MR. SCHENK: YOU PURSUED BOTH AT THE SAME TIME; IS THAT FAIR?
DANIEL MOSLEY: WELL, I DON'T REALLY HONESTLY KNOW WHETHER I WAS PURSUING AN INVESTMENT AT THAT POINT. I WAS REALLY DOING WHAT DR. KISSINGER HAD ASKED ME. AND, YOU KNOW, YOU CAN'T READ SOMETHING WITHOUT THINKING ABOUT IT IN A BROADER SCOPE.
MR. SCHENK: I SEE. OKAY. AND NOW THE LAST PARAGRAPH READS, "I AM HAPPY TO PROVIDE MORE BACKGROUND ON ANY OF THE ABOVE, OR ANY OF THE MATERIALS ENCLOSED IN THIS PACKAGE. THERANOS'S INVESTMENT DOCUMENTS ARE ENCLOSED HEREIN. THE ADDITIONAL MATERIALS FOCUS ON THE INFRASTRUCTURE THERANOS HAS DEVELOPED AND INITIAL MARKET OF COMMERCIAL LABORATORY TESTING THAT THERANOS HAS ENTERED." AND I WANT TO FOCUS YOUR ATTENTION ON THE USE OF THE WORD "HAS." MS. HOLMES WRITES THAT "THE ADDITIONAL MATERIALS FOCUS ON THE INFRASTRUCTURE THERANOS HAS DEVELOPED." WHAT DID THAT MEAN TO YOU?
DANIEL MOSLEY: REALLY JUST THAT -- I DON'T KNOW WHAT TO SAY OTHER THAN THEY WERE MAKING GREAT PROGRESS IN HAVING DEVELOPED THE TECHNOLOGY AND INFRASTRUCTURE AROUND IT.
MR. SCHENK: AND THE SECOND PART OF THAT SENTENCE CONTINUES, "AND INITIAL MARKET OF COMMERCIAL LABORATORY TESTING THAT THERANOS HAS ENTERED." WHAT DID THAT MEAN TO YOU?
DANIEL MOSLEY: I THINK I THOUGHT THAT REFERRED TO THE FACT THAT THEY HAD ENTERED INTO AN ARRANGEMENT WITH WALGREENS TO BEGIN TESTING.
MR. SCHENK: WERE YOU AWARE OF THAT AT OR AROUND THIS TIME?
DANIEL MOSLEY: I WAS. I THINK -- I BELIEVE THERE WAS AN ARTICLE IN "THE WALL STREET JOURNAL" THAT PRECEDED THIS THAT DESCRIBED THAT IN SOME DETAIL.
MR. SCHENK: OKAY. SOMETIME AROUND THIS TIME, YOU THINK YOU BECAME AWARE OF IT?
DANIEL MOSLEY: RIGHT. AND I THINK ELIZABETH MAY HAVE -- PROBABLY HAD ALSO DESCRIBED IT TO ME AS WELL.
MR. SCHENK: OKAY. DO YOU KNOW WHAT THEY WERE DOING WITH WALGREENS, WHAT THERANOS WAS DOING WITH WALGREENS?
DANIEL MOSLEY: WELL, I KNOW WHAT I KNEW FROM "THE WALL STREET JOURNAL" ARTICLE, AND THE MATERIALS THAT WERE INCLUDED WITH THIS PACKAGE HAD INFORMATION ABOUT IT, AND I THINK I KNEW SOMETHING ABOUT IT FROM CONVERSATIONS WITH ELIZABETH.
MR. SCHENK: AND IN A BROAD SENSE AT LEAST, WHAT WAS IT?
DANIEL MOSLEY: WELL, IT WAS OFFERING, YOU KNOW, TESTING WHERE PEOPLE COULD GO INTO WALGREENS AND HAVE THEIR BLOOD TESTED AND GET THE RESULTS BACK.
MR. SCHENK: BLOOD TESTING?
DANIEL MOSLEY: BLOOD TESTING.
MR. SCHENK: OKAY. COULD I ASK YOU NOW TO TURN BACK IN YOUR BINDER TO EXHIBIT 3387. IT'S A LARGE EXHIBIT, AND INITIALLY I WOULD LIKE YOU TO JUST LOOK THROUGH IT AND TELL ME IF THIS IS SOME OF THE MATERIALS THAT WERE INCLUDED WITH THE LETTER THAT WE JUST READ.
DANIEL MOSLEY: YES, I DO BELIEVE TO THE BEST OF MY RECOLLECTION THIS WAS SOME OF THE MATERIAL, OR MAYBE ALL OF THE MATERIAL, THAT WAS IN THAT PACKAGE.
MR. SCHENK: OKAY. YOUR HONOR, THE GOVERNMENT OFFERS 3387.
JUDGE DAVILA: IT'S ADMITTED. IT MAY BE PUBLISHED.
(GOVERNMENT'S EXHIBIT 3387 WAS RECEIVED IN EVIDENCE.)
BY MR. SCHENK:
MR. SCHENK: CAN WE START WITH PAGE 128. THERE'S PAGE NUMBERS AT THE BOTTOM IN THE MIDDLE, MR. MOSLEY.
DANIEL MOSLEY: OKAY. OKAY.
MR. SCHENK: THIS IS ENTITLED CERTIFICATE OF DESIGNATION OF SERIES C-2 PREFERRED STOCK. DO YOU SEE THAT?
DANIEL MOSLEY: I DO.
MR. SCHENK: WHAT IS THAT?
DANIEL MOSLEY: IT'S A CERTIFICATE THAT IS NORMALLY ADOPTED BY A BOARD OF DIRECTORS OF A COMPANY TO AUTHORIZE A PARTICULAR CLASS OF STOCK OR PARTICULAR SERIES OF STOCK.
MR. SCHENK: AND THIS ONE IS CALLED C-2; IS THAT RIGHT?
DANIEL MOSLEY: THAT'S CORRECT.
MR. SCHENK: EVENTUALLY WHEN YOU PURCHASED STOCK IN THERANOS, WHICH SERIES DID YOU BUY?
DANIEL MOSLEY: C-2.
MR. SCHENK: ON THIS PAGE THERE'S A NUMBER 2, LIQUIDATION RIGHTS. DO YOU SEE THAT?
DANIEL MOSLEY: I DO.
MR. SCHENK: AND ON THIS PAGE AND THROUGHOUT THE DOCUMENT, THERE IS SOME UNDERLINING IN IT. DO YOU SEE THAT?
DANIEL MOSLEY: I DO.
MR. SCHENK: AND WHOSE UNDERLINING IS THAT?
DANIEL MOSLEY: IT'S MINE.
MR. SCHENK: AND WHAT WERE YOU DOING? DESCRIBE FOR THE JURY THE PROCESS HERE. YOU RECEIVED THESE DOCUMENTS AND NOW WE SEE UNDERLINING. WHAT WAS HAPPENING?
DANIEL MOSLEY: WELL, I WAS READING THE DOCUMENTS AND, YOU KNOW, UNDERLINING THINGS THAT WERE OF PARTICULAR IMPORTANCE FROM MY STANDPOINT.
MR. SCHENK: IMPORTANT TO WHAT?
DANIEL MOSLEY: WELL, IMPORTANT TO IN THIS CASE UNDERSTANDING WHAT THE C-2 PREFERRED STOCK WAS AND WHAT RIGHTS IT HAD.
MR. SCHENK: AND WHEN WE'RE LOOKING THROUGH THESE DOCUMENTS, ARE WE -- WERE THESE DOCUMENTS THAT YOU RELIED UPON TO MAKE YOUR INVESTMENT IN THERANOS?
DANIEL MOSLEY: THEY'RE SOME OF THE DOCUMENTS THAT I RELIED UPON, YES.
MR. SCHENK: YOU SAID THEY'RE SOME OF. WHAT DO YOU MEAN?
DANIEL MOSLEY: WELL, I THINK THERE WERE OTHER DOCUMENTS THAT I ULTIMATELY RECEIVED BEFORE I ULTIMATELY MADE MY INVESTMENTS.
MR. SCHENK: I SEE. THESE DOCUMENTS, IN ADDITION TO OTHER DOCUMENTS?
DANIEL MOSLEY: THAT'S CORRECT.
MR. SCHENK: WHAT IS THIS LIQUIDATION RIGHTS TELLING US, AND HELP ME UNDERSTAND WHY YOU UNDERLINED THINGS?
DANIEL MOSLEY: WELL, IT'S REALLY SAYING IF THE -- IF THERE WAS A PROBLEM WITH THE COMPANY, IF SOMETHING WENT THE WRONG DIRECTION, IN WHAT ORDER -- AND THERE WERE ASSETS TO BE DISTRIBUTED TO THE STOCKHOLDERS, AFTER PAYING OFF DEBT OBVIOUSLY, IF THERE WAS MONEY TO BE DISTRIBUTED TO THE STOCKHOLDERS, WHAT ORDER WOULD THAT MONEY BE DISTRIBUTED AMONG THE VARIOUS SERIES OR CLASSES OF STOCK.
MR. SCHENK: AND IN WHICH RANKING OR WHAT PREFERRED STATUS WOULD C-2 HAVE?
DANIEL MOSLEY: WELL, C-2 WOULD BE ENTITLED TO GET BACK ITS FACE AMOUNT, DESIGNATED AMOUNT BEFORE ANY PREVIOUS CLASS OF PREFERRED STOCK. SO IT WOULD BE FIRST IN THE ORDER OF RECEIVING PROCEEDS IN THE EVENT OF A LIQUIDATION OF THE COMPANY.
MR. SCHENK: I SEE. SO C-2 WOULD GET PROCEEDS BEFORE SERIES B, FOR INSTANCE?
DANIEL MOSLEY: THAT IS CORRECT.
MR. SCHENK: AND TO USE B AS AN EXAMPLE, DID YOU KNOW WHO OWNED MUCH OF SERIES B?
DANIEL MOSLEY: I DON'T THINK I KNEW.
MR. SCHENK: OKAY. ON THE NEXT PAGE, PAGE 129, THERE'S A SECTION ENTITLED MANDATORY REDEMPTION. DO YOU SEE THAT?
DANIEL MOSLEY: I DO.
MR. SCHENK: AND WHAT IS THAT?
DANIEL MOSLEY: IT'S A, IT'S A CLAUSE THAT ESSENTIALLY SAID THAT THE COMPANY COULD, AT ITS OPTION AT ANY PARTICULAR TIME IT CHOSE, CHOOSE TO BUY IN OR REPURCHASE THE C -2 PREFERRED SHARES AT A PRICE PER SHARE THAT THEY DETERMINED IN GOOD FAITH BY THE BOARD AS BEING FAIR MARKET VALUE.
MR. SCHENK: OKAY. AND YOU UNDERLINED SOME LANGUAGE IN THAT AS WELL. WHY DID YOU DO THAT?
DANIEL MOSLEY: TO ME IT WAS A LITTLE -- IT WAS AN UNUSUAL -- IT WAS AN UNUSUAL PROVISION, AND THAT'S WHY I UNDERLINED IT.
MR. SCHENK: OKAY. WHY DO YOU SAY IT WAS UNUSUAL?
DANIEL MOSLEY: WELL, IT WAS UNUSUAL BECAUSE NORMALLY IF YOU WERE INVESTING IN THE STOCK OF A COMPANY, IT WOULD BE VERY UNUSUAL TO SAY THAT THE COMPANY'S BOARD COULD GO OUT AND DECIDE AT SOME LATER DATE WHAT THEY THOUGHT THE FAIR MARKET VALUE OF THE STOCK THAT YOU OWNED WAS AND THEN ELECT TO BUY IT FROM YOU, AND IN PARTICULAR THIS ALLOWED THEM TO NOT BUY PRO RATA ACROSS ALL OF THE SHARES, BUT THEY COULD COME TO ONE SHAREHOLDER AND SAY WE'RE LIQUIDATING YOUR SHARES.
MR. SCHENK: AT SOME POINT IN THE FUTURE, DID YOU HAVE A CONVERSATION WITH MS. HOLMES ABOUT THIS MANDATORY REDEMPTION PROVISION?
DANIEL MOSLEY: I DID.
MR. SCHENK: AND DID YOU END UP CREATING A SEPARATE ARRANGEMENT WITH MS. HOLMES REGARDING THE APPLICATION OF THE MANDATORY REDEMPTION PROVISION?
DANIEL MOSLEY: YES, I RECEIVED A LETTER OR A SHORT DOCUMENT FROM ELIZABETH WITH REGARD TO THIS PROVISION.
MR. SCHENK: GREAT. OKAY. WE'LL GET TO THAT DOCUMENT IN A MOMENT. YOUR HONOR, I'M GOING TO TRANSITION INTO ANOTHER TOPIC. I'M HAPPY TO START IT OR TAKE OUR BREAK.
JUDGE DAVILA: WHY DON'T WE TAKE OUR BREAK NOW. WE'RE CLOSE ENOUGH TO THE BOTTOM OF THE HOUR. LET'S TAKE OUR AFTERNOON 30 MINUTE BREAK, PLEASE, 30 MINUTES.
DANIEL MOSLEY: THANK YOU.
(JURY OUT AT 1:26 P.M.)
JUDGE DAVILA: YOU CAN STAND DOWN NOW, SIR. THANK YOU.
DANIEL MOSLEY: CAN I GO OUT THIS DOOR?
JUDGE DAVILA: YOU CAN GO OUT THE DOOR YOU CAME IN. THANK YOU. PLEASE BE SEATED. THANK YOU. ALL RIGHT. THE RECORD SHOULD REFLECT THAT THE JURY HAS LEFT FOR THEIR AFTERNOON BREAK AND THE WITNESS HAS LEFT THE COURTROOM. I JUST WANT TO CHECK IN, ANYTHING BEFORE WE BREAK, MR. SCHENK?
MR. SCHENK: YOUR HONOR, WE RAISED THE ISSUE THIS MORNING ABOUT THE 2015 DOCUMENTS. I ANTICIPATE THAT WE'LL GET TO THAT THIS AFTERNOON, OR AT LEAST NOW COULD BE A CONVENIENT TIME TO DISCUSS THAT IF THE COURT IS IN A POSITION TO HAVE FURTHER DISCUSSIONS.
JUDGE DAVILA: OKAY. DO YOU THINK WE'LL GET TO THIS? IS THIS GOING TO COME IN THROUGH YOUR DIRECT?
MR. SCHENK: NO, IT WILL NOT.
JUDGE DAVILA: I SEE.
MR. WADE: I'M NOT SURE HOW MUCH LONGER MR. SCHENK HAS. I THINK -- I CAN CERTAINLY AVOID THAT TOPIC. WE CAN DISCUSS IT IN THE MORNING IF THAT'S -- OR AFTER COURT. IT DEPENDS ON --
JUDGE DAVILA: ALL RIGHT. WELL, LET'S DO THAT. LET'S TAKE OUR BREAK AND WE'LL DEFER DISCUSSION. IF IT DOES -- IF MR. SCHENK ENDS AND YOU BEGIN YOUR CROSS-EXAMINATION, YOU DON'T NEED TO GO INTO THIS THIS AFTERNOON I TAKE IT?
MR. WADE: I DON'T THINK SO. I THINK, BASED ON THE TIMING AS I SEE IT, I THINK WE CAN AVOID GOING INTO THAT, YEAH.
JUDGE DAVILA: ALL RIGHT. FAIR ENOUGH. THANK YOU.
COURT CLERK: COURT IS IN RECESS.
(RECESS FROM 1:28 P.M. UNTIL 2:03 P.M.)
(JURY IN AT 2:03 P.M.)
JUDGE DAVILA: PLEASE BE SEATED. WE'RE BACK ON THE RECORD. ALL PARTIES PREVIOUSLY PRESENT ARE PRESENT AGAIN. OUR JURY IS PRESENT. OUR WITNESS IS ON THE STAND. I'M SORRY, MR. SCHENK. I JUST WANTED TO LET EVERYONE KNOW THAT IT SEEMS WARM TO ME IN THE COURTROOM, AND I DON'T KNOW WHAT THAT HAS TO DO WITH OUR ISSUE LAST WEEK WITH WATER, BUT WE'RE TRYING TO GET THAT -- THE TEMPERATURE ADJUSTED A LITTLE BIT SO IT CAN COOL OFF A LITTLE BIT HERE. SO I APOLOGIZE FOR THE INCONVENIENCE. IF ANY MEMBER OF THE JURY, IF IT BECOMES UNTENABLE OR A PROBLEM, PLEASE LET ME KNOW AND RAISE YOUR HAND, AND WE'LL DO WHAT WE CAN. OTHERWISE -- OR ANY PARTY, TOO. PLEASE LET ME KNOW. ALL RIGHT. THANK YOU. MR. SCHENK, YOU'D LIKE TO CONTINUE?
MR. SCHENK: YES. THANK YOU.
MR. SCHENK: GOOD AFTERNOON AGAIN, MR. MOSLEY.
DANIEL MOSLEY: HELLO.
MR. SCHENK: WHEN WE FINISHED OFF WE WERE LOOKING AT EXHIBIT 3387. DO YOU RECALL THAT?
DANIEL MOSLEY: I DO.
MR. SCHENK: AND I THINK YOU TESTIFIED THAT THESE WERE AMONG THE DOCUMENTS THAT YOU REVIEWED AND ASSISTED IN YOUR DECISION TO INVEST IN THERANOS?
DANIEL MOSLEY: YES.
MR. SCHENK: AND WOULD YOU TURN TO PAGE 144 OF THIS EXHIBIT, EXHIBIT 3387.
DANIEL MOSLEY: YES.
MR. SCHENK: EXHIBIT PAGE 144, MS. HOLLIMAN, PLEASE. DO YOU SEE THAT DOCUMENT?
DANIEL MOSLEY: I DO.
MR. SCHENK: AND WHAT ARE WE LOOKING AT?
DANIEL MOSLEY: THESE ARE SOME HANDWRITTEN NOTES THAT ARE IN MY HANDWRITING.
MR. SCHENK: OKAY. AND DID YOU TAKE THESE NOTES WHILE YOU WERE REVIEWING THE MATERIALS THAT WE'RE LOOKING AT, OR ON A PHONE CALL? DO YOU RECALL?
DANIEL MOSLEY: I DON'T HONESTLY KNOW. I DON'T REMEMBER.
MR. SCHENK: OKAY. THESE ARE NOTES ABOUT THERANOS, BUT YOU DON'T REMEMBER THE CIRCUMSTANCES OF TAKING THEM?
DANIEL MOSLEY: THAT'S CORRECT.
MR. SCHENK: OKAY. LET'S WALK THROUGH SOME OF THEM AND IF YOU CAN HELP US WITH THE HANDWRITING. WHAT IS NUMBER 1?
DANIEL MOSLEY: IT SAYS PENETRATION ASSUMED IN 2015, AND THE HASH MARK MEANS NUMBERS TO ME.
MR. SCHENK: OKAY.
DANIEL MOSLEY: AND --
MR. SCHENK: I'M SORRY?
DANIEL MOSLEY: DO YOU WANT ME TO READ THE REST OF 1?
MR. SCHENK: SURE. WHY DON'T YOU READ IT AND THEN I'LL ASK YOU QUESTIONS.
DANIEL MOSLEY: SURE. FIRST LOCATION IN PALO ALTO IN 2012. AND THEN NOW. AND THEN P/S MEANS PARTNERSHIP WITH WALGREENS FALL OF 2013. AND THEN THE NEXT IS NOW IN 30 WALGREENS, AND UNDER THAT IT SAYS 29 ARIZONA, 1 PALO ALTO. AND THEN IT SAYS WALGREENS IN 10,000 STORES IN 10 COUNTRIES. AND THEN IT SAYS COLLABORATIONS WITH 3 HOSPITAL GROUPS. AS REFERENCE LABS. QUOTE, "MASSIVE UNDERTAKING."
MR. SCHENK: THANK YOU. LET'S GO TO THE TOP, PENETRATION ASSUMED IN 2015 NUMBERS. WHAT IS THAT A REFERENCE TO?
DANIEL MOSLEY: IT WOULD BE A REFERENCE TO WHAT THE -- WHAT WERE THE ASSUMPTIONS BAKED INTO THE FINANCIAL NUMBERS.
MR. SCHENK: DID MS. HOLMES PROVIDE YOU FINANCIAL NUMBERS BEFORE YOU INVESTED?
DANIEL MOSLEY: I BELIEVE THERE ARE FINANCIAL NUMBERS IN THIS BOOK, OR I CERTAINLY HAD FINANCIAL NUMBERS BEFORE I INVESTED.
MR. SCHENK: OKAY. I'LL SHOW THOSE TO YOU IN A MOMENT, BUT WHAT ARE YOU TALKING ABOUT -- YOU USED THE WORD "BAKED IN." WHAT WERE YOU REFERRING TO?
DANIEL MOSLEY: WELL, I MEANT THE FINANCIAL -- THE ASSUMPTIONS THAT WERE USED IN COMING TO THE FINANCIAL NUMBERS.
MR. SCHENK: OKAY. AND WHAT IS "PENETRATION" A REFERENCE TO?
DANIEL MOSLEY: IT WOULD MEAN THE DEGREE OF ADOPTION INTO THE MARKET. SO SAYING, YOU KNOW, 30 WALGREENS WOULD BE AN EXAMPLE OF WHAT PART OF THE MARKET THE COMPANY WAS THEN SERVICING.
MR. SCHENK: I SEE. SO YOU WROTE IN HERE THAT AT THIS POINT THERE WERE 30 WALGREENS LOCATIONS THAT WERE OFFERING THERANOS BLOOD TESTING SERVICES?
DANIEL MOSLEY: YES.
MR. SCHENK: AND PENETRATION ASSUMED IN 2015 NUMBERS. IS THAT A STATEMENT ABOUT INCREASED WALGREENS ADOPTION?
DANIEL MOSLEY: I, I DON'T KNOW. I DON'T REMEMBER.
MR. SCHENK: OKAY. BUT PENETRATION OR ADOPTION BY WALGREENS OF THERANOS WAS RELEVANT TO THE 2015 FINANCIAL PROJECTIONS?
DANIEL MOSLEY: WELL, IT HAD TO, BECAUSE ONE LINE WAS OBVIOUSLY FROM PHARMACIES, ONE -- AS I REMEMBER IN THE FINANCIAL STATEMENTS, ONE LINE WAS IN SOME WAY DESIGNATED AS REVENUE FROM PHARMACY -- WALGREENS PHARMACIES.
MR. SCHENK: I SEE. SO THE NUMBER OF WALGREENS LOCATIONS WOULD DETERMINE OR HAVE AN EFFECT ON THE AMOUNT OF REVENUE THAT THERANOS GENERATED FROM WALGREENS?
DANIEL MOSLEY: PRESUMABLY, YES.
MR. SCHENK: I SEE. AND THEN FURTHER DOWN YOU WRITE ABOUT HOSPITAL GROUPS AND REFERENCE LABS. WHAT IS THAT A REFERENCE TO?
DANIEL MOSLEY: IT WAS A REFERENCE TO MY UNDERSTANDING THAT THEY WERE CURRENTLY WORKING WITH THREE HOSPITAL GROUPS, COLLABORATIONS MEANT THEY WERE WORKING WITH THREE HOSPITAL GROUPS, AND PRESUMABLY THAT MEANT AS REFERENCE LABS OR, OR -- I DON'T REALLY KNOW EXACTLY WHAT THAT MEANT HONESTLY.
MR. SCHENK: OKAY. YOU HAD AN UNDERSTANDING, I THINK YOU SAID, THAT THEY WERE WORKING WITH, THERANOS WAS WORKING WITH THREE HOSPITAL GROUPS?
DANIEL MOSLEY: THAT'S CORRECT.
MR. SCHENK: BUT YOU, YOU DON'T REMEMBER EXACTLY WHAT THAT WORK INVOLVED; IS THAT FAIR?
DANIEL MOSLEY: I DON'T THINK I KNEW A LOT OF DETAIL.
MR. SCHENK: OKAY. IF YOU'LL NOW TURN TO PAGE 275 IN THIS EXHIBIT.
DANIEL MOSLEY: OKAY.
MR. SCHENK: AND THIS DOCUMENT IS PART OF THE BINDER AND IT'S LABELED MEMO: IMPLICATIONS OF THERANOS'S WORK FOR GLOBAL HEALTH, PUBLIC POLICY, AND THOSE IN NEED. DO YOU SEE THAT?
DANIEL MOSLEY: I DO.
MR. SCHENK: OKAY. AND NOW IF YOU'LL LOOK AT THAT FIRST PARAGRAPH, IT READS, "HEADQUARTERED IN PALO ALTO, THERANOS IS A CONSUMER HEALTHCARE TECHNOLOGY COMPANY. THERANOS'S CLINICAL LABORATORY OFFERS COMPREHENSIVE LABORATORY TESTS FROM SAMPLES AS SMALL AS A FEW DROPS OF BLOOD AT UNPRECEDENTED LOW PRICES." IS THAT STATEMENT CONSISTENT WITH YOUR UNDERSTANDING AT THE TIME ABOUT WHAT THERANOS DID?
DANIEL MOSLEY: YES.
MR. SCHENK: IF YOU'LL TURN TO THE SECOND PAGE OF THIS MEMO, WHICH IS 276, PAGE 276, AT THE TOP THERE'S A PARAGRAPH THAT BEGINS "THERANOS." DO YOU SEE THAT?
DANIEL MOSLEY: YES.
MR. SCHENK: IT READS, "THERANOS HAS BUILT A CERTIFIED LABORATORY INFRASTRUCTURE POWERED BY THERANOS DEVICES THAT MAKE IT POSSIBLE TO RUN ANY LABORATORY TEST FROM A MICRO-SAMPLE OF BLOOD (TAKEN FROM A FINGER-STICK) OR OTHER" -- I'M SORRY, "OR OTHER ANY OTHER FLUID (NASAL SWABS, THROAT SWABS, URINE)," IT CONTINUES, "THERANOS'S TESTS ARE CAPABLE OF GENERATING RESULTS IN LESS THAN AN HOUR FROM THE TIME A SAMPLE IS PROCESSED." DO YOU SEE THAT?
DANIEL MOSLEY: YES.
MR. SCHENK: IN THAT FIRST SENTENCE, THERE IS SOME UNDERLINING. IS THAT YOUR HANDWRITING?
DANIEL MOSLEY: YES, IT IS.
MR. SCHENK: AND IT TALKS ABOUT THERANOS'S INFRASTRUCTURE THAT'S POWERED BY THERANOS DEVICES. WAS THAT YOUR UNDERSTANDING, THAT THERANOS USED THERANOS DEVICES TO TEST BLOOD?
DANIEL MOSLEY: IT WAS.
MR. SCHENK: AND DID YOU KNOW WHETHER THERANOS USED DEVICES MANUFACTURED BY THIRD PARTIES TO TEST BLOOD?
DANIEL MOSLEY: I DID NOT.
MR. SCHENK: YOU DID NOT KNOW THAT?
DANIEL MOSLEY: I DID NOT KNOW.
MR. SCHENK: IT CONTINUES, "DEVICES THAT MAKE IT POSSIBLE TO RUN ANY LAB TEST FROM A MICRO-SAMPLE TAKEN FROM A FINGERSTICK." IS THAT ALSO CONSISTENT WITH YOUR UNDERSTANDING AT THE TIME?
DANIEL MOSLEY: IT IS.
MR. SCHENK: THERANOS PERFORMED BLOOD TESTING THAT COULD DO ANY LAB TEST FROM A MICRO-SAMPLE AND THAT MICRO-SAMPLE WAS TAKEN FROM A FINGERSTICK. IS THAT WHAT YOU UNDERSTOOD THIS TECHNOLOGY TO BE AT THE TIME THAT YOU WERE CONSIDERING THIS INVESTMENT?
DANIEL MOSLEY: YES, WITH THE EXCEPTION THAT OBVIOUSLY SOME OF THESE TYPES OF FLUID SAMPLES WOULDN'T HAVE BEEN TAKEN BY A FINGERSTICK LIKE A SWAB, A THROAT SWAB. THAT'S THE ONLY THING. BUT THE BLOOD, THE BLOOD DRAWS IN MY UNDERSTANDING WERE BY A FINGERSTICK.
MR. SCHENK: SO YOUR UNDERSTANDING WAS WHEN THEY WERE TESTING BLOOD, IT WAS BLOOD DRAWN FROM A FINGER, BUT THEY MIGHT ALSO HAVE THE ABILITY TO TEST --
DANIEL MOSLEY: OTHER.
MR. SCHENK: FORGIVE ME. -- FLUIDS OR OTHER SAMPLES FROM OTHER PARTS OF THE BODY?
DANIEL MOSLEY: THAT'S CORRECT.
MR. SCHENK: THANK YOU. IF YOU WILL NOW TURN TO PAGE 278. THIS SECTION OF YOUR MATERIALS LOOKS LIKE IT'S A GROUP OF POWERPOINT SLIDES. DO YOU RECALL THAT?
DANIEL MOSLEY: I DO.
MR. SCHENK: AND DID YOU ALSO REVIEW THESE POWERPOINT SLIDES BEFORE YOU MADE THE DECISION TO INVEST $6 MILLION?
DANIEL MOSLEY: I DID.
MR. SCHENK: THE SLIDE THAT IS NUMBERED 279, THE NEXT PAGE.
DANIEL MOSLEY: YES.
MR. SCHENK: MS. KRATZMANN, CAN YOU CLEAR THE SCREEN. THANK YOU. ON 279 THERE'S AN IMAGE OF A CHILD AND THE PHRASE "GOODBYE, BIG BAD NEEDLE." DO YOU SEE THAT?
DANIEL MOSLEY: I DO.
MR. SCHENK: MR. MOSLEY, I THINK -- THE SCREEN IS A TOUCH SCREEN AND YOUR BINDER MIGHT BE MAKING IMAGES.
DANIEL MOSLEY: OH. SORRY ABOUT THAT.
MR. SCHENK: NO PROBLEM. THANK YOU. WHAT DID "GOODBYE, BIG BAD NEEDLE" MEAN TO YOU?
DANIEL MOSLEY: IT MEANT THAT THEY COULD DO A BLOOD DRAW WITHOUT HAVING TO USE A LARGE NEEDLE.
MR. SCHENK: AND WHERE WOULD THE BLOOD BE TAKEN USING THE LARGE NEEDLE? DID YOU HAVE AN IDEA?
DANIEL MOSLEY: IT WOULD BE TAKEN FROM A VEIN.
MR. SCHENK: OKAY. WOULD YOU TURN TO 280, 2-8-0. ON THIS SLIDE IT SAYS THAT "THERANOS'S PROPRIETARY, PATENTED TECHNOLOGY RUNS COMPREHENSIVE BLOOD TESTS FROM A FINGER-STICK AND TESTS FROM MICRO-SAMPLES OF OTHER MATRICES, AND GENERATES SIGNIFICANTLY HIGHER INTEGRITY DATA THAN CURRENTLY POSSIBLE." DO YOU SEE THAT?
DANIEL MOSLEY: I DO.
MR. SCHENK: AND WAS THAT CONSISTENT WITH YOUR UNDERSTANDING AT THE TIME THAT YOU WERE CONSIDERING MAKING AN INVESTMENT WHAT THE THERANOS TECHNOLOGY WAS?
DANIEL MOSLEY: IT WAS.
MR. SCHENK: AND DO YOU UNDERSTAND THAT THERANOS HAD ITS OWN TECHNOLOGY THAT RAN THESE COMPREHENSIVE BLOOD TESTS?
DANIEL MOSLEY: I DID.
MR. SCHENK: IT CONTINUES, "THERANOS IS THE WORLD'S FIRST AND ONLY CLIA-CERTIFIED LABORATORY RUNNING ITS TESTS ON MICRO-SAMPLES," AND CONTINUES, "CURRENT AND PAST CLIENTS INCLUDE 10 OF THE TOP 15 MAJOR PHARMACEUTICAL COMPANIES, MIDSIZED BIO-PHARMAS, PROMINENT RESEARCH INSTITUTIONS, HEALTH CARE PAYORS, AND U.S. AND FOREIGN GOVERNMENT HEALTH AND MILITARY ORGANIZATIONS." WAS THAT WORK THAT THERANOS HAD DONE WITH THESE ORGANIZATIONS, WAS THAT IMPORTANT TO YOU?
DANIEL MOSLEY: IT WAS.
MR. SCHENK: WHY?
DANIEL MOSLEY: OBVIOUSLY THE PHARMACEUTICAL COMPANIES ARE EXTREMELY SOPHISTICATED AND CAPABLE OF MAKING JUDGMENTS ABOUT THE TECHNOLOGY.
MR. SCHENK: AND THE RELATIONSHIP THAT THERANOS HAD WITH THESE, WITH THESE COMPANIES, DID THAT SAY SOMETHING TO YOU ABOUT THE THERANOS TECHNOLOGY?
DANIEL MOSLEY: I WOULD REGARD IT AS AN ENDORSEMENT THAT THEY HAD CONFIDENCE IN THE TECHNOLOGY.
MR. SCHENK: OKAY. IF YOU'LL TURN NOW TO PAGE 285. THIS SLIDE IS LABELLED VALIDATION OF THERANOS TESTS. DO YOU SEE THAT?
DANIEL MOSLEY: I DO.
MR. SCHENK: IT READS, "THERANOS HAS BEEN COMPREHENSIVELY VALIDATED OVER THE COURSE OF THE LAST SEVEN YEARS BY 10 OF THE 15 LARGEST PHARMACEUTICAL COMPANIES, WITH HUNDREDS OF THOUSANDS OF ASSAYS PROCESSED." IS THIS A LITTLE BIT MORE THE POINT THAT YOU WERE JUST MAKING TO ME ABOUT VALIDATION THROUGH THIS EXTERNAL WORK?
DANIEL MOSLEY: YES.
MR. SCHENK: THERE'S AN IMAGE AT THE BOTTOM, JOHNS HOPKINS MEDICINE. DO YOU SEE THAT?
DANIEL MOSLEY: I DO.
MR. SCHENK: AND IT READS ABOVE THAT, "EXCERPTS FROM JOHNS HOPKINS DUE DILIGENCE AND TECHNOLOGY VALIDATION." WAS THAT THE WORK WITH JOHNS HOPKINS, WAS THAT IMPORTANT TO YOU?
DANIEL MOSLEY: IT WAS.
MR. SCHENK: WHY?
DANIEL MOSLEY: ONCE AGAIN, IT'S A VERY LARGE, VERY RESPECTED, SOPHISTICATED HOSPITAL SYSTEM, AND THE FACT THAT THEY HAD VALIDATED THE TECHNOLOGY WAS OBVIOUSLY IMPORTANT.
MR. SCHENK: AND YOU THOUGHT THAT JOHNS HOPKINS HAD VALIDATED THE TECHNOLOGY?
DANIEL MOSLEY: I DID.
MR. SCHENK: WOULD YOU TURN NOW TO PAGE 299. THIS SLIDE READS "SAME TESTS, A WHOLE NEW APPROACH. "THE ACTIONABLE INFORMATION YOU NEED, 1/1,000 THE SIZE OF A TYPICAL BLOOD DRAW." THEN THERE ARE SOME IMAGES. IT READS, "THERANOS RUNS ANY TEST AVAILABLE IN CENTRAL LABORATORIES, AND PROCESSES ALL SAMPLE TYPES." IS THAT CONSISTENT WITH YOUR UNDERSTANDING OF THE CAPABILITIES OF THE TECHNOLOGY WHEN YOU INVESTED?
DANIEL MOSLEY: YES.
MR. SCHENK: AT THE BOTTOM IT READS THAT "THERANOS PROVIDES THE HIGHEST LEVEL OF OVERSIGHT, AUTOMATION, AND STANDARDIZATION IN OUR PRE- AND POST-ANALYTIC PROCESSES, ENSURING THE HIGHEST LEVELS OF ACCURACY AND PRECISION." WAS IT RELEVANT TO YOU THAT THERANOS SAID THAT IT ENSURED THE HIGHEST LEVELS OF ACCURACY AND PRECISION?
DANIEL MOSLEY: YES.
MR. SCHENK: AND WHY DID THAT MATTER?
DANIEL MOSLEY: WELL, IT WAS A STATEMENT THAT THEY HAD THE HIGHEST LEVEL OF PRECISION, WHICH WAS OBVIOUSLY IMPORTANT, HIGHEST LEVEL OF ACCURACY.
MR. SCHENK: WHY? FORGIVE ME, IT MIGHT BE OBVIOUS, BUT WHY WAS ACCURACY IN BLOOD TESTING IMPORTANT TO YOU WHEN YOU WERE CONSIDERING INVESTING?
DANIEL MOSLEY: WELL, YOU KNOW, FROM AN ECONOMIC STANDPOINT, THE COMPANY WOULD OBVIOUSLY DO A LOT BETTER IF IT HAD A HIGHLY EFFECTIVE TEST, TECHNOLOGY WITH HIGH ACCURACY.
MR. SCHENK: OKAY. THANK YOU. IF YOU'LL TURN TO 301, PAGE 301. THIS SLIDES READS "A NEW STANDARD IN QUALITY." DO YOU SEE THAT?
DANIEL MOSLEY: I DO.
MR. SCHENK: AND IT SAYS THAT "BY SYSTEMATICALLY CONTROLLING AND STANDARDIZING OUR PROCESSES, THERANOS OFFERS TESTS WITH THE HIGHEST LEVELS OF ACCURACY." ARE THERE -- ARE WE NOW LOOKING AT MULTIPLE INSTANCES IN THIS SLIDE DECK WHERE YOU SEE REPRESENTATIONS ABOUT THE ACCURACY OF THERANOS TESTS?
DANIEL MOSLEY: YES.
MR. SCHENK: WOULD YOU NOW TURN TO PAGE 303. 303 IS ENTITLED NEW POSSIBILITIES IN LAB, AND ON THE LEFT SIDE IT SAYS, "ALL 1,000 PLUS CURRENTLY RUN TESTS/CPT CODES ARE AVAILABLE THROUGH THERANOS. "THERANOS RUNS ANY TEST AVAILABLE IN CENTRAL LABORATORIES." IS THAT ALSO CONSISTENT WITH YOUR UNDERSTANDING OF THE TESTS THAT THERANOS COULD RUN IN ITS LAB?
DANIEL MOSLEY: IT WAS.
MR. SCHENK: WOULD YOU NOW TURN TO PAGE 304. 304 READS "FASTER RESULTS. FASTER ANSWERS." AND IT CONTINUES, "THERANOS'S MICRO-SAMPLE ANALYSIS IS PERFORMED AT AMAZING SPEEDS, SO WE CAN REPORT RESULTS FASTER THAN PREVIOUSLY POSSIBLE." WHAT DID THAT MEAN TO YOU?
DANIEL MOSLEY: IT JUST MEANT THAT THE RESULTS OF THE BLOOD TESTS COULD BE RECEIVED IN A SHORTER PERIOD OF TIME.
MR. SCHENK: ON THERANOS'S ANALYSIS OR THERANOS'S USE OF MICRO-SAMPLES?
DANIEL MOSLEY: THAT'S CORRECT.
MR. SCHENK: AND IF THERANOS WAS ACTUALLY USING CONVENTIONAL MACHINES, THE TYPES OF MACHINES THAT OTHER LABS USED, WOULD YOU THINK IT WOULD BE ANY FASTER, THAT THERE WOULD BE AN ADVANTAGE TO USING THERANOS?
DANIEL MOSLEY: I THOUGHT THIS MEANT THERE WAS A REAL ADVANTAGE TO USING THERANOS MACHINES.
MR. SCHENK: WHY?
DANIEL MOSLEY: BECAUSE THEY WERE FASTER.
MR. SCHENK: IF YOU'LL NOW TURN TO PAGE 320. ON THIS SLIDE WE SEE RECENT PRESS, AND THERE'S AN IMAGE OF "FORTUNE" MAGAZINE. AND TO THE LEFT OF THAT IMAGE, A SECOND LINE READS "THIS CEO IS OUT FOR BLOOD." DO YOU SEE THAT?
DANIEL MOSLEY: I SEE IT.
MR. SCHENK: WERE THERE INSTANCES SUCH AS THIS WHEN YOU LEARNED INFORMATION ABOUT THERANOS NOT JUST FROM THE BINDER OF MATERIAL, BUT FROM OTHER SOURCES?
DANIEL MOSLEY: YES.
MR. SCHENK: AND WAS THIS ARTICLE, THIS "FORTUNE" ARTICLE, ONE OF THOSE INSTANCES?
DANIEL MOSLEY: YES.
MR. SCHENK: AND WHAT DID YOU THINK ABOUT YOUR ABILITY TO RELY ON THE ARTICLE BY THERANOS SENDING IT TO YOU? DO YOU UNDERSTAND?
DANIEL MOSLEY: WELL, I ASSUMED -- I ASSUMED THAT THE COMPANY AGREED WITH WHAT WAS STATED IN THE ARTICLE.
MR. SCHENK: WHY DID YOU MAKE THAT ASSUMPTION?
DANIEL MOSLEY: PROBABLY TWO REASONS. ONE, I ASSUMED THAT ELIZABETH HAD COOPERATED IN THE ARTICLE, AND MAYBE THE COMPANY HAD COOPERATED; AND, TWO, BY SENDING IT TO ME, THE COMPANY WAS SAYING THIS IS A GOOD DESCRIPTION OF THE COMPANY.
MR. SCHENK: OKAY. AND DO YOU RECALL WHETHER YOU THEN, IN FACT, FOUND THE "FORTUNE" ARTICLE AND READ IT OR IF IT WAS SENT TO YOU? DO YOU HAVE A RECOLLECTION?
DANIEL MOSLEY: I DEFINITELY READ IT. I DON'T KNOW HOW I PULLED IT TO READ IT, BUT I DID READ THE ARTICLE.
MR. SCHENK: OKAY. WOULD YOU NOW TURN TO PAGE 333. ON THIS SLIDE WE SEE SIX IMAGINES, AND I'D LIKE TO DRAW YOUR ATTENTION TO THE BOTTOM MIDDLE IMAGE. IF WE CAN ZOOM IN ON THE TEXT OF THE BOTTOM MIDDLE --
DANIEL MOSLEY: OKAY.
MR. SCHENK: -- IMAGE. DO YOU SEE THAT?
DANIEL MOSLEY: SURE.
MR. SCHENK: IT READS, "OUR CERTIFIED LABS PERFORM PRECISE TESTS ON A SAMPLE 1/1,000TH THE SIZE OF A TYPICAL BLOOD DRAW. NO MORE BIG VIALS TO FILL. NO MORE SEARCHING FOR A GOOD VEIN." WHAT DID THAT MEAN TO YOU?
DANIEL MOSLEY: IT MEANT TO ME THAT THEY WERE ABLE TO DO THE TEST WITH A VERY SMALL AMOUNT OF BLOOD THAT DID NOT REQUIRE FILLING UP LARGE TUBES WITH BLOOD.
MR. SCHENK: IF YOU WILL NOW TURN TO 354. THIS SLIDE IS ABOUT AUTOMATED REFLEX TESTING. DO YOU SEE THAT?
DANIEL MOSLEY: YES.
MR. SCHENK: "ORDER REFLEX TESTS DIRECTLY FROM THE THERANOS LAB ORDER FORM. "IMMEDIATE FOLLOW-ON TESTING." WERE YOU FAMILIAR WITH THIS CONCEPT OF AUTOMATED REFLEX TESTING WHEN YOU WERE DECIDING TO INVEST?
DANIEL MOSLEY: I WAS. AT SOME POINT I SORT OF CAME TO UNDERSTAND WHAT I THOUGHT IT MEANT.
MR. SCHENK: AND WHAT WAS THAT UNDERSTANDING?
DANIEL MOSLEY: IT WAS THE FACT THAT IN REQUESTING A LAB TEST, YOU COULD SAY IF THIS PARTICULAR TEST COMES OUT IN A PARTICULAR WAY, YOU WOULD BE ASKING AT THE SAME TIME THAT FOLLOW-ON TESTS WOULD BE DONE THAT WOULD BE HELPFUL IN DETERMINING THE MEANING OF THE FIRST TEST.
MR. SCHENK: AND DID YOU UNDERSTAND THAT THAT WAS SOMETHING THAT THERANOS WAS CURRENTLY CAPABLE OF DOING?
DANIEL MOSLEY: YES.
MR. SCHENK: WOULD YOU TURN TO PAGE 419. ARE YOU FAMILIAR WITH A DOCUMENT THAT IS BEGINNING ON PAGE 419?
DANIEL MOSLEY: YES.
MR. SCHENK: THIS DOCUMENT HAS THE PFIZER LOGO IN THE UPPER LEFT CORNER, AND THE THERANOS LOGO IN THE UPPER RIGHT. DO YOU SEE THAT?
DANIEL MOSLEY: I DO.
MR. SCHENK: AND IT READS, "THERANOS ANGIOGENESIS STUDY REPORT, PFIZER INC." AND THEN IF WE ZOOM OUT, ON THE BOTTOM THERE IS SOME HIGHLIGHTING. WHERE DID THE HIGHLIGHTING COME FROM?
DANIEL MOSLEY: IT'S MY HIGHLIGHTING.
MR. SCHENK: AND DID YOU READ THIS BEFORE YOU MADE THE DECISION TO INVEST?
DANIEL MOSLEY: I DID.
MR. SCHENK: AND LATER DID YOU WRITE A MEMO WHERE YOU SUMMARIZED YOUR UNDERSTANDING OF THERANOS?
DANIEL MOSLEY: I DID.
MR. SCHENK: AND DID YOU INCLUDE SOME INFORMATION THAT YOU LEARNED FROM THE PFIZER REPORT IN THAT MEMO?
DANIEL MOSLEY: I DID.
MR. SCHENK: WAS THIS PFIZER REPORT IMPORTANT TO YOU IN YOUR DECISION TO INVEST?
DANIEL MOSLEY: IT WAS.
MR. SCHENK: WHY?
DANIEL MOSLEY: AS I MENTIONED EARLIER, IT'S A -- PFIZER IS A VERY LARGE PHARMACEUTICAL COMPANY THAT IS HIGHLY SOPHISTICATED AND HAS A LARGE SCIENTIFIC STAFF, AND I BELIEVED THAT IF THEY HAD REACHED THE CONCLUSIONS STATED IN THIS REPORT, THAT WAS A VERY GOOD VALIDATION OF THE COMPANY.
MR. SCHENK: WHO DID YOU THINK WROTE THIS REPORT?
DANIEL MOSLEY: PFIZER.
MR. SCHENK: WHY DID YOU THINK THAT?
DANIEL MOSLEY: ONE, IT'S GOT THE PFIZER LOGO ON THE TOP LEFT OF IT, AND I THINK THAT IS ON EVERY PAGE. AND THERE ARE CERTAIN PARTS OF THE STUDY THAT CERTAINLY I WOULD HAVE THOUGHT THAT PFIZER WAS THE ONLY ONE THAT WOULD HAVE KNOWN THE INFORMATION THAT IS INCLUDED IN THE STUDY.
MR. SCHENK: OKAY. IF WE COULD ZOOM OUT ON THIS PAGE AND THEN ZOOM IN AT THE VERY BOTTOM OF THIS DOCUMENT. NEXT TO THE PAGE NUMBER THERE'S AN ADDRESS. DO YOU SEE THAT? IT IS SAYS 3200 HILLVIEW, PALO ALTO. DO YOU SEE WHERE I AM?
DANIEL MOSLEY: I SEE IT.
MR. SCHENK: AND IT HAS A PHONE NUMBER AND A WEBSITE, THERANOS.COM. DO YOU SEE THAT?
DANIEL MOSLEY: I DO.
MR. SCHENK: AND DO YOU KNOW WHAT IS LOCATED, OR WHAT WAS LOCATED AT THAT ADDRESS, 3200?
DANIEL MOSLEY: I DON'T KNOW FOR SURE, BUT I THINK IT WAS THERANOS'S HEADQUARTERS AT ONE POINT.
MR. SCHENK: FORGIVE ME. AT ONE POINT?
DANIEL MOSLEY: YEAH.
MR. SCHENK: THIS DOCUMENT HAD THERANOS'S ADDRESS, WEBSITE, PHONE NUMBER ON IT. DID THAT MAKE YOU THINK THAT PFIZER DID NOT WRITE THIS DOCUMENT?
DANIEL MOSLEY: IT DID NOT.
MR. SCHENK: WHY? WHY DIDN'T -- I MEAN, YOU SAW THE THERANOS WEBSITE. WHY DIDN'T THAT CHANGE YOUR MIND ABOUT WHO DRAFTED THE DOCUMENT?
DANIEL MOSLEY: WELL, THERE IS -- YOU GET TO THE BACK OF THE DOCUMENT AND THERE ARE A LOT OF CONCLUSIONS ABOUT THE TECHNOLOGY, AND THEY CERTAINLY READ AS THIRD PARTY CONCLUSIONS.
MR. SCHENK: WHAT DO YOU MEAN, "THEY READ AS THIRD PARTY CONCLUSIONS"?
DANIEL MOSLEY: WELL, THEY READ, TO ME, TO BE STATEMENTS EFFECTIVELY BY SOMEBODY OTHER THAN THERANOS ABOUT THE TECHNOLOGY, THERANOS'S TECHNOLOGY.
MR. SCHENK: OKAY. IF YOU'LL NOW TURN TO PAGE 510.
DANIEL MOSLEY: OKAY.
MR. SCHENK: WHAT ARE WE LOOKING AT HERE?
DANIEL MOSLEY: A CAP TABLE.
MR. SCHENK: WHAT IS A CAP TABLE?
DANIEL MOSLEY: IT'S NORMALLY A TABLE SHOWING THE STOCK THAT A COMPANY HAD ISSUED AND AT WHAT PRICE AND THE AMOUNT OF PROCEEDS THAT HAD COME TO THE COMPANY AS A RESULT OF ISSUING THAT STOCK.
MR. SCHENK: PROCEEDS THAT HAD COME TO THE COMPANY BY ISSUING THE STOCK, WHAT DOES THAT MEAN?
DANIEL MOSLEY: WELL, ISSUING MEANS REALLY A COMPANY SELLING STOCK. SO THIS WOULD BE AN INDICATION OF THE SHARES SOLD AT DIFFERENT DATES FOR DIFFERENT AMOUNTS AND HOW MUCH CAME TO THE COMPANY AS A RESULT OF THE PROCEEDS OF THOSE SALES.
MR. SCHENK: OKAY. AND THEN THE COLUMN SECOND FROM THE LEFT, PER SHARE PRICE, WHAT DOES THAT MEAN?
DANIEL MOSLEY: IT -- WHEN THEY SOLD IN THAT PARTICULAR SERIES, THE PRICE PER SHARE THAT WAS PAID BY THE PURCHASERS OF THE STOCK.
MR. SCHENK: AND WHICH SERIES DID YOU END UP PURCHASING?
DANIEL MOSLEY: THE SERIES C-2.
MR. SCHENK: SO DOES THAT MEAN THAT YOU PAID $17 PER SHARE?
DANIEL MOSLEY: IT DOES.
MR. SCHENK: THE VALUATION DATE IS 2013. WHEN DID YOU INVEST, THOUGH?
DANIEL MOSLEY: I THINK IT WAS AROUND THE END OF OCTOBER.
MR. SCHENK: OF?
DANIEL MOSLEY: 2014.
MR. SCHENK: IT WAS IN 2014. THE PRICE DIDN'T CHANGE, YOU STILL GOT THE 2013 PRICE?
DANIEL MOSLEY: THAT IS CORRECT.
MR. SCHENK: IF YOU'LL NOW TURN TO PAGE 512. WE TALKED ABOUT THIS A MOMENT AGO. YOU SAID YOU RECEIVED SOME FINANCIAL INFORMATION FROM THE COMPANY WHEN YOU WERE REVIEWING THE INVESTMENT OPPORTUNITY. IS THIS SOME OF THE FINANCIAL INFORMATION THAT YOU WERE REFERRING TO?
DANIEL MOSLEY: YES.
MR. SCHENK: IT'S CALLED A PROJECTED STATEMENT OF INCOME, AND IT HAS TWO PERIODS, THE PERIOD ENDING 12/31/2014 AND THEN 12/31/2015. DO YOU SEE THAT?
DANIEL MOSLEY: I DO.
MR. SCHENK: AND THIS DOCUMENT I THINK YOU SAID WAS PART OF MATERIALS THAT MS. HOLMES SENT TO YOU WITH THAT COVER LETTER. THAT COVER LETTER WAS IN AUGUST OF 2014; IS THAT RIGHT?
DANIEL MOSLEY: YES.
MR. SCHENK: AND SO WOULD YOU HAVE BEEN REVIEWING THIS PROJECTED STATEMENT OF INCOME ROUGHLY IN AUGUST OF 2014?
DANIEL MOSLEY: YES.
MR. SCHENK: AND IT PROJECTS REVENUE BY THE END OF THIS YEAR, 2014, FROM LAB SERVICES FOR U.S. RETAIL PHARMACIES AT $42 MILLION. DO YOU SEE THAT?
DANIEL MOSLEY: YES.
MR. SCHENK: AND IT INCLUDES REVENUE FROM PHYSICIANS OFFICES, HOSPITALS, REVENUE FROM PHARMACEUTICAL SERVICES FOR A TOTAL REVENUE OF $140 MILLION. DO YOU SEE THAT?
DANIEL MOSLEY: I DO.
MR. SCHENK: WHEN YOU WERE LOOKING AT THOSE NUMBERS IN AUGUST OF 2014, AND THE PROJECTION IS FOR THE YEAR ENDING DECEMBER 31, 2014, DID THAT SAY ANYTHING TO YOU ABOUT THE RELIABILITY OF THESE PROJECTIONS?
DANIEL MOSLEY: IT, IT DID. BY DEFINITION THEY COULD NOT BE WHAT I MIGHT CALL HARD NUMBERS, OR FINAL NUMBERS, FOR THE ACTUAL REVENUE IN THAT PARTICULAR YEAR SINCE THE YEAR HAD NOT YET BEEN COMPLETED.
MR. SCHENK: OKAY. AND HOW ABOUT THE LIKELIHOOD THAT THOSE NUMBERS ARE, WHILE NOT HARD NUMBERS, ARE CLOSE TO ACCURATE? DID IT SAY ANYTHING ABOUT THAT?
DANIEL MOSLEY: YES, IT WOULD HAVE PROBABLY INDICATED TO ME THAT THEY WERE PRETTY GOOD NUMBERS BECAUSE ROUGHLY THREE QUARTERS OF THE YEAR HAD ALREADY PASSED, AND I WOULD EXPECT THAT PART OF THE NUMBERS TO BE BASED ON ACTUAL, AND ONLY THE BALANCE OF THE YEAR WHICH HAD NOT YET OCCURRED TO BE BASED ON PROJECTED.
MR. SCHENK: SO KNOWING THAT THESE WERE NOT YET HARD NUMBERS, WOULD IT HAVE SURPRISED YOU IF THERANOS HAD VERY LITTLE REVENUE IN 2014 GIVEN THESE PROJECTIONS?
DANIEL MOSLEY: IT WOULD HAVE.
MR. SCHENK: WHY?
DANIEL MOSLEY: BECAUSE AS I SAY, I WOULD HAVE EXPECTED THESE NUMBERS TO BE PRETTY ACCURATE FOR THE FIRST THREE QUARTERS OF THE YEAR, AND THREE QUARTERS OF THE YEAR HAD PASSED, AND I WOULD HAVE EXPECTED THEM TO BE A GOOD FAITH ESTIMATE FOR THE BALANCE OF THE YEAR BASED ON THE FIRST THREE QUARTERS OF THE YEAR.
MR. SCHENK: OKAY. AND NOW LET'S TURN TO THE 2015 NUMBERS. LET'S HAVE THAT SAME CONVERSATION FOR 2015 NUMBERS. TALK TO ME ABOUT YOUR VIEW ON THE RELIABILITY OF NUMBERS THAT ARE NOW PROJECTED OUT LET'S SAY 15 MONTHS, 16 MONTHS INTO THE FUTURE?
DANIEL MOSLEY: I WOULD HAVE CONSIDERED THEM FAR LESS RELIABLE BECAUSE NO PART OF THAT YEAR HAD OCCURRED YET.
MR. SCHENK: OKAY. AND WHAT ABOUT THAT SAME QUESTION, IF IN 2015 THERE WAS VERY LITTLE REVENUE, WOULD THAT HAVE SURPRISED YOU GIVEN THE PROJECTION OF NEARLY A BILLION DOLLARS OF REVENUE?
DANIEL MOSLEY: IT, IT WOULD HAVE SURPRISED ME BECAUSE THREE QUARTERS OF 2014 HAD ALREADY OCCURRED AND SO THE COMPANY WOULD HAVE SOME VISIBILITY WITH THREE QUARTERS OF THAT YEAR HAVING OCCURRED, SOME VISIBILITY NOT ONLY INTO THE FOURTH QUARTER OF 2014, BUT PRESUMABLY, YOU KNOW, INTO 2015.
MR. SCHENK: SO IS IT FAIR THAT SORT OF THE ACCURACY OF THE NUMBERS DECREASES OVER TIME? THE FURTHER OUT YOU GET, THE LESS RELIABLE YOU VIEW THE NUMBERS TO BE?
DANIEL MOSLEY: ABSOLUTELY.
MR. SCHENK: BUT THERE'S STILL, IS IT FAIR TO SAY, A BALLPARK? IF YOU'RE IN 2014, IN AUGUST, PROJECTING NUMBERS FOR 2015, DO YOU VIEW THE PROJECTIONS TO SORT OF BE, LET'S SAY, A FEW STANDARD DEVIATIONS FROM A BALLPARK?
DANIEL MOSLEY: YOU KNOW, I PROBABLY WOULDN'T SAY THEY WERE THAT ACCURATE. I WOULD JUST SAY THAT THEY ARE WHAT THE COMPANY THOUGHT THEY COULD DO FOR THAT YEAR, OR WHAT THEY WERE SAYING THEY THOUGHT THEY COULD DO FOR THAT YEAR.
MR. SCHENK: AND A MOMENT AGO YOU USED THE PHRASE A GOOD FAITH ESTIMATE. WHAT DID YOU MEAN BY THAT?
DANIEL MOSLEY: IT WAS A JUDGMENT THAT THEY WERE BASED ON A -- THAT IF NUMBERS WERE -- I WOULD EXPECT PROJECTIONS TO BE ARRIVED AT IN GOOD FAITH, WHICH MEANS THAT THEY WOULD BE BASED ON THE INFORMATION THAT WAS AVAILABLE AT THAT TIME AND A REASONABLE AND FAIR JUDGMENT OF WHAT THAT PORTRAYED FOR THE FUTURE.
MR. SCHENK: OKAY. THANK YOU. WOULD YOU NOW TURN TO PAGE 516. DO YOU RECOGNIZE THIS DOCUMENT?
DANIEL MOSLEY: I DO.
MR. SCHENK: AND IS THIS -- I THINK EARLIER YOU REFERENCED AN ARTICLE IN "THE WALL STREET JOURNAL" ABOUT THE LAUNCH WITH WALGREENS; IS THAT RIGHT?
DANIEL MOSLEY: YES.
MR. SCHENK: IS THAT THIS ARTICLE?
DANIEL MOSLEY: YES, IT IS.
MR. SCHENK: DID YOU -- DO YOU REMEMBER IF YOU READ THE ARTICLE AT THE TIME?
DANIEL MOSLEY: I DID.
MR. SCHENK: AND THERE'S SOME HIGHLIGHTS IN IT. ARE THOSE YOUR HIGHLIGHTS?
DANIEL MOSLEY: THEY ARE.
MR. SCHENK: AND IF WE COULD NOW ZOOM IN THE SECOND COLUMN FURTHER DOWN, IT'S THE SIXTH FULL PARAGRAPH IN THE SECOND COLUMN, IT BEGINS, "THERANOS'S TECHNOLOGY ELIMINATES MULTIPLE LAB TRIPS." DO YOU SEE THAT?
DANIEL MOSLEY: JUST ONE SECOND. IN THE SECOND COLUMN?
MR. SCHENK: IN THE SECOND COLUMN.
DANIEL MOSLEY: ONE, TWO, THREE, FOUR, FIVE. YES, I DO.
MR. SCHENK: MS. HOLLIMAN, IF WE CAN ZOOM OUT INTO THE SECOND COLUMN. FURTHER DOWN, THE SIXTH FULL PARAGRAPH DOWN, THERE'S A PARAGRAPH THAT BEGINS -- IT'S ACTUALLY THREE PARAGRAPHS UP FROM THE BOTTOM. MAYBE THAT'S EASIER.
MR. SCHENK: IT SAYS, "THERANOS'S TECHNOLOGY ELIMINATES MULTIPLE LAB TRIPS BECAUSE IT CAN RUN ANY COMBINATION OF TESTS, INCLUDING SETS OF FOLLOW-ON TESTS." DO YOU SEE THAT?
DANIEL MOSLEY: I DO.
MR. SCHENK: AND WAS THAT CONSISTENT WITH YOUR UNDERSTANDING OF THE THERANOS TECHNOLOGY WHEN YOU WERE CONSIDERING INVESTING?
DANIEL MOSLEY: IT WAS.
MR. SCHENK: WOULD YOU NOW TURN TO PAGE 523. WE SEE ANOTHER IMAGE OF THE "FORTUNE" ARTICLE AT 523. DID MS. HOLMES PROVIDE YOU WITH THIS "FORTUNE" ARTICLE BEFORE YOU DECIDED TO INVEST?
DANIEL MOSLEY: I THINK THAT IT MAY HAVE BEEN, AT LEAST THE COVER MAY HAVE BEEN IN THE MATERIALS, BUT I DON'T KNOW FOR SURE.
MR. SCHENK: OKAY. DO YOU THINK THAT YOU READ IT BEFORE YOU DECIDED TO INVEST?
DANIEL MOSLEY: I HAD ABSOLUTELY READ IT BEFORE I INVESTED.
MR. SCHENK: ALL RIGHT. IF YOU WILL NOW TURN TO EXHIBIT 3844. DO YOU SEE THIS DOCUMENT?
DANIEL MOSLEY: IT HAS JOHNS HOPKINS AT THE TOP?
MR. SCHENK: YES?
DANIEL MOSLEY: YES.
MR. SCHENK: WAS THIS DOCUMENT ALSO PROVIDED TO YOU WHEN YOU WERE CONSIDERING MAKING AN INVESTMENT?
DANIEL MOSLEY: IT WAS.
MR. SCHENK: YOUR HONOR, THE GOVERNMENT OFFERS 3844.
JUDGE DAVILA: IT'S ADMITTED. IT MAY BE PUBLISHED.
(GOVERNMENT'S EXHIBIT 3844 WAS RECEIVED IN EVIDENCE.)
BY MR. SCHENK:
MR. SCHENK: IN THE POWER POINTS THAT WE LOOKED AT, WE SAW THE LOGOS FROM THE JOHNS HOPKINS MEDICAL SCHOOL. DO YOU RECALL THAT?
DANIEL MOSLEY: I DO.
MR. SCHENK: AND THERE WAS SOME DISCUSSION ABOUT VALIDATION WORK. WAS THIS SOME SUPPORTING MATERIAL THAT YOU RECEIVED REGARDING THE WORK JOHNS HOPKINS HAD DONE?
DANIEL MOSLEY: IT WAS.
MR. SCHENK: DO YOU KNOW WHAT JOHNS HOPKINS DID TO VALIDATE OR TO INVESTIGATE THE THERANOS TECHNOLOGY?
DANIEL MOSLEY: I THINK I WAS -- I THINK I WAS AWARE THAT THEY HAD TESTED AT LEAST, OR HAD SEEN THE THERANOS MACHINES TESTED.
MR. SCHENK: AND DO YOU REMEMBER --
DANIEL MOSLEY: I SAID I THINK THEY HAD REVIEWED THE TECHNOLOGY AND SEEN THE EQUIPMENT IN USE.
MR. SCHENK: DO YOU REMEMBER WHERE YOU LEARNED THAT OR WHERE YOU GOT THAT FROM?
DANIEL MOSLEY: I DON'T KNOW.
MR. SCHENK: OKAY. WOULD YOU NOW TURN TO 4202. IS 4202 AN EMAIL EXCHANGE BETWEEN YOU AND MS. HOLMES IN SEPTEMBER OF 2014 REGARDING A VISIT THAT YOU TWO MIGHT HAVE?
DANIEL MOSLEY: YES.
MR. SCHENK: YOUR HONOR, THE GOVERNMENT OFFERS 4202.
JUDGE DAVILA: IT'S ADMITTED. IT MAY BE PUBLISHED.
(GOVERNMENT'S EXHIBIT 4202 WAS RECEIVED IN EVIDENCE.)
BY MR. SCHENK:
MR. SCHENK: IF WE CAN START ON PAGE 2 OF THIS EXHIBIT, THE EMAIL ON THE BOTTOM FROM YOU TO MS. HOLMES, IT'S DATED SEPTEMBER 2ND, 2014. DO YOU SEE THAT?
DANIEL MOSLEY: YES.
MR. SCHENK: NOW, IN SEPTEMBER YOU'RE THANKING MS. HOLMES FOR THE EXTENSIVE MATERIALS ON THERANOS. IS THAT A REFERENCE TO AT LEAST SOME OF THE MATERIALS THAT YOU AND I JUST TALKED ABOUT?
DANIEL MOSLEY: YES, IT IS.
MR. SCHENK: YOU "ENJOYED READING THE MATERIALS AND CAN'T TELL YOU HOW APPRECIATIVE AND THANKFUL I AM FOR THE OPPORTUNITY TO BECOME ONE OF YOUR SHAREHOLDERS." WAS THAT ACCURATE? DID YOU FEEL HONORED OR APPRECIATIVE TO BECOME A POTENTIAL SHAREHOLDER?
DANIEL MOSLEY: ABSOLUTELY.
MR. SCHENK: WHY?
DANIEL MOSLEY: WELL, IT'S -- THIS IS A COMPANY THAT HAD ENORMOUS POTENTIAL TO DO GOOD THINGS FOR PEOPLE, AND IT WAS ALSO LIKELY TO BE VERY FINANCIALLY SUCCESSFUL, SO YOU WOULD BE APPRECIATIVE OF THAT OPPORTUNITY.
MR. SCHENK: AND YOU SAID IT HAD THE OPPORTUNITY TO BE ENORMOUSLY SUCCESSFUL FINANCIALLY TO DO GREAT THINGS. WHERE DID YOU GET THAT IMPRESSION?
DANIEL MOSLEY: YOU KNOW, LARGELY PROBABLY FROM ALL OF THE MATERIALS THAT WERE INCLUDED IN THAT PACKAGE, AS WELL AS THE "FORTUNE" ARTICLE AND SUCH.
MR. SCHENK: SO THIS POTENTIAL THAT YOU'RE REFERRING TO, IS THAT AN ASSUMPTION BASED ON THE ACCURACY OF THE MATERIALS THAT YOU RECEIVED?
DANIEL MOSLEY: YES.
MR. SCHENK: YOU WROTE A SENTENCE OR TWO LATER THAT YOU PREPARED AN OUTLINE OVER THE WEEKEND WITH YOUR THOUGHTS AND ANALYSIS WHICH YOU'RE SENDING TO DR. KISSINGER; IS THAT RIGHT?
DANIEL MOSLEY: THAT'S RIGHT.
MR. SCHENK: AND WHY DID YOU PREPARE THE MEMO THAT IS REFERENCED HERE?
DANIEL MOSLEY: WELL, AS I STATED EARLIER, WHEN DR. KISSINGER FIRST BROUGHT UP THE COMPANY AND ELIZABETH TO ME, HE SAID IT WOULD BE VERY HELPFUL TO ME IF YOU WOULD TALK TO ELIZABETH, LEARN ABOUT THE COMPANY, AND GIVE ME YOUR THOUGHTS. AND SO THE MEMO WAS REALLY MY HAVING GONE THROUGH THE MATERIALS AND HAD CONVERSATIONS AND PULLING TOGETHER MY THOUGHTS.
MR. SCHENK: AND DID THE MEMO SERVE TWO PURPOSES OR JUST ONE? WAS IT SOMETHING THAT WAS USED ONLY FOR DR. KISSINGER, OR WAS IT ALSO GATHERING YOUR THOUGHTS ON THE THERANOS INVESTMENT?
DANIEL MOSLEY: WELL, IT WAS, IT WAS REALLY FOR DR. KISSINGER AT HIS REQUEST AND I, I GUESS YOU COULD SAY THAT IT HAD A DUAL PURPOSE OF PULLING TOGETHER MY OWN THOUGHTS ABOUT THE COMPANY.
MR. SCHENK: OKAY. AND WHEN YOU DRAFTED THIS MEMO, HAD YOU DECIDED WHETHER TO INVEST? HAD YOU MADE THAT DECISION?
DANIEL MOSLEY: AT THAT POINT I HAD NOT.
MR. SCHENK: ABOVE THIS EMAIL THAT YOU AND I ARE READING RIGHT NOW, YOU FOLLOW UP WITH ANOTHER EMAIL SAYING THAT YOU SEE THAT YOU, MS. HOLMES, IS GOING TO BE SPEAKING AT BYRON TROTT'S CONFERENCE, IT LOOKS LIKE IN MAYBE TWO WEEKS, A WEEK AND A HALF, TUESDAY, SEPTEMBER 16TH IN CHICAGO. DO YOU SEE THAT?
DANIEL MOSLEY: I DO.
MR. SCHENK: DID YOU GO TO THIS CONFERENCE IN CHICAGO?
DANIEL MOSLEY: I DID.
MR. SCHENK: DID SHE GO?
DANIEL MOSLEY: SHE DID.
MR. SCHENK: AND DID YOU MEET MS. HOLMES THERE?
DANIEL MOSLEY: I DID.
MR. SCHENK: AND DID YOU INTRODUCE MS. HOLMES TO OTHER INDIVIDUALS THAT YOU THOUGHT MIGHT BE INTERESTED IN THERANOS AS WELL?
DANIEL MOSLEY: WE DID. I DID MEET WITH ELIZABETH AND SOME OF THE INDIVIDUALS THAT I THOUGHT MIGHT HAVE AN INTEREST IN LOOKING AT THE COMPANY.
MR. SCHENK: AND WHY, WHY DID YOU -- WELL, LET ME ASK, DID YOU CREATE THIS OPPORTUNITY FOR AN INTRODUCTION OR MEETING FOR MS. HOLMES TO MEET SOME OF THESE OTHER INDIVIDUALS?
DANIEL MOSLEY: I THINK I DID, YES.
MR. SCHENK: AND WHY DID YOU DO THAT?
DANIEL MOSLEY: WELL, BECAUSE I THOUGHT THE COMPANY HAD ENORMOUS POTENTIAL FOR GOOD IN THE WORLD, BEING ABLE TO DO THIS KIND OF TESTING AS DESCRIBED, AND I OBVIOUSLY HAD CLIENTS THAT, YOU KNOW, WOULD HAVE A SIMILAR VIEW TO MINE THAT THIS WAS BOTH A GOOD INVESTMENT OPPORTUNITY, AS WELL AS A VERY GOOD THING TO BACK BECAUSE OF THE POTENTIAL GOOD IN THE WORLD.
MR. SCHENK: WHEN YOU ARRANGED THESE MEETINGS, DID YOU TELL THESE CLIENTS THAT YOU WERE VOUCHING FOR THE TECHNOLOGY OR FOR THE INVESTMENT?
DANIEL MOSLEY: NO. I BASICALLY TOLD THE INDIVIDUALS I INTRODUCED THAT ELIZABETH IS SOMEBODY THAT I HAD COME ACROSS. I WAS IMPRESSED WITH HER IDEA AND TECHNOLOGY, AND THIS IS SOMEBODY THAT I THOUGHT THEY WOULD ENJOY MEETING.
MR. SCHENK: IF WE COULD NOW TURN TO 4 -- WELL, I'M SORRY. DO YOU KNOW THE NAMES OF SOME -- WHEN YOU SAY "THESE INDIVIDUALS," CAN YOU FILL IN THAT BLANK FOR US?
DANIEL MOSLEY: WELL, THERE'S A REFERENCE TO MEMBERS OF THE WALTON FAMILY; THERE WERE ALSO MEMBERS OF THE DEVOS FAMILY; AND I BELIEVE MEMBERS OF THE COX FAMILY.
MR. SCHENK: AND THE THREE GROUPS OF PEOPLE THAT YOU JUST REFERENCED, WERE THEY CLIENTS OF YOURS?
DANIEL MOSLEY: THEY WERE.
MR. SCHENK: DO YOU RECALL IF THREE SEPARATE MEETINGS HAPPENED IN CHICAGO, OR DID EVERYBODY GET TOGETHER? OR TOO LONG AGO AND YOU DON'T REMEMBER?
DANIEL MOSLEY: I DON'T REALLY REMEMBER, BUT I HAVE SOME -- I BELIEVE THEY WERE LIKELY SEPARATE.
MR. SCHENK: DID YOU PARTICIPATE IN SOME OF THESE MEETINGS?
DANIEL MOSLEY: I PROBABLY SAT IN ON THEM.
MR. SCHENK: DID MS. HOLMES SPEAK DURING THESE MEETINGS?
DANIEL MOSLEY: YES.
MR. SCHENK: DID MS. HOLMES DESCRIBE THE TECHNOLOGY OR THERANOS DURING THESE MEETINGS?
DANIEL MOSLEY: YES.
MR. SCHENK: DID YOU LEARN SOMETHING DURING THESE MEETINGS THAT WAS VASTLY DIFFERENT THAN THE IMAGE THAT WE JUST TALKED ABOUT THROUGH THESE POWERPOINT SLIDES, THROUGH THE MATERIALS THAT WERE SENT TO YOU?
MR. SCHENK: WAS THE DESCRIPTION THAT YOU WERE OBSERVING CONSISTENT WITH THE UNDERSTANDING THAT YOU AND I JUST TALKED ABOUT WITH, FOR INSTANCE, EXHIBIT 3387?
DANIEL MOSLEY: YES.
MR. SCHENK: COULD WE NOW TURN TO EXHIBIT 4197? YOUR HONOR, 4197 HAS ALREADY BEEN ADMITTED. PERMISSION TO PUBLISH?
JUDGE DAVILA: YES.
MR. SCHENK: THANK YOU.
MR. SCHENK: MR. MOSLEY, WHAT ARE WE --
DANIEL MOSLEY: GIVE ME ONE SECOND IF YOU WOULD. OKAY.
MR. SCHENK: WHAT ARE WE LOOKING AT HERE?
DANIEL MOSLEY: IT'S A LETTER DATED SEPTEMBER THE 2ND, 2014, FROM ME TO DR. KISSINGER.
MR. SCHENK: AND IS THERE AN ATTACHMENT?
DANIEL MOSLEY: THERE IS.
MR. SCHENK: LET'S TURN TO PAGE 2. WHAT IS THE ATTACHMENT THAT BEGINS ON PAGE 2?
DANIEL MOSLEY: THIS IS THE MEMO THAT I REFERRED TO EARLIER HAVING WRITTEN FOR DR. KISSINGER WITH MY THOUGHTS AND ANALYSIS ABOUT THE -- REALLY THOUGHTS ABOUT THE COMPANY.
MR. SCHENK: ABOUT THERANOS?
DANIEL MOSLEY: ABOUT THERANOS.
MR. SCHENK: DESCRIBE FOR THE JURY THE SOURCES OF INFORMATION. YOU WROTE A MEMO THAT DESCRIBED YOUR THOUGHTS ON THERANOS. WHERE DID YOU GET THE INFORMATION THAT YOU USED TO WRITE THIS MEMO?
DANIEL MOSLEY: IT WAS A COMBINATION OF THE MATERIALS THAT YOU'VE ALREADY ASKED ME ABOUT, THE PACKAGE THAT CAME TO ME IN AUGUST, PROBABLY THE "FORTUNE" ARTICLE, AND THEN THE PFIZER REPORT AND THE JOHNS HOPKINS PIECE OF PAPER.
MR. SCHENK: HOW ABOUT CONVERSATIONS WITH MS. HOLMES? DO YOU KNOW IF THAT WAS A SOURCE OF INFORMATION FOR YOU WHEN YOU WROTE THIS MEMO?
DANIEL MOSLEY: IT LIKELY WAS. BUT I THINK IF YOU READ THIS, MOST OF THE INFORMATION IN HERE IS DIRECTLY TRACEABLE TO THE MATERIALS.
MR. SCHENK: OKAY. WHERE WERE YOU LIVING, IN WHAT CITY, WHEN YOU WROTE THIS MEMO?
DANIEL MOSLEY: WHEN I WROTE THE MEMO I WAS LIVING IN CONNECTICUT.
MR. SCHENK: DID YOU TRAVEL TO A WALGREENS IN ARIZONA AS PART OF YOUR ANALYSIS HERE?
DANIEL MOSLEY: I DID NOT.
MR. SCHENK: AND HOW ABOUT A WALGREENS IN PALO ALTO? DID YOU TRAVEL THERE BEFORE YOU WROTE THE MEMO?
DANIEL MOSLEY: I DID NOT.
MR. SCHENK: I'M GOING TO ASK YOU A COUPLE OF QUESTIONS ABOUT THE CONTENT OF THE MEMO. ON PAGE 2 THERE'S A SECTION BELOW WHAT IS ON THE SCREEN NOW. NUMBER 1 IS "QUALITY OF THE TECHNOLOGY." DO YOU SEE THAT?
DANIEL MOSLEY: I DO.
MR. SCHENK: YOU WRITE, "THERE IS SUBSTANTIAL DATA AND OTHER INFORMATION ATTESTING TO THE QUALITY, PERFORMANCE, AND RELIABILITY OF THE THERANOS TECHNOLOGY AND EQUIPMENT. THERE DOES NOT SEEM" -- I'M SORRY. "THERE DOES NOT APPEAR TO BE ANY SIGN OF ANY QUESTION ABOUT THE QUALITY, ACCURACY, OR RELIABILITY OF THERANOS'S BLOOD TESTING TECHNOLOGY. THE INFORMATION SUPPORTING THESE CONCLUSIONS IS SUBSTANTIAL." DID YOU FEEL THAT WAY IN SEPTEMBER OF 2014?
DANIEL MOSLEY: I DID.
MR. SCHENK: AND THEN THE BULLET POINTS THAT FOLLOW, THERE ARE ABOUT A HALF DOZEN OF THEM, ARE THEY EXAMPLES OF THE MATERIALS THAT SUPPORT THIS CONCLUSION THAT YOU REACHED?
DANIEL MOSLEY: THEY ARE.
MR. SCHENK: SO THE FIRST ONE IS THAT CLIA CERTIFICATION; IS THAT RIGHT?
DANIEL MOSLEY: THAT'S CORRECT.
MR. SCHENK: AND THE SECOND ONE IS INSPECTIONS BY REGULATORS, THE NEW YORK DEPARTMENT OF HEALTH?
DANIEL MOSLEY: THAT'S CORRECT.
MR. SCHENK: AND THE THIRD IS THIS STATEMENT ABOUT THERANOS HAVING WORKED WITH 10 OF THE 15 LARGEST PHARMACEUTICAL COMPANIES. DO YOU SEE THAT?
DANIEL MOSLEY: I DO.
MR. SCHENK: AND THEN THERE'S A REFERENCE THERE TO WORK WITH GLAXOSMITHKLINE?
DANIEL MOSLEY: YES.
MR. SCHENK: WORK WITH PFIZER?
DANIEL MOSLEY: YES.
MR. SCHENK: AND WORK WITH SCHERING-PLOUGH?
DANIEL MOSLEY: YES.
MR. SCHENK: WOULD YOU HAVE GOTTEN THAT FROM THE MATERIALS THAT YOU AND I JUST SPENT SOME TIME LOOKING AT?
DANIEL MOSLEY: I BELIEVE SO.
MR. SCHENK: THE NEXT BULLET IS ABOUT WORK WITH HOSPITAL GROUPS. DO YOU SEE THAT?
DANIEL MOSLEY: I DO.
MR. SCHENK: AND IT CONTINUES, THE DUE DILIGENCE, ON THE NEXT PAGE, THE TOP OF PAGE 3, THE DUE DILIGENCE AND TECHNOLOGY REVIEW PREPARED BY JOHNS HOPKINS, AND THEN YOU QUOTE IT. DO YOU SEE THAT?
DANIEL MOSLEY: I DO.
MR. SCHENK: THE NEXT BULLET IS ABOUT WALGREENS; AND THEN THE FINAL ONE IS "THE MOST EXTENSIVE EVIDENCE SUPPLIED REGARDING THE RELIABILITY OF THE THERANOS TECHNOLOGY AND ITS APPLICATION IS A STUDY REPORT PREPARED BY PFIZER BASED ON A CLINICAL CANCER TREATMENT TRIAL." DO YOU SEE THAT?
DANIEL MOSLEY: I DO.
MR. SCHENK: AND DID YOU THINK THAT AT THE TIME, THAT THE PFIZER REPORT, AMONG ALL OF THESE INSTANCES OF PROOF, WAS THE MOST EXTENSIVE EVIDENCE?
DANIEL MOSLEY: THAT WAS MY JUDGMENT AT THE TIME.
MR. SCHENK: WHY WAS THAT YOUR VIEW?
DANIEL MOSLEY: WELL, IT'S A LENGTHY REPORT, IT'S MORE THAN 20 PAGES LONG, AND IT GOES INTO A LOT OF DETAIL, AND IT OBVIOUSLY TO ME WAS A DEMONSTRATION THAT THE EQUIPMENT COULD WORK WELL IN THE FIELD WHEN BEING OPERATED BY UNSOPHISTICATED PARTIES, AND IT COULD PRODUCE GOOD QUALITY RESULTS AND COULD TRANSMIT THOSE RESULTS BACK TO THE THERANOS SERVERS, COMPUTER SERVERS.
MR. SCHENK: DID YOU REACH THOSE CONCLUSIONS BY READING THE PFIZER REPORT THAT YOU WERE PROVIDED?
DANIEL MOSLEY: I DID.
MR. SCHENK: THE NEXT SECTION, SECTION B, IS A SUMMARY OF THE PFIZER STUDY; IS THAT RIGHT?
DANIEL MOSLEY: THAT IS CORRECT.
MR. SCHENK: IN THE FIRST PARAGRAPH YOU DESCRIBE THAT THE PRIMARY TRIAL SITE WAS WITH SOMETHING CALLED TENNESSEE ONCOLOGY. DO YOU SEE THAT?
DANIEL MOSLEY: I DO.
MR. SCHENK: DID YOU, AS PART OF THIS DRAFTING OF THE MEMO, DID YOU CONTACT TENNESSEE ONCOLOGY?
DANIEL MOSLEY: I DID NOT.
MR. SCHENK: WHY?
DANIEL MOSLEY: I, YOU KNOW, ACCEPTED THAT -- YOU KNOW, I THOUGHT THE REPORT HAD BEEN WRITTEN BY PFIZER, AND TO ME THAT WAS SUFFICIENT VALIDATION OF THE CONTENTS TO THE PAPER.
MR. SCHENK: FORGIVE ME. TWO PARAGRAPHS DOWN IT BEGINS, "THE CONCLUSIONS IN THE PFIZER STUDY REPORT ARE EXTRAORDINARILY COMPLIMENTARY AND VALIDATE THE THERANOS TECHNOLOGY AND ITS APPLICATIONS. "SOME OF THE PRINCIPAL CONCLUSIONS FROM THE STUDY REPORT ARE AS FOLLOWS." AND THEN YOU SPEND ANOTHER ABOUT HALF DOZEN BULLETS QUOTING CONCLUSIONS. DID YOU THINK THAT THE CONCLUSIONS THAT YOU WERE QUOTING WERE PFIZER'S CONCLUSIONS?
DANIEL MOSLEY: I DID.
MR. SCHENK: IF YOU HAD KNOWN THAT THOSE WERE THERANOS'S CONCLUSIONS, WOULD THAT HAVE CHANGED YOUR OPINION?
DANIEL MOSLEY: IT WOULD.
MR. SCHENK: WHY?
DANIEL MOSLEY: WELL, BECAUSE, AS I SAID, PFIZER IS A VERY LARGE SOPHISTICATED PHARMACEUTICAL COMPANY WITH THE EXPERTISE TO RENDER AN IMPORTANT JUDGMENT ABOUT THIS TECHNOLOGY.
MR. SCHENK: IF YOU'LL TURN NOW TO PAGE 5 OF THIS DOCUMENT. THIS IS UNDER A SECTION THAT WAS ENTITLED "THE THERANOS BUSINESS APPROACH," AND I WANT TO ASK YOU QUESTIONS ABOUT THE SECOND AND THIRD BULLETS.
DANIEL MOSLEY: OKAY.
MR. SCHENK: THE SECOND BULLET READS, "THE WORK WITH PHARMA COMPANIES (WHICH WERE UNDOUBTEDLY REQUIRED TO SIGN CONFIDENTIALITY AGREEMENTS) PROVIDED VALIDATION OF THE TECHNOLOGY AND APPROACH." WHAT DID YOU MEAN BY THAT, AND IN PARTICULAR THE "UNDOUBTEDLY REQUIRED TO SIGN CONFIDENTIALITY AGREEMENTS"?
DANIEL MOSLEY: I DON'T -- AT THIS MOMENT, I CAN'T TELL YOU EXACTLY WHAT I MEANT BY THAT.
MR. SCHENK: YOU DON'T RECALL?
DANIEL MOSLEY: I DON'T RECALL.
MR. SCHENK: OKAY. THE NEXT BULLET, "A COMBINATION OF," AND THEN YOU HAVE FOUR SUBPARTS. "THE PRICING OF TESTS BY THERANOS, THE SPEED OF THE DELIVERY OF RESULTS, THE RELIABILITY OF THE TEST RESULTS, AND THE ABILITY TO PERFORM A VAST ARRAY OF TESTS." THERE'S ANOTHER 4. "THE ABILITY TO PERFORM A VAST NUMBER OF TESTS WITH ONLY A FEW DROPS OF BLOOD REQUIRING JUST A FINGER PRICK, WILL MAKE THERANOS'S APPROACH DISRUPTIVE AND EXTREMELY HARD TO COUNTER BY ITS COMPETITORS." DO YOU RECALL WHAT YOU MEANT BY THIS?
DANIEL MOSLEY: EXACTLY WHAT IT SAYS, THAT I THOUGHT IT WAS -- YOU KNOW, FOR ALL OF THE REASONS THAT ARE LISTED THERE, THAT IT WAS EXTREMELY DISRUPTIVE AND WOULD BE HARD TO REPLICATE BY ITS COMPETITORS.
MR. SCHENK: AND IF THE -- IF SOME OF THESE ASSUMPTIONS, YOU KNOW, YOUR ROMAN NUMERALS I THROUGH V, IF THEY WEREN'T TRUE, WOULD THAT MAKE THE TECHNOLOGY LESS DISRUPTIVE OR EASIER TO COUNTER?
DANIEL MOSLEY: YES.
MR. SCHENK: SO, FOR INSTANCE, IF THE TECHNOLOGY AND THE RESULTS WERE NOT RELIABLE, IT MIGHT BE LESS DISRUPTIVE?
DANIEL MOSLEY: YES.
MR. SCHENK: IF THE TECHNOLOGY DIDN'T HAVE THE ABILITY TO PERFORM A VAST ARRAY OF TESTS, IT MIGHT BE LESS DISRUPTIVE?
DANIEL MOSLEY: YES.
MR. SCHENK: IT MIGHT BE EASIER TO COUNTER BY ITS COMPETITORS?
DANIEL MOSLEY: YES.
MR. SCHENK: IF WE CAN NOW GO TO PAGE 7. ON PAGE 7, SECTION 4 IS "CURRENT AND PROJECTED FINANCIAL RESULTS." ARE YOU SUMMARIZING HERE SOME OF THE FINANCIAL INFORMATION THAT YOU AND I HAD A CONVERSATION ABOUT A FEW MINUTES AGO?
DANIEL MOSLEY: YES.
MR. SCHENK: IN A YOU WRITE, "FOR CALENDAR YEAR 2014, THERANOS IS PROJECTING $140 MILLION OF REVENUE WITH A NET LOSS OF 3 MILLION." AND THEN YOU BREAK OUT THE REVENUE. DID YOU GET THIS INFORMATION FROM THAT DOCUMENT THAT YOU AND I LOOKED AT EARLIER?
DANIEL MOSLEY: I DID.
MR. SCHENK: AND THEN YOU DO THE SAME FOR 2015, THE PROJECTED REVENUE AND THE BREAKOUT. SO DID YOU ALSO GET THIS INFORMATION FROM THAT DOCUMENT THAT YOU AND I LOOKED AT?
DANIEL MOSLEY: YES, I DID.
MR. SCHENK: FINALLY, IN V(B) TOWARDS THE BOTTOM OF THIS PAGE, YOU WRITE, "ELIZABETH HOLMES OWNS ALL OF THE CLASS B COMMON SHARES, WHICH REPRESENT ALMOST 50 PERCENT OF THE VALUE OF THE COMPANY. THE CLASS B SHARES HAVE 100 VOTES PER SHARE, AS COMPARED TO THE CLASS A SHARES THAT HAVE ONE VOTE PER SHARE." WHAT DOES THAT MEAN?
DANIEL MOSLEY: WELL, IT MEANS THAT THE CLASS B COMMON SHARES HAVE 100 TIMES THE VOTE OF THE CLASS A COMMON SHARE.
MR. SCHENK: WAS THAT IMPORTANT TO YOU OR SOMETHING THAT YOU NOTICED?
DANIEL MOSLEY: IT WAS.
MR. SCHENK: WHY?
DANIEL MOSLEY: IT MEANT THAT ELIZABETH WOULD BE ABSOLUTELY IN CONTROL OF THE COMPANY EVEN AFTER ALL OF THE PREFERRED SHARES THAT HAD BEEN SOLD AND THAT WERE CONVERTIBLE INTO COMMON STOCK, THEY WERE CONVERTIBLE INTO CLASS B SHARES -- OR CONVERTIBLE INTO CLASS A SHARES RATHER, BUT SHE WOULD STILL HAVE ABSOLUTE CONTROL OF THE COMPANY.
MR. SCHENK: AND IN YOUR MIND, WAS MS. HOLMES MAINTAINING CONTROL OF THE COMPANY A GOOD THING?
DANIEL MOSLEY: IT WAS.
MR. SCHENK: WHY?
DANIEL MOSLEY: WELL, SHE WAS OBVIOUSLY THE VISIONARY THAT HAD CREATED THIS COMPANY AND DEVELOPED THE TECHNOLOGY, AND HAVING HER IN CONTROL OF THE COMPANY WAS A GOOD THING.
MR. SCHENK: AND WHEN YOU REACHED THAT OPINION OR THAT CONCLUSION, WERE YOU RELYING ON THE ACCURACY OF THE MATERIALS THAT WERE PROVIDED TO YOU TO REACH THAT CONCLUSION?
DANIEL MOSLEY: YES.
MR. SCHENK: EARLIER WE LOOKED AT SOME OF THE DOCUMENTS THAT TALKED ABOUT THE PRIORITY THAT INDIVIDUALS, INDIVIDUAL SHAREHOLDERS WOULD GET PAID BACK AND YOU DESCRIBED THAT TO ME. DO YOU REMEMBER?
DANIEL MOSLEY: I DO.
MR. SCHENK: AND WAS CLASS B A LOWER PRIORITY? WOULD THE C-1 AND C-2 GET PAID BEFORE B?
DANIEL MOSLEY: YES, BECAUSE THE CLASS B SHARES ARE COMMON SHARES, AND COMMON SHARES RECEIVE ASSETS AND LIQUIDATION ONLY AFTER ALL OF THE PREFERRED SHARES RECEIVE THEIR STATED VALUE.
MR. SCHENK: I SEE. SO THE SHARES THAT YOU'RE REFERRING TO HERE THAT MS. HOLMES HELD HAD A LOWER PRIORITY AT LIQUIDATION, BUT HAD MORE VOTING POWER?
DANIEL MOSLEY: THAT IS CORRECT.
MR. SCHENK: GOT IT. IF YOU'LL NOW TURN TO PAGE 9. IN THIS SECTION YOU TALK ABOUT, "QUESTIONS, CONCERNS AND RISKS." THERE ARE FIVE OF THEM; IS THAT RIGHT?
DANIEL MOSLEY: THAT IS CORRECT.
MR. SCHENK: WAS ONE OF THE RISKS IDENTIFIED THAT THE FOUNDER WOULD NOT BE ACCURATE IN HER DESCRIPTIONS OF THE COMPANY TO YOU?
DANIEL MOSLEY: IT'S NOT ONE OF THE RISKS LISTED HERE.
MR. SCHENK: WHY DIDN'T YOU WRITE THAT AS ONE OF THE RISKS?
DANIEL MOSLEY: I DIDN'T -- I REALLY DIDN'T AT THE TIME BELIEVE THAT IT WAS A RISK.
MR. SCHENK: THE, THE SECOND RISK, YOU WRITE IN THAT SECOND SENTENCE, "IN PARTICULAR, GIVEN THAT THERANOS IS CURRENTLY IN ROUGHLY 30 WALGREENS PHARMACIES, IT WOULD BE HELPFUL TO KNOW HOW MANY PHARMACY LOCATIONS ARE ASSUMED IN THE 2015 PROJECTIONS." HELP ME UNDERSTAND THE QUESTION OR THE RISK THAT YOU WERE IDENTIFYING THERE.
DANIEL MOSLEY: WELL, IT WAS -- YOU KNOW, OBVIOUSLY 140 TO 990 MILLION WAS A VERY SUBSTANTIAL, AS I SAY. AND IN MAKING A JUDGMENT ABOUT HOW LARGE THE OPPORTUNITY IS, IT WOULD BE HELPFUL TO KNOW HOW MANY OF THE WALGREENS WERE EXPECTED TO HAVE THERANOS FACILITIES IN 2015 THAT WOULD GET YOU TO THAT KIND OF REVENUE NUMBER, WHICH WOULD THEN TELL YOU PERHAPS HOW YOU COULD EXTRAPOLATE TO WHAT THE REVENUE MIGHT BE WHEN IT WAS FULLY ROLLED OUT IF IT WERE IN ALL OF THE WALGREENS.
MR. SCHENK: DID YOU THINK THAT ONE OF THE RISKS RELATIVE TO WALGREENS PENETRATION WAS THAT WALGREENS MISUNDERSTOOD OR DID NOT APPRECIATE THE THERANOS TECHNOLOGY? DID YOU THINK THAT THAT WAS ONE OF THE RISKS?
DANIEL MOSLEY: WELL, YOU KNOW, I REALIZED THAT WALGREENS WAS TESTING IT IN 30 PHARMACIES, AND THERE, YOU KNOW, WOULD ALWAYS BE A RISK THAT THEY WOULD NOT ROLL IT OUT TO ALL OF THE PHARMACIES. I DID REALIZE THAT THAT WAS A RISK.
MR. SCHENK: AND DID YOU HAVE FURTHER THOUGHTS ON THE REASONS WHY WALGREENS MIGHT NOT ROLL IT OUT? IF THEY WERE IN 30, YOU UNDERSTOOD IT WASN'T GUARANTEED. DID YOU HAVE A THOUGHT ON THE KINDS OF THINGS THAT MIGHT AFFECT A ROLLOUT?
DANIEL MOSLEY: AT THE TIME I HAD NO REASON TO THINK THAT WALGREENS WOULD NOT CONTINUE WITH THE ROLLOUT.
MR. SCHENK: WHY DO YOU SAY THAT?
DANIEL MOSLEY: ALL OF THE INFORMATION ABOUT THE ACCURACY OF THE TEST, THE VAST ARRAY OF THE TEST, THE PRICING OF THE TEST, THE SPEED AT WHICH THE TEST RESULTS COULD BE DELIVERED, ALL OF THOSE MADE ME EXPECT OR COME TO THE CONCLUSION THAT IT WAS LIKELY AT THAT TIME THAT THEY WOULD CONTINUE TO ROLL OUT.
MR. SCHENK: I SEE. THE THINGS THAT YOU FOUND ATTRACTIVE ABOUT THERANOS, YOU THOUGHT WALGREENS WOULD AS WELL?
DANIEL MOSLEY: THAT'S CORRECT.
MR. SCHENK: THE NEXT C, THE CONCERN OR QUESTION YOU RAISE IS WHY THERANOS IS NOW WILLING TO SELL ADDITIONAL SHARES AND WISHES TO RAISE ADDITIONAL CASH THEY COULD LIKELY BORROW. SO YOU'RE WONDERING ABOUT THE EQUITY RAISED. WHAT WERE YOU GETTING AT HERE?
DANIEL MOSLEY: WELL, WHEN YOU, WHEN YOU RAISE ADDITIONAL EQUITY, YOU DILUTE THE OWNERSHIP OF ALL OF THE PEOPLE WHO INVESTED IN THE COMPANY BEFORE THAT. SO TYPICALLY COMPANIES ARE RELUCTANT TO RAISE MORE EQUITY THAN THEY NEED CASH FLOW BECAUSE OF THAT POTENTIAL FOR DILUTION.
MR. SCHENK: AND WHY WAS THIS LISTED AS A QUESTION OR A CONCERN OR A RISK?
DANIEL MOSLEY: IT WAS LISTED AS A QUESTION BECAUSE THE 2015 PROJECTION NUMBER SHOWED IT MAKING A PROFIT, WHICH WOULD HAVE BEEN AN INDICATION TO ME THAT PERHAPS IT DIDN'T NEED ADDITIONAL CAPITAL GOING FORWARD.
MR. SCHENK: I SEE. D YOU WRITE ABOUT A FAIRLY UNUSUAL PROVISION. IS -- WHAT IS THIS UNUSUAL PROVISION THAT YOU'RE WRITING ABOUT?
DANIEL MOSLEY: IT'S THE PROVISION YOU ASKED ME ABOUT EARLIER.
MR. SCHENK: THE MANDATORY REDEMPTION?
DANIEL MOSLEY: WELL, THAT ALLOWED THE COMPANY TO MAKE A DECISION AND HAVE -- ALLOWED THE BOARD TO HAVE THE FAIR MARKET VALUE OF THE SHARES DETERMINED, AND THEN THE COMPANY COULD CHOOSE TO REDEEM SHARES FROM ONE OR MORE SHAREHOLDERS AT THAT PRICE.
MR. SCHENK: YOU LIST HERE SOME QUESTIONS. DO YOU REMEMBER GETTING ANSWERS TO THESE QUESTIONS BEFORE YOU DECIDED TO INVEST?
DANIEL MOSLEY: I GOT ASSURANCE BEFORE I INVESTED FROM ELIZABETH THAT THIS WOULD NOT BE EXERCISED IN MY CASE, OR IN THE CASE OF ANY OF MY CLIENTS THAT ULTIMATELY, YOU KNOW, THROUGH THEIR OWN PROCESS DECIDED TO INVEST.
MR. SCHENK: AND BY THAT YOU'RE REFERRING TO D, THE MANDATORY REDEMPTION?
DANIEL MOSLEY: THAT IS CORRECT.
MR. SCHENK: AND HOW ABOUT THE OTHER FOUR THAT YOU LIST HERE? DO YOU REMEMBER HAVING FOLLOW-UP CONVERSATIONS OR ADDITIONAL OPPORTUNITIES TO GET SOME CLARIFICATION ON THESE ISSUES BEFORE YOU INVESTED, OR DO THESE REMAIN OUTSTANDING QUESTIONS?
DANIEL MOSLEY: BY THE OTHER FOUR, YOU MEAN A, B, C AND E?
MR. SCHENK: YES, SIR.
DANIEL MOSLEY: I DON'T REMEMBER GETTING -- YOU KNOW, I GOT ADDITIONAL MATERIALS, BUT I DON'T REMEMBER SPECIFICALLY ON EACH ONE OF THESE POINTS GETTING ADDITIONAL INFORMATION, I DON'T.
MR. SCHENK: SO NOTWITHSTANDING THESE OUTSTANDING QUESTIONS, YOU STILL INVESTED?
DANIEL MOSLEY: I DID.
MR. SCHENK: WHY?
DANIEL MOSLEY: BECAUSE I THOUGHT IT WAS A VERY, VERY ATTRACTIVE OPPORTUNITY TO SUPPORT SOMETHING THAT WAS GOING TO ACHIEVE A VERY, VERY GOOD RESULT FOR PEOPLE.
MR. SCHENK: SO YOU IDENTIFIED SOME QUESTIONS, BUT THEY WERE NOT OBSTACLES TO ULTIMATELY INVESTING?
DANIEL MOSLEY: THEY WERE NOT.
MR. SCHENK: OKAY. IF YOU WOULD NOW TURN TO EXHIBIT 5387D IN YOUR BINDER. YOUR HONOR, 5387D IS TEXT MESSAGES THAT WERE PREVIOUSLY ADMITTED. I WOULD NOW SEEK PERMISSION TO PUBLISH TWO MESSAGES ON PAGE 16 OF THIS EXHIBIT 5387D. THERE ARE TWO MESSAGES ON THE BOTTOM OF PAGE 16, IF THE COURT SEES 11/20/13 AT 3:38, AND THE ONE JUST AFTER THAT.
JUDGE DAVILA: THANK YOU. THESE HAVE BEEN ADMITTED, AND THEY MAY BE PUBLISHED AGAIN.
MR. SCHENK: THANK YOU, YOUR HONOR. MS. HOLLIMAN, IF WE CAN BRING UP PAGE 16 OF EXHIBIT 5387D. AND THE TWO MESSAGES ON THE BOTTOM OF THAT PAGE, IF WE CAN EXPAND THEM. THANK YOU.
MR. SCHENK: THE FIRST ONE MS. HOLMES WRITES ON NOVEMBER 20TH, 2013 TO MR. BALWANI, "AM PLANNING ON INCLUDING ALL WE SENT DST, INCLUDING THE PFIZER REPORT. LET ME KNOW IF U DISAGREE." SHE CONTINUES, "ALSO THE HOSPITAL LIST." MR. MOSLEY, YOU'VE TALKED A LITTLE BIT ABOUT THE IMPORTANCE OF THE PFIZER REPORT TO YOUR DUE DILIGENCE, OR YOUR EXAMINATION OF THE INVESTMENT. WHEN YOU WERE READING THE PFIZER REPORT, CAN YOU REMIND THE JURY WHO YOU THOUGHT AUTHORED THE PFIZER REPORT?
DANIEL MOSLEY: PFIZER.
MR. SCHENK: WOULD YOU NOW TURN IN YOUR BINDER TO 4221, EXHIBIT 4221.
DANIEL MOSLEY: OKAY.
MR. SCHENK: MR. MOSLEY, IS THIS AN EMAIL EXCHANGE BETWEEN YOU AND MS. HOLMES ABOUT A TRIP TO CALIFORNIA AND ABOUT YOUR MEMO?
DANIEL MOSLEY: ARE YOU REFERRING TO THE TOP EMAIL?
MR. SCHENK: THE TRIP TO CALIFORNIA APPEARS IN THE MIDDLE EMAIL ON THE FIRST PAGE, AND THERE'S A REFERENCE TO YOUR MEMO IN THAT EMAIL AS WELL.
DANIEL MOSLEY: YES, I SEE THE EMAIL.
MR. SCHENK: YOUR HONOR, THE GOVERNMENT OFFERS 4221.
JUDGE DAVILA: IT'S ADMITTED. IT MAY BE PUBLISHED.
(GOVERNMENT'S EXHIBIT 4221 WAS RECEIVED IN EVIDENCE.)
BY MR. SCHENK:
MR. SCHENK: MR. MOSLEY, IF WE START ON PAGE 2, YOU WRITE TO MS. HOLMES ON SEPTEMBER 18TH OF 2014 THAT YOU SENT THE BLANK CONFIDENTIAL DISCLOSURE AGREEMENT TO BOTH THE COX FAMILY AND JERRY TUBERGEN FROM THE DEVOS FAMILY. DO YOU SEE THAT?
DANIEL MOSLEY: I DO.
MR. SCHENK: AND DO YOU REMEMBER WHY YOU DID THAT?
DANIEL MOSLEY: BECAUSE THE -- YOU KNOW, I UNDERSTOOD THAT OBVIOUSLY ALL OF THE -- I HAD DISCUSSED -- I HAD EXECUTED A NONDISCLOSURE AGREEMENT, OR A CONFIDENTIAL DISCLOSURE AGREEMENT, WHICH MEANT THAT I WAS NOT ALLOWED TO GIVE ANY OF THE INFORMATION THAT I HAD RECEIVED TO ANYBODY ELSE WITHOUT THE CONSENT OF THE COMPANY. AND WHAT I WAS SAYING HERE WAS THAT BEFORE I WOULD PASS ALONG ANY INFORMATION THAT I HAD LEARNED TO THESE INDIVIDUALS, I WOULD FIRST GET THEM TO SIGN A CONFIDENTIAL DISCLOSURE AGREEMENT.
MR. SCHENK: I SEE.
DANIEL MOSLEY: JUST CARRYING OUT MY OBLIGATIONS.
MR. SCHENK: I SEE. IF WE TURN TO PAGE 1, IN THE MIDDLE OF THE PAGE YOU WRITE AN EMAIL TO MS. HOLMES ON SEPTEMBER 25TH. YOU'RE LOOKING FORWARD TO GETTING OUT TO CALIFORNIA TO SEE HER AND MEET HER TEAM. DID THAT EVENTUALLY HAPPEN?
DANIEL MOSLEY: IT DID.
MR. SCHENK: YOU TALK ABOUT AN INDIVIDUAL NAMED ANDREAS. DO YOU SEE THAT?
DANIEL MOSLEY: YES, I DO.
MR. SCHENK: FROM THE STAVROS FOUNDATION?
DANIEL MOSLEY: YES.
MR. SCHENK: AND THEN THERE'S A REFERENCE IN THE NEXT PARAGRAPH TO GREG PENNER. WE SAW THAT NAME EARLIER; IS THAT RIGHT?
DANIEL MOSLEY: THAT'S CORRECT.
MR. SCHENK: AND THEN MR. TUBERGEN FROM THE DEVOS FAMILY, OR FROM RDV; IS THAT RIGHT?
DANIEL MOSLEY: YES.
MR. SCHENK: AND THEN FINALLY, YOU SAY THAT DR. KISSINGER HAS MENTIONED OTHER FAMILIES THAT DR. KISSINGER KNOWS AS POSSIBLE INVESTOR CANDIDATES. YOU REFERENCE A MEMO THAT YOU PREPARED, OR A SUMMARY, AND DISCUSS SHARING IT. WHAT MEMO IS THAT THAT YOU'RE REFERRING TO?
DANIEL MOSLEY: I BELIEVE IT WAS THE MEMO THAT I PREPARED FOR DR. KISSINGER.
MR. SCHENK: THE ONE THAT YOU AND I JUST REVIEWED?
DANIEL MOSLEY: YES, YES.
MR. SCHENK: OKAY. AND WHAT WAS YOUR QUESTION HERE? WHAT WERE YOU WONDERING?
DANIEL MOSLEY: I'M NOT SURE. WHAT LANGUAGE ARE YOU REFERRING TO?
MR. SCHENK: I'LL BE MORE SPECIFIC. YOU WRITE THAT YOU TOLD DR. KISSINGER THAT YOU WERE COMFORTABLE SHARING THE MEMO WITH THESE OTHER FAMILIES THAT DR. KISSINGER KNEW, BUT ONLY IF SOMETHING HAPPENED FIRST; IS THAT RIGHT?
DANIEL MOSLEY: YES.
MR. SCHENK: WHY WAS --
DANIEL MOSLEY: I HAD WRITTEN THE MEMO TO DR. KISSINGER FOR DR. KISSINGER, AND I SAID I WAS OKAY IF HE WANTED TO SHOW IT WITH SOMEBODY, BUT ONLY IF IT HAD BEEN CLEARED WITH ELIZABETH THAT THAT WAS OKAY.
MR. SCHENK: DO YOU -- FORGIVE ME. DO YOU KNOW WHETHER THAT HAPPENED? DO YOU REMEMBER RECEIVING NOTICE FROM MS. HOLMES THAT YOU COULD SHARE THE MEMO?
DANIEL MOSLEY: I BELIEVE I DID GET -- I WOULD NOT HAVE ULTIMATELY SAID TO DR. KISSINGER, YOU CAN SEND IT TO SOMEBODY ELSE, WITHOUT GETTING HER CONSENT.
MR. SCHENK: OKAY. THANK YOU. IF YOU'LL NOW TURN TO 4284. MR. MOSLEY, IS THIS A COUPLE OF EMAILS BETWEEN YOU AND MS. HOLMES WHERE YOU TELL HER THAT YOU WILL INVEST AND THE AMOUNT?
DANIEL MOSLEY: YES.
MR. SCHENK: YOUR HONOR, THE GOVERNMENT OFFERS 4284.
JUDGE DAVILA: IT'S ADMITTED. IT MAY BE PUBLISHED.
(GOVERNMENT'S EXHIBIT 4284 WAS RECEIVED IN EVIDENCE.)
BY MR. SCHENK:
MR. SCHENK: MR. MOSLEY, AT THE BOTTOM OF THIS EMAIL YOU -- THE BOTTOM EMAIL, FORGIVE ME. YOU WRITE, "ELIZABETH. "IT WAS GOOD TO SEE YOU ON FRIDAY." WHAT WAS THAT A REFERENCE TO?
DANIEL MOSLEY: I THINK IT WAS A REFERENCE TO MY HAVING BEEN OUT AT THERANOS IN CALIFORNIA ON FRIDAY, THE PREVIOUS FRIDAY.
MR. SCHENK: SO IN OCTOBER OF 2014, DID YOU TRAVEL TO CALIFORNIA TO MEET WITH MS. HOLMES?
DANIEL MOSLEY: YES, I DID.
MR. SCHENK: AND WHAT WAS THE PURPOSE OF THAT TRIP?
DANIEL MOSLEY: I THINK THE PURPOSE OF THE TRIP WAS TO INTRODUCE INDIVIDUALS AT THE STAVROS NIARCHOS FOUNDATION THAT WANTED TO MEET WITH ELIZABETH SO THAT THEY COULD DO THEIR OWN ANALYSIS AS TO WHETHER IT WAS SOMETHING OF INTEREST TO THEM.
MR. SCHENK: AND THEN WHY DID YOU GO? IF THE PURPOSE WAS FOR MS. HOLMES TO MEET OTHER INDIVIDUALS, WHAT BROUGHT YOU TO CALIFORNIA?
DANIEL MOSLEY: THE FACT THAT, YOU KNOW, THEY HAD NEVER MET HER, AND REALLY PRIMARILY TO DO THE INTRODUCTION.
MR. SCHENK: OKAY. DO YOU REMEMBER MS. HOLMES TALKING DURING THIS MEETING?
DANIEL MOSLEY: I DO.
MR. SCHENK: AND DO YOU REMEMBER HER TALKING ABOUT THE TECHNOLOGY OR ABOUT THERANOS?
DANIEL MOSLEY: AS I REMEMBER, WE HAD A LONG CONVERSATION ABOUT THERANOS AND THE TECHNOLOGY.
MR. SCHENK: AND DURING THAT MEETING, DO YOU REMEMBER LEARNING ANYTHING THAT WAS DIFFERENT, THAT WAS SIGNIFICANTLY DIFFERENT THAN ALL OF THE MATERIALS YOU AND I HAVE SPENT THIS AFTERNOON REVIEWING? DID YOU LEARN THAT THE TECHNOLOGY WAS ACTUALLY SOMETHING DIFFERENT, OR DID SOMETHING DIFFERENT?
DANIEL MOSLEY: I DID NOT.
MR. SCHENK: WAS THERE -- WERE THE REPRESENTATIONS THAT YOU HEARD IN THIS MEETING LARGELY CONSISTENT WITH YOUR UNDERSTANDING OF THE TECHNOLOGY WHEN YOU LEFT CONNECTICUT TO GO TO THIS MEETING?
DANIEL MOSLEY: IT WAS.
MR. SCHENK: AT THE BOTTOM -- I'M SORRY. CLOSE TO THE BOTTOM OF THE EMAIL, THERE'S A PARAGRAPH THAT BEGINS, "AS WE DISCUSSED." DO YOU SEE THAT?
DANIEL MOSLEY: YES.
MR. SCHENK: "AS WE DISCUSSED, I WILL SPEAK WITH DAVID ABOUT THE CONCERN WITH THE MANDATORY REDEMPTION CLAUSE IN THE CERTIFICATE OF INCORPORATION." WHO IS DAVID?
DANIEL MOSLEY: THAT WAS A REFERENCE TO DAVID BOIES.
MR. SCHENK: AND DID YOU SPEAK WITH MR. BOIES?
DANIEL MOSLEY: I DID.
MR. SCHENK: IS THIS A REFERENCE TO THE MANDATORY REDEMPTION THAT YOU AND I TALKED ABOUT? YOU PUT IT AS ONE OF YOUR QUESTIONS OR CONCERNS?
DANIEL MOSLEY: IT IS.
MR. SCHENK: OKAY. AND THEN THE LAST PARAGRAPH, "PERSONALLY, I WOULD BE DELIGHTED AND HONORED TO BE PART OF YOUR FIRST CLOSING. MY HOPE WOULD BE TO INVEST $6 MILLION, WHICH I WOULD PROPOSE TO INVEST THROUGH AN LLC WHOLLY OWNED BY ME AND TRUSTS FOR MY THREE DAUGHTERS, SO THAT IT WILL LIMIT THE NUMBER OF YOUR SEPARATE SHAREHOLDERS RESULTING FROM MY INVESTMENT TO ONE." YOU DECIDED ON AN INVESTMENT AMOUNT OF $6 MILLION; IS THAT RIGHT?
DANIEL MOSLEY: I DID.
MR. SCHENK: HOW DID YOU PICK THAT NUMBER? WHERE DID THAT COME FROM? DO YOU KNOW?
DANIEL MOSLEY: I DON'T REALLY REMEMBER. YOU KNOW, JUST HAVING THOUGHT ABOUT IT AND THOUGHT ABOUT MY PERSONAL FINANCIAL SITUATION, I THOUGHT IT WAS SOMETHING THAT I COULD AFFORD TO INVEST.
MR. SCHENK: OKAY. ABOVE THIS EMAIL, MS. HOLMES RESPONDS TO YOU THANKING YOU FOR THE EMAIL, AND SHE WRITES, "WE HAVE SPENT A LOT OF TIME ON HOW WE'RE SIZING THIS TRANSACTION AND WHO WE'RE BRINGING IN, AND I CAN HEREIN CONFIRM THE ALLOCATIONS FOR YOU, ANDREAS, AND THE COX'S IN ADDITION TO THE DEVOS COMMITMENT AT THE NUMBERS BELOW. WE WILL FOLLOW UP TOMORROW ON PAPERWORK THERE." YOU WROTE THAT YOU'RE DELIGHTED AND HONORED, AND MS. HOLMES RESPONDS THAT THEY HAVE SPENT A LOT OF TIME DETERMINING THE ALLOCATIONS. DID YOU FEEL GRATEFUL THAT THE $6 MILLION THAT YOU WANTED TO INVEST WAS ACCEPTED?
DANIEL MOSLEY: I DID.
MR. SCHENK: WHY?
DANIEL MOSLEY: WELL, AS I SAY, YOU KNOW, I THOUGHT IT WAS, YOU KNOW, VERY EXCITING TECHNOLOGY, AND I THOUGHT IT WAS A VERY INTERESTING COMPANY, AND I THOUGHT THAT IT WOULD BOTH BE A GOOD INVESTMENT AND ALSO SOMETHING THAT WAS SORT OF -- NOT SORT OF -- IT WAS SOMETHING THAT WAS GOOD FOR EVERYBODY.
MR. SCHENK: WHY DO YOU SAY THAT, "GOOD FOR EVERYBODY"?
DANIEL MOSLEY: WELL, IT'S GOOD FOR PEOPLE BECAUSE THEY WOULD BE ABLE TO GET BETTER BLOOD TESTING, GET THE RESULTS QUICKER, PAY LESS FOR THE TESTING, AND I THOUGHT IT WOULD IMPROVE MEDICAL TREATMENT.
MR. SCHENK: ALL OF THESE ADVANTAGES, THAT THE RESULTS WERE QUICKER, THE PRICE, WAS THAT BASED ON A BELIEF THAT THE INFORMATION THAT YOU HAD BEEN PROVIDING ABOUT THERANOS WAS ACCURATE?
DANIEL MOSLEY: IT WAS.
MR. SCHENK: WOULD YOU TURN NOW TO 4286. IS THIS AN EMAIL FROM MR. BALWANI TO YOU, CC'ING MS. HOLMES, INCLUDING SOME INVESTMENT DOCUMENTS?
DANIEL MOSLEY: YES.
MR. SCHENK: YOUR HONOR, THE GOVERNMENT OFFERS 4286.
(PAUSE IN PROCEEDINGS.)
JUDGE DAVILA: IT'S ADMITTED AND IT MAY BE PUBLISHED.
(GOVERNMENT'S EXHIBIT 4286 WAS RECEIVED IN EVIDENCE.)
BY MR. SCHENK:
MR. SCHENK: MR. MOSLEY, MR. BALWANI SENDS YOU INVESTMENT DOCUMENTS HERE, AND IT'S OCTOBER 24TH, 2014. DO YOU SEE THAT?
DANIEL MOSLEY: I DO.
MR. SCHENK: AND IF I COULD NOW DRAW YOUR ATTENTION TO PAGE 60 OF THIS DOCUMENT. THERE'S SOME SECTIONS IN IT THAT I WOULD LIKE TO ASK YOU ABOUT. FIRST, ARE YOU FAMILIAR WITH THIS DOCUMENT AS A WHOLE, THE DOCUMENT THAT WE'RE LOOKING AT?
DANIEL MOSLEY: YES, I AM.
MR. SCHENK: AND WHAT IS IT GENERALLY?
DANIEL MOSLEY: IT'S A STOCK PURCHASE AGREEMENT FOR C-2 SHARES.
MR. SCHENK: C-2 SHARES IN THERANOS?
DANIEL MOSLEY: THAT'S CORRECT.
MR. SCHENK: NOW, IF ON PAGE 60 YOU'LL LOOK AT, THERE'S A SECTION THAT I'D LIKE TO ASK YOU ABOUT, 4.3, INVESTMENT EXPERIENCE. DO YOU SEE THAT?
DANIEL MOSLEY: YES.
MR. SCHENK: AND IT TALKS ABOUT THE EXPERIENCE OF THE PURCHASER. IS THAT YOU?
DANIEL MOSLEY: IT IS.
MR. SCHENK: AND WAS THIS ACCURATE WHEN YOU SIGNED IT? IN OTHER WORDS, DID YOU HAVE THIS RELEVANT INVESTMENT EXPERIENCE?
DANIEL MOSLEY: I DID.
MR. SCHENK: AND 4.4 REFERENCES THE SPECULATIVE NATURE OF THE INVESTMENT. IT SAYS THAT THE INVESTOR, THAT'S YOU, UNDERSTANDS AND ACKNOWLEDGES THAT THE COMPANY HAS A LIMITED FINANCIAL AND OPERATING HISTORY AND THAT AN INVESTMENT IN THE COMPANY IS HIGHLY SPECULATIVE AND INVOLVES SUBSTANTIAL RISKS. DID YOU UNDERSTAND THAT WHEN YOU INVESTED?
DANIEL MOSLEY: YES, I DID.
MR. SCHENK: DID YOU BELIEVE THAT ONE OF THE RISKS WAS THE INFORMATION PROVIDED TO YOU WOULD NOT BE ACCURATE?
DANIEL MOSLEY: I WAS NOT THINKING ABOUT THAT IN REFERENCE TO THIS REFERENCE, TO THIS STATEMENT.
MR. SCHENK: WHY NOT? WHAT WERE YOU THINKING ABOUT WHEN YOU SAW THAT THE INVESTMENT WAS SPECULATIVE?
DANIEL MOSLEY: WELL, JUST RECOGNIZING THAT, YOU KNOW, IT WAS NEW TECHNOLOGY AND SOMETHING COULD HAPPEN THAT WOULD NOT MAKE IT AS DISRUPTIVE OR AS EFFECTIVE AS I THOUGHT IT WOULD BE.
MR. SCHENK: DID YOU UNDERSTAND THAT THOSE WERE SOME OF THE RISKS THAT YOU WERE FACING, BUT ACCURACY MIGHT NOT BE ONE OF THE RISKS?
DANIEL MOSLEY: I THOUGHT I WAS FACING THOSE RISKS. BUT I THINK YOU'RE ASKING ME, DID I THINK RISK WAS THAT I HAD INACCURATE INFORMATION? NO.
MR. SCHENK: YES, SIR.
DANIEL MOSLEY: I DID NOT THINK THAT I HAD INACCURATE INFORMATION.
MR. SCHENK: OKAY. THAT SAME PARAGRAPH CONTINUES THAT YOU UNDERSTOOD THAT THERE WAS THE POSSIBILITY THAT YOU WOULD SUFFER A COMPLETE LOSS OF YOUR INVESTMENT. DID YOU UNDERSTAND THAT WHEN YOU --
DANIEL MOSLEY: I DID.
MR. SCHENK: -- INVESTED?
DANIEL MOSLEY: I DID.
MR. SCHENK: AND THAT DIDN'T STOP YOU FROM INVESTING?
DANIEL MOSLEY: IT DID NOT.
MR. SCHENK: WHY DIDN'T IT?
DANIEL MOSLEY: IT WAS A RISK I WAS WILLING TO TAKE BASED ON WHAT I KNEW.
MR. SCHENK: WHAT DO YOU MEAN, "BASED ON WHAT YOU KNEW"?
DANIEL MOSLEY: BASED ON ALL OF THE INFORMATION THAT WE HAVE GONE THROUGH IN MY MEMORANDUM TO DR. KISSINGER WHICH SORT OF EXPLAINED MY VIEWS OF THE COMPANY.
MR. SCHENK: THE NEXT SECTION, 4.5, IS CALLED ACCESS TO DATA, AND IT READS "THAT THE INVESTOR HAS HAD AN OPPORTUNITY TO ASK QUESTIONS OF, AND RECEIVE ANSWERS FROM, THE OFFICERS OF THE COMPANY." WAS THAT TRUE? DID YOU HAVE AN OPPORTUNITY TO ASK QUESTIONS?
DANIEL MOSLEY: I DID.
MR. SCHENK: THE QUESTIONS THAT YOU ASKED AND THE ANSWERS THAT YOU RECEIVED, THEY DIDN'T MAKE THEIR WAY INTO THIS AGREEMENT; IS THAT RIGHT?
DANIEL MOSLEY: I'M NOT SURE WHAT YOU MEAN.
MR. SCHENK: SO YOU SAID THAT YOU HAD THE OPPORTUNITY TO ASK QUESTIONS?
DANIEL MOSLEY: I DID.
MR. SCHENK: AND DID YOU MEMORIALIZE THE QUESTIONS AND THEN MAKE THEM SECTIONS IN THIS AGREEMENT?
DANIEL MOSLEY: I DID NOT.
MR. SCHENK: SO DID YOU UNDERSTAND THAT WHILE YOU WERE SIGNING THIS AGREEMENT, THINGS THAT LED YOU TO INVEST EXISTED OUTSIDE OF THE AGREEMENT?
DANIEL MOSLEY: I DID.
MR. SCHENK: 4.6 IS AN ACCREDITED INVESTOR. WAS THAT TRUE WHEN YOU SIGNED IT? YOU WERE AN ACCREDITED INVESTOR?
DANIEL MOSLEY: IT WAS TRUE.
MR. SCHENK: AND THAT'S A TERM THAT YOU'RE FAMILIAR WITH?
DANIEL MOSLEY: YES, I AM.
MR. SCHENK: WOULD YOU TURN NOW TO 4303. MR. MOSLEY, IS THIS AN EMAIL FROM YOU TO MS. HOLMES ATTACHING SOME SIGNATURE PAGES?
DANIEL MOSLEY: IT WAS.
MR. SCHENK: YOUR HONOR, THE GOVERNMENT OFFERS 4303.
JUDGE DAVILA: IT'S ADMITTED. IT MAY BE PUBLISHED.
(GOVERNMENT'S EXHIBIT 4303 WAS RECEIVED IN EVIDENCE.)
BY MR. SCHENK:
MR. SCHENK: MR. MOSLEY, IT LOOKS LIKE YOU SENT ON YOUR WHAT IS CALLED A MASTER SIGNATURE PAGE, AS WELL AS THAT OF SOMEONE NAMED ANDREAS; IS THAT RIGHT?
DANIEL MOSLEY: THAT IS CORRECT.
MR. SCHENK: WHY DID YOU SEND ANDREAS'S SIGNATURE PAGE IN ADDITION TO YOURS?
DANIEL MOSLEY: BECAUSE ANDREAS TOLD ME THAT HE HAD INDEPENDENTLY DECIDED TO MAKE AN INVESTMENT AND ASKED ME IF I WOULD TAKE HIS SIGNATURE PAGE AND PASS IT ALONG WITH MINE TO THE COMPANY.
MR. SCHENK: DID YOU ENCOURAGE HIM TO INVEST?
MR. SCHENK: IF YOU'LL LOOK NOW AT PAGE 2 OF THIS DOCUMENT. IS THAT YOUR SIGNATURE?
DANIEL MOSLEY: YES, IT IS.
MR. SCHENK: AND YOUR -- AT THE TIME YOUR WORK ADDRESS?
DANIEL MOSLEY: THAT IS CORRECT.
MR. SCHENK: AND IS THIS THE SIGNATURE PAGE TO THE DOCUMENT THAT WE WERE JUST LOOKING AT, THE ACCREDITED INVESTOR DOCUMENT?
DANIEL MOSLEY: IT IS.
MR. SCHENK: IF YOU WILL NOW TURN TO EXHIBIT 2172, WHICH WOULD BE TOWARDS THE BEGINNING OF THAT BINDER.
DANIEL MOSLEY: I HAVE IT.
MR. SCHENK: MR. MOSLEY, WHAT ARE WE LOOKING AT HERE?
DANIEL MOSLEY: IT IS A SIGNED PIECE OF PAPER FROM THERANOS SIGNED BY ELIZABETH HOLMES.
MR. SCHENK: AND IS THIS IN REGARDS TO THE REDEMPTION, THE MANDATORY REDEMPTION ISSUE THAT YOU AND I HAVE SPOKEN ABOUT?
DANIEL MOSLEY: IT IS.
MR. SCHENK: YOUR HONOR, THE GOVERNMENT OFFERS 2172.
JUDGE DAVILA: IT'S ADMITTED. IT MAY BE PUBLISHED.
(GOVERNMENT'S EXHIBIT 2172 WAS RECEIVED IN EVIDENCE.)
BY MR. SCHENK:
MR. SCHENK: IN THIS DOCUMENT, MS. HOLMES WRITES, "THIS WILL CONFIRM WITH RESPECT TO THE SERIES C-2 PREFERRED STOCK FOR WHICH YOUR CLIENTS ARE SUBSCRIBING AT THIS TIME, IF THE COMPANY EXERCISES ITS RIGHT PURSUANT TO SECTION 6 OF THE STOCK'S CERTIFICATE TO REDEEM ANY OR ALL OF SUCH SHARES, THE PRICE PER SHARE SHALL NOT BE LESS THAN $17." DO YOU SEE THAT?
DANIEL MOSLEY: I DO.
MR. SCHENK: "YOU AND YOUR CLIENTS WILL HOLD THE EXISTENCE OF THIS LETTER AND ITS CONTENTS AS PERTAINS TO EACH OF THEM IN CONFIDENCE." IT'S DATED OCTOBER 31ST, 2014. WAS THAT THE DATE THAT YOU INVESTED?
DANIEL MOSLEY: UM --
MR. SCHENK: I CAN SHOW YOU THE DOCUMENT IF YOU DON'T --
DANIEL MOSLEY: YES, YOU CAN SHOW ME THE DOCUMENT.
MR. SCHENK: OKAY. THE REFERENCE TO "YOUR CLIENTS" IN HERE, WHAT DID YOU UNDERSTAND THAT TO MEAN?
DANIEL MOSLEY: WELL, AS A -- YOU KNOW, AS A LAWYER, OBVIOUSLY YOU HAVE A DUTY TO YOUR CLIENTS, AND I HAD INTRODUCED VARIOUS PEOPLE TO THE COMPANY, AND THEY WERE LOOKING AT THE COMPANY. AND I WOULD NEVER -- KNOWING THAT I HAD CLIENTS LOOKING AT THE COMPANY AND WHO MIGHT INVEST IN THE COMPANY, I WOULD NEVER OBTAIN SOME PROTECTION FOR MYSELF THAT I THOUGHT WAS IMPORTANT WITHOUT INCLUDING MY CLIENTS.
MR. SCHENK: YOU UNDERSTOOD THAT SOME OF YOUR CLIENTS ALSO INVESTED IN THERANOS?
DANIEL MOSLEY: I THINK AT THE TIME I THOUGHT SOME OF MY CLIENTS WOULD INVEST. I DON'T KNOW AT THE TIME WHETHER ANY OF THEM HAD, BUT I THOUGHT THAT THEY WERE INTERESTED AND THEY MIGHT WELL INVEST.
MR. SCHENK: OKAY. DID YOU ENCOURAGE ANY OF YOUR CLIENTS TO INVEST?
MR. SCHENK: IF YOU DIDN'T ENCOURAGE THEM, WHY DID YOU GET THIS BENEFIT OR PROTECTION FOR THEM?
DANIEL MOSLEY: WELL, THE SAME THING I JUST SAID. YOU KNOW, I WOULD FEEL LIKE I HAD NOT DONE THE RIGHT THING HAD I GOTTEN THIS PROTECTION FOR MYSELF AND IF LATER MY CLIENTS CHOSE TO INVEST IN THE COMPANY AND THEY DID NOT HAVE THE BENEFIT OF THE SAME PROTECTION. AND SO WHEN I ASKED FOR IT, I ASKED FOR IT TO INCLUDE ME, AS WELL AS ANY OF MY CLIENTS THAT MIGHT DECIDE TO INVEST.
MR. SCHENK: THANK YOU. IF YOU'LL NOW TURN TO 4845, 4845. YOUR HONOR, THIS HAS BEEN ADMITTED PREVIOUSLY. PERMISSION TO PUBLISH PAGE 23?
JUDGE DAVILA: YES.
MR. SCHENK: THANK YOU.
MR. SCHENK: LET ME KNOW WHEN YOU'RE THERE, MR. MOSLEY.
DANIEL MOSLEY: I'M THERE.
MR. SCHENK: DO YOU SEE THE DOCUMENT AT PAGE 23 OF 4845?
DANIEL MOSLEY: I DO.
MR. SCHENK: AND WHEN YOU MADE THE INVESTMENT IN THERANOS, DID YOU BANK WITH JPMORGAN CHASE?
DANIEL MOSLEY: I DID.
MR. SCHENK: AND WHERE WERE YOU, IN WHAT STATE, WHEN YOU INITIATED THE WIRE TRANSFER?
DANIEL MOSLEY: I WAS IN MY OFFICE IN NEW YORK.
MR. SCHENK: THE AMOUNT THAT WE SEE HERE IS JUST UNDER $6 MILLION. DO YOU SEE THAT?
DANIEL MOSLEY: I DO.
MR. SCHENK: AND DO YOU KNOW WHAT EXPLAINS THE DISCREPANCY? YOU WROTE AN EMAIL THAT YOU WERE GOING TO INVEST 6 MILLION, AND THIS IS JUST UNDER THAT.
DANIEL MOSLEY: THIS IS THE DOLLAR AMOUNT THAT ROUNDED OUT, AT $17 A SHARE, TO AN EVEN NUMBER OF SHARES.
MR. SCHENK: I SEE. OKAY. AND THE BENEFICIARY AT THE BOTTOM IS THERANOS. DO YOU SEE THAT?
DANIEL MOSLEY: I DO.
MR. SCHENK: MR. MOSLEY, WHEN YOU WERE DESCRIBING YOUR CLIENTS OR OTHERS THAT YOU KNEW WERE CONTEMPLATING AN INVESTMENT AT THE SAME TIME AS YOU, DID YOU KNOW WHETHER MR. TROTT OR BDT WAS CONTEMPLATING AN INVESTMENT?
DANIEL MOSLEY: I DID NOT KNOW.
MR. SCHENK: YOU DID NOT KNOW WHETHER THEY WERE?
DANIEL MOSLEY: I DID NOT.
MR. SCHENK: YOUR HONOR, MAY I HAVE ONE MOMENT?
JUDGE DAVILA: YES.
(DISCUSSION AMONGST GOVERNMENT COUNSEL OFF THE RECORD.)
MR. SCHENK: THANK YOU, YOUR HONOR. NO FURTHER QUESTIONS.
JUDGE DAVILA: CROSS-EXAMINATION?
JUDGE DAVILA: YES. FOLKS, PLEASE STAND AND STRETCH.
(STRETCHING.)
JUDGE DAVILA: I THINK WE SAID WE WOULD GO UNTIL 4:00 O'CLOCK TODAY. I DON'T THINK I SUGGESTED 5:00 O'CLOCK FOR TODAY. I THINK IT'S 4:00 O'CLOCK.
JUDGE DAVILA: RIGHT.
(STRETCHING.)
CROSS-EXAMINATION BY MR. WADE:
DANIEL MOSLEY: GOOD AFTERNOON.
MR. WADE: MY NAME IS LANCE WADE. I'M A LAWYER, AND I REPRESENT MS. HOLMES. I'M GOING TO ASK YOU A FEW QUESTIONS TODAY, AND WE'LL PROBABLY GO INTO TOMORROW A BIT. I'D LIKE TO START BY ASKING YOU A LITTLE MORE ABOUT YOUR PRIOR OCCUPATION. YOU'RE NOW A RECOVERING LAWYER; IS THAT RIGHT?
DANIEL MOSLEY: THAT IS CORRECT.
MR. WADE: OKAY. AND BEFORE YOU TRANSITIONED CAREERS, YOU WORKED AT THE LAW FIRM OF CRAVATH, SWAINE & MOORE IN NEW YORK CITY?
DANIEL MOSLEY: I DID.
MR. WADE: AND IF I CAN ASK YOU TO BE IMMODEST IF I MIGHT -- I KNOW IT MAY NOT BE HOW YOU WERE RAISED -- IS IT FAIR TO SAY THAT CRAVATH IS ONE OF THE PREEMINENT LAW FIRMS IN THE WORLD?
DANIEL MOSLEY: I BELIEVE IT IS.
DANIEL MOSLEY: THAT'S CORRECT.
DANIEL MOSLEY: THAT IS CORRECT.
MR. WADE: AND IT REPRESENTS ITSELF AS HAVING THE MOST ACCOMPLISHED LAWYERS ACROSS ALL PRACTICE AREAS. IS THAT -- DO YOU THINK THAT'S A FAIR ASSESSMENT?
DANIEL MOSLEY: YOU KNOW, "MOST" IS AN EXTREME STATEMENT. I WOULD SAY EXTREMELY ACCOMPLISHED, YES.
DANIEL MOSLEY: I DID.
DANIEL MOSLEY: I BELIEVE IT WAS.
DANIEL MOSLEY: THAT IS CORRECT.
MR. WADE: AND DURING THAT TIME, YOU SERVICED ANY NUMBER OF PROMINENT FAMILIES THROUGHOUT THE COUNTRY?
DANIEL MOSLEY: I DID.
DANIEL MOSLEY: THAT'S CORRECT.
DANIEL MOSLEY: THAT IS CORRECT.
DANIEL MOSLEY: I'M INVOLVED IN THE MANAGEMENT OF THE FIRM, I RUN THE NEW YORK OFFICE. WE ADVISE AND WORK WITH, YOU KNOW, HIGH NET WORTH FAMILIES, AND I DO THAT TYPE OF WORK.
MR. WADE: AND YOU'VE WORKED WITH A LOT OF VERY HIGH NET WORTH FAMILIES IN YOUR WORK IN TRUSTS AND ESTATES PRACTICE AT CRAVATH; IS THAT CORRECT?
DANIEL MOSLEY: I DID.
DANIEL MOSLEY: YES.
DANIEL MOSLEY: YES.
DANIEL MOSLEY: YEAH. AS I HAD EXTRA FUNDS, I INVESTED FOR MY OWN PERSONAL ACCOUNT, YES.
MR. WADE: AND SO YOU HAVE SOME EXPERIENCE IN THE INVESTING WORLD BEYOND JUST THE THERANOS INVESTMENT; IS THAT FAIR?
DANIEL MOSLEY: I DO, YES.
MR. WADE: IN FACT, THERE'S -- I BELIEVE THE ENTITY THROUGH WHICH YOU INVESTED HERE IS CALLED MOSLEY FAMILY HOLDINGS; IS THAT CORRECT?
DANIEL MOSLEY: THAT'S CORRECT.
DANIEL MOSLEY: THAT IS CORRECT.
MR. WADE: OKAY. AND THE CLIENTS -- THERE ARE A NUMBER OF PEOPLE WHO ARE YOUR CLIENTS WHO YOU INTERACTED WITH IN CONNECTION WITH THERANOS; IS THAT RIGHT?
DANIEL MOSLEY: YEAH. I WOULD SAY A SMALL NUMBER OF MY CLIENTS I INTERACTED WITH IN CONNECTION WITH THERANOS.
DANIEL MOSLEY: I HAD A LOT OF CLIENTS.
MR. WADE: OKAY. AND AMONG THE PEOPLE WHO YOU INTERACTED WITH WERE MEMBERS OF THE WALTON FAMILY; CORRECT?
DANIEL MOSLEY: THAT IS CORRECT.
DANIEL MOSLEY: THEY ARE, THEY ARE DECEDENTS OF SAM WALTON.
DANIEL MOSLEY: CORRECT.
DANIEL MOSLEY: THAT IS CORRECT.
MR. WADE: AND AT THE TIME OF THE THERANOS INVESTMENT, HE WAS THE CHAIRMAN OF THE BOARD OF WAL-MART; IS THAT CORRECT?
DANIEL MOSLEY: YES, I BELIEVE THAT'S CORRECT.
DANIEL MOSLEY: I DID.
DANIEL MOSLEY: I BELIEVE HE WAS.
DANIEL MOSLEY: HE IS.
DANIEL MOSLEY: THAT'S CORRECT.
DANIEL MOSLEY: THIRD GENERATION STARTING WITH SAM WALTON, YES.
MR. WADE: OKAY. AND IN ADDITION TO THAT, YOU INTERACTED A BIT WITH ALICE WALTON AS WELL; CORRECT?
DANIEL MOSLEY: I DID.
DANIEL MOSLEY: SHE IS ONE OF -- SHE IS ROB WALTON'S SISTER.
DANIEL MOSLEY: THAT'S CORRECT.
DANIEL MOSLEY: I BELIEVE -- YOU KNOW, I WASN'T INVOLVED IN THEIR DECISION AS TO HOW MUCH TO INVEST, BUT I THINK -- THAT'S WHAT I BELIEVE THEY DID INVEST.
DANIEL MOSLEY: I CERTAINLY HAVE HEARD THAT.
DANIEL MOSLEY: THAT IS CORRECT.
DANIEL MOSLEY: YES.
DANIEL MOSLEY: UH, YES.
DANIEL MOSLEY: THEY DO, YES.
DANIEL MOSLEY: THAT IS CORRECT.
DANIEL MOSLEY: AT THE TIME IT WAS, YES.
MR. WADE: AND MR. TUBERGEN WAS A PERSON WHO YOU INTERACTED WITH IN CONNECTION WITH THERANOS; CORRECT?
DANIEL MOSLEY: YES.
MR. WADE: DID YOU INTERACT WITH ANY OF THE DEVOS FAMILY MEMBERS THEMSELVES WITH RESPECT TO THERANOS?
DANIEL MOSLEY: YOU KNOW, I MAY HAVE AT ONE POINT HAD A CONVERSATION CASUALLY WITH ONE OR MORE OF THEM BECAUSE THEY ASKED ME ABOUT IT, BUT PRIMARILY I INTERACTED WITH -- I JUST INTRODUCED JERRY TUBERGEN TO ELIZABETH HOLMES AND THE COMPANY.
DANIEL MOSLEY: SURE.
DANIEL MOSLEY: THE DEVOS FAMILY WERE CLIENTS OF MINE.
DANIEL MOSLEY: YOU KNOW, I WASN'T INVOLVED, BUT I DO -- THAT IS THE NUMBER THAT I HAVE HEARD THAT THEY INVESTED, YES.
MR. WADE: OKAY. AND YOU ALSO INTERACTED WITH MEMBERS OF THE COX FAMILY IN CONNECTION WITH THERANOS AS WELL; RIGHT?
DANIEL MOSLEY: YES, I ALSO INTRODUCED MEMBERS OF THE COX FAMILY TO THERANOS.
DANIEL MOSLEY: NO, IT'S NOT.
DANIEL MOSLEY: THEY OWN COX CABLE, COX ENTERPRISES.
DANIEL MOSLEY: YES, IT IS.
DANIEL MOSLEY: THAT IS CORRECT.
DANIEL MOSLEY: THAT IS CORRECT.
DANIEL MOSLEY: YES, THE COX FAMILY WERE CLIENTS OF MINE.
DANIEL MOSLEY: THAT IS CORRECT.
DANIEL MOSLEY: THAT IS CORRECT.
DANIEL MOSLEY: HE IS A RELATIVE OF THE LATE STAVROS NIARCHOS.
DANIEL MOSLEY: IT IS.
MR. WADE: AND HE WAS A CLIENT OF YOURS FOR A PERIOD OF TIME BEFORE YOU STARTED INTERACTING WITH THERANOS; IS THAT RIGHT?
DANIEL MOSLEY: HE WAS.
DANIEL MOSLEY: YES, I DID AT SOME POINT.
DANIEL MOSLEY: NO, HE IS NOT.
MR. WADE: AND DO YOU KNOW HOW YOU CAME TO INTERACT WITH JOHN ELKANN AS A RESULT OF THERANOS MATTERS?
DANIEL MOSLEY: HE WAS A MEMBER OF A FAMILY THAT DR. KISSINGER HAD HAD A LONG ASSOCIATION WITH, AND I THINK -- I DON'T REALLY KNOW, BUT I SUSPECT THAT DR. KISSINGER MAY HAVE INTRODUCED HIM TO ELIZABETH AND THERANOS.
DANIEL MOSLEY: HE IS A MEMBER OF THE -- I DO KNOW THAT HE'S A MEMBER OF THE ANGNELLI FAMILY FROM ITALY.
DANIEL MOSLEY: IT IS.
DANIEL MOSLEY: YES, I DID.
DANIEL MOSLEY: FOR A VERY LONG TIME.
MR. WADE: OKAY. AND IN ADDITION TO MR. DRACOPOULOS, IS THERE A FOUNDATION THAT HE'S AFFILIATED WITH?
DANIEL MOSLEY: YES.
DANIEL MOSLEY: THE STAVROS NIARCHOS FOUNDATION.
DANIEL MOSLEY: I DID NOT.
DANIEL MOSLEY: I DID NOT.
DANIEL MOSLEY: AT THIS POINT I DON'T THINK I HAD PERSONALLY DONE ANY WORK FOR BDT WHATSOEVER.
MR. WADE: OKAY. I THINK I FAILED TO ASK WITH RESPECT TO MR. DRACOPOULOS, YOU'RE AWARE THAT HE INVESTED $25 MILLION?
DANIEL MOSLEY: YES.
DANIEL MOSLEY: ONLY BECAUSE SOMEBODY SAID IT AT SOME POINT.
DANIEL MOSLEY: YES.
DANIEL MOSLEY: I AM.
DANIEL MOSLEY: I THINK THAT'S RIGHT.
MR. WADE: OKAY. AND YOU'RE, OF COURSE, AWARE THAT IN CONNECTION WITH SOME OF THESE MATTERS, YOU HAD ATTORNEY-CLIENT COMMUNICATIONS; RIGHT?
MR. SCHENK: OBJECTION. RELEVANCE.
MR. WADE: I JUST WANT TO SET THE FRAME SO THE WITNESS UNDERSTANDS WHAT I'M NOT ASKING FOR WHEN I ASK QUESTIONS. I DON'T WANT ANY PRIVILEGED COMMUNICATIONS. THAT'S THE POINT.
JUDGE DAVILA: OKAY. MAYBE YOU SHOULD PREFACE YOUR QUESTION LIKE THAT.
MR. WADE: RECOGNIZING THAT YOU'RE A LAWYER AND YOU HAVE YOUR ETHICAL OBLIGATIONS, I DON'T WANT TO -- WHEN I ASK YOU QUESTIONS THAT RELATE TO ANY OF THESE CLIENTS, I'M NOT SEEKING ANY -- THE CONTENTS OF ANY ATTORNEY-CLIENT COMMUNICATIONS. OKAY?
DANIEL MOSLEY: I UNDERSTAND.
MR. WADE: OKAY. AND IF THERE'S EVER ANY UNCERTAINTY THAT YOU HAVE IN YOUR MIND AS TO WHETHER ANY OF THE QUESTIONS THAT I SEEK CALL FOR SUCH INFORMATION, I ASSURE YOU IT'S NOT INTENTIONAL. BUT LET'S BE CAUTIOUS THERE. OKAY?
DANIEL MOSLEY: I UNDERSTAND.
JUDGE DAVILA: SO TO THAT REGARD, SIR, IF YOU FEEL YOU NEED TO EXERCISE A PRIVILEGE, YOU SHOULD DO SO.
DANIEL MOSLEY: OKAY. THANK YOU.
BY MR. WADE:
MR. WADE: I BELIEVE IN YOUR DIRECT EXAMINATION YOU TESTIFIED THAT YOU WERE ASKED BY DR. KISSINGER TO LOOK INTO THERANOS A BIT; IS THAT RIGHT?
DANIEL MOSLEY: THAT'S CORRECT.
DANIEL MOSLEY: YES.
MR. WADE: WITHOUT REVEALING ANY PRIVILEGED COMMUNICATIONS, DO YOU KNOW WHY IT IS THAT HE WAS ASKING YOU TO LOOK INTO THIS FROM AN INVESTMENT STANDPOINT?
MR. SCHENK: SPECULATION.
JUDGE DAVILA: SUSTAINED.
BY MR. WADE:
MR. WADE: DO YOU KNOW WHY DR. KISSINGER -- DO YOU HAVE AN UNDERSTANDING, BASED ON YOUR COMMUNICATIONS WITH DR. KISSINGER, WHY IT WAS THAT HE WAS ASKING YOU TO DO THIS?
DANIEL MOSLEY: HE SIMPLY WANTED MY VIEWS ON THE COMPANY AND -- AND ON THE COMPANY IN GENERAL.
JUDGE DAVILA: YES.
BY MR. WADE:
MR. WADE: (HANDING.) I'VE HANDED YOU A COUPLE MORE BINDERS. I KNOW YOU HAVE A GROWING COLLECTION UP THERE.
DANIEL MOSLEY: I DO.
MR. WADE: I GUESS THAT'S THE LIFE OF A LAWYER, RIGHT? COULD I ASK YOU TO TURN YOUR ATTENTION TO EXHIBIT 4162. DO YOU HAVE THAT DOCUMENT IN FRONT OF YOU?
DANIEL MOSLEY: I DO.
MR. WADE: AND DO YOU RECOGNIZE THIS -- THE ATTACHMENT TO THIS LETTER? HAVE YOU SEEN THIS LETTER BEFORE?
DANIEL MOSLEY: I DON'T REMEMBER.
MR. WADE: DO YOU RECALL THAT IN JULY OF 2014, MR. -- THE STAVROS NIARCHOS FOUNDATION ASKED YOU TO ENGAGE WITH THERANOS ABOUT THE POTENTIAL INVESTMENT BY THE FOUNDATION?
DANIEL MOSLEY: COULD YOU RESTATE THAT? I DIDN'T QUITE UNDERSTAND THE QUESTION.
MR. WADE: YES. DO YOU RECALL BEING ASKED BY THE STAVROS NIARCHOS FOUNDATION TO ENGAGE WITH THERANOS IN CONNECTION WITH A POSSIBLE INVESTMENT BY THE FOUNDATION IN THERANOS?
DANIEL MOSLEY: I DON'T REMEMBER BEING ASKED TO BE ENGAGED IN THE SENSE OF TO REPRESENT THEM AS A LAWYER IN CONNECTION WITH IT. IS THAT WHAT YOU'RE ASKING?
MR. WADE: DO YOU RECALL BEING ASKED BY THE FOUNDATION TO ENGAGE IN ANY WAY WITH THE POTENTIAL INVESTMENT IN THERANOS?
DANIEL MOSLEY: YES, I THINK THEY ASKED ME TO PARTICIPATE IN THE INTRODUCTION TO ELIZABETH HOLMES AND TO THE COMPANY.
DANIEL MOSLEY: ON JULY THE 14TH, I HAD NOT.
MR. SCHENK: YOUR HONOR, FOUNDATION. HEARSAY.
JUDGE DAVILA: CAN YOU LAY A LITTLE MORE FOUNDATION ON THIS?
JUDGE DAVILA: SURE.
BY MR. WADE:
DANIEL MOSLEY: THEY ASKED ME TO HELP INTRODUCE THEM TO ELIZABETH HOLMES AND THE COMPANY.
MR. WADE: OKAY. AND AT THIS POINT, THIS WAS BEFORE YOU HAD HAD ANY OF THE INTERACTIONS RELATING TO THE KISSINGER ASSIGNMENT I BELIEVE; ISN'T THAT RIGHT?
DANIEL MOSLEY: NO. I BELIEVE IT WAS -- YOU KNOW, I COULD BE WRONG ABOUT THIS, BUT I BELIEVE IT WAS AFTER DR. KISSINGER HAD ASKED ME TO BEGIN LOOKING AT THERANOS AND GIVE HIM MY VIEWS.
MR. WADE: OKAY. AND WAS THIS A MEETING THAT WAS FACILITATED -- OR AN ENGAGEMENT BY YOU THAT WAS FACILITATED BY DR. KISSINGER?
DANIEL MOSLEY: I'M NOT SURE WHAT YOU MEAN BY THAT.
DANIEL MOSLEY: YOU KNOW, I THINK I MAY HAVE KNOWN THAT HE WANTED TO LET SOME OF THE PEOPLE THAT HE HAD HAD A LONG ASSOCIATION WITH KNOW ABOUT THIS OPPORTUNITY, AND I DON'T REMEMBER SPECIFICALLY, BUT HE MIGHT WELL HAVE SAID TO ME, CAN YOU HELP ME IN TALKING TO PEOPLE AT THE NIARCHOS FOUNDATION.
MR. WADE: AND YOU HAD NOT DONE -- THE NIARCHOS FOUNDATION WAS NOT A CLIENT OF YOURS AT THE TIME?
DANIEL MOSLEY: I DON'T BELIEVE SO. ANDREAS DRACOPOULOS WAS A CLIENT AND HE WAS THE CO-CEO OF THE FOUNDATION. I DON'T REMEMBER WHETHER I, YOU KNOW, I CERTAINLY DIDN'T THINK OF THEM AS A CLIENT. BUT I MIGHT WELL HAVE GIVEN HIM ADVICE, OR SOMEBODY ELSE. BUT I REALLY DON'T HAVE A COMPLETE RECOLLECTION OF EVERYTHING.
DANIEL MOSLEY: OKAY. SURE.
MR. WADE: THE NEXT, THE NEXT COMMUNICATION -- IF I COULD TURN YOUR ATTENTION TO 4163, WHICH I BELIEVE IS IN EVIDENCE.
COURT CLERK: CORRECT.
JUDGE DAVILA: YES.
BY MR. WADE:
MR. WADE: AND THIS IS RIGHT AROUND THE TIME WHEN YOU'RE BEING ENGAGED WITH -- BY DR. KISSINGER FOR THE ASSIGNMENT THAT YOU DISCUSSED; IS THAT RIGHT?
DANIEL MOSLEY: YES, IT WAS.
MR. WADE: AND AMONG THE FIRST THINGS THAT YOU DID, YOU HAD AN INITIAL CONVERSATION WITH MS. HOLMES; IS THAT RIGHT?
DANIEL MOSLEY: THAT IS CORRECT.
DANIEL MOSLEY: I DON'T REMEMBER HOW LONG THE CONVERSATION WAS.
DANIEL MOSLEY: IT WAS.
DANIEL MOSLEY: NO, I HAD NOT.
MR. WADE: OKAY. IN THE SHORT TIME, IT LOOKS LIKE WITHIN THE NEXT DAY YOU WERE REACHING OUT TO MEMBERS OF THE WALTON FAMILY; CORRECT?
DANIEL MOSLEY: I DON'T KNOW HOW MUCH TIME WAS IN BETWEEN MY CONVERSATION WITH HER AND REACHING OUT TO GREG PENNER. I DON'T KNOW HOW MUCH TIME.
DANIEL MOSLEY: ALL RIGHT. THEN MAYBE IT MEANS THE NEXT DAY.
DANIEL MOSLEY: YES.
DANIEL MOSLEY: YES, HE RUNS HIS PRIVATE INVESTMENT FIRM BY THE NAME OF MADRONE.
DANIEL MOSLEY: IT IS.
MR. WADE: OKAY. AND YOU REACHED OUT TO HIM IMMEDIATELY AND YOU WERE WORKING TO FACILITATE PUTTING MS. HOLMES IN CONTACT WITH MR. PENNER; CORRECT?
DANIEL MOSLEY: I -- YES.
DANIEL MOSLEY: IS THAT IN VOLUME 2? IT IS.
DANIEL MOSLEY: OKAY.
DANIEL MOSLEY: I DO.
DANIEL MOSLEY: YES.
MR. SCHENK: NO OBJECTION.
JUDGE DAVILA: IT'S ADMITTED. IT MAY BE PUBLISHED.
(DEFENDANT'S EXHIBIT 14129 WAS RECEIVED IN EVIDENCE.)
BY MR. WADE:
MR. WADE: AND DO YOU SEE THE BOTTOM EMAIL THERE, IT'S THE SAME EMAIL THAT WE WERE JUST LOOKING AT?
DANIEL MOSLEY: THAT'S CORRECT.
DANIEL MOSLEY: UH-HUH.
MR. WADE: AND DO YOU INFER FROM THIS EMAIL THAT ABOUT A WEEK HAD PASSED AND MS. HOLMES APPEARS TO NOT HAVE FOLLOWED UP WITH MR. PENNER?
DANIEL MOSLEY: YES.
DANIEL MOSLEY: WELL, I POINTED OUT THAT I HADN'T RECEIVED THE MATERIALS AND WAS LOOKING OUT FOR THEM, AND THAT GREG PENNER WAS DOING THE SAME.
MR. WADE: RIGHT. YOU PROVIDED AN INTRODUCTION TO MR. PENNER, AND HE HAD NOT GOTTEN THE BINDERS; RIGHT?
DANIEL MOSLEY: THAT IS CORRECT.
DANIEL MOSLEY: THAT IS CORRECT.
MR. WADE: AND DO YOU SEE IN THAT SECOND LINE IT SAYS, "ROB WALTON RAN INTO ONE OF YOUR BOARD MEMBERS OVER THE WEEKEND AT THE GROVE"?
DANIEL MOSLEY: YES.
DANIEL MOSLEY: YOU KNOW, I'M NOT -- I'M CERTAINLY BY NO MEANS AN EXPERT ON THE GROVE, BUT I THINK IT'S A GROUP OF PEOPLE THAT GET TOGETHER IN CALIFORNIA ON A PERIODIC BASIS.
DANIEL MOSLEY: IT IS, PROMINENT INDIVIDUALS.
DANIEL MOSLEY: RIGHT.
MR. WADE: AND ARE YOU AWARE -- WITHOUT REVEALING PRIVILEGED INFORMATION, ARE YOU AWARE OF WHO MR. WALTON SPOKE WITH AT THE GROVE ABOUT THERANOS?
MR. WADE: OKAY. AND IT APPEARED, AS A RESULT OF THESE INTERACTIONS, THAT MR. WALTON AND MR. PENNER WERE EAGER TO RECEIVE INFORMATION ABOUT THERANOS; CORRECT?
DANIEL MOSLEY: THAT'S SORT OF WHAT IS IMPLIED HERE, YES.
MR. WADE: AND GIVEN THAT YOU HAD PROVIDED THE INTRODUCTION, YOU WERE TRYING TO ENCOURAGE THAT ALONG; IS THAT RIGHT?
DANIEL MOSLEY: WELL, I OBVIOUSLY POINTED OUT THE FIRST THING WAS THAT I HAD NOT RECEIVED THE MATERIALS, AND THEN I NOTED THAT NEITHER HAD GREG PENNER.
DANIEL MOSLEY: I WAS LOOKING FORWARD TO RECEIVING THE MATERIALS.
DANIEL MOSLEY: I DON'T.
MR. WADE: AND CAN YOU -- LET'S LOOK AT 14130. AND I CAN JUST ASK, DOES THIS REFRESH YOUR RECOLLECTION THAT YOU NEXT SPOKE WITH MS. HOLMES IN MID-AUGUST OF 2014?
DANIEL MOSLEY: YOU KNOW, IT'S A MESSAGE SLIP FROM CRAVATH SAYING THAT ELIZABETH HOLMES HAD CALLED, AND IT SAYS "PLEASE CALL HER ON MONDAY" IS WHAT I'M LOOKING AT IF I'M ON THE RIGHT -- 14130?
JUDGE DAVILA: ANY OBJECTION?
MR. SCHENK: NO OBJECTION.
JUDGE DAVILA: IT'S ADMITTED. IT MAY BE PUBLISHED.
(DEFENDANT'S EXHIBIT 14130 WAS RECEIVED IN EVIDENCE.)
BY MR. WADE:
DANIEL MOSLEY: UM, SHE WASN'T ACTUALLY MY SECRETARY, BUT SHE WAS IN THE SUITE THAT I WAS LOCATED.
DANIEL MOSLEY: YES.
DANIEL MOSLEY: YEAH, IT APPEARS TO BE AN INDICATION THAT ELIZABETH HAD CALLED ME AND LEFT A TELEPHONE NUMBER AND SAID PLEASE CALL ME ON MONDAY.
DANIEL MOSLEY: I DON'T SPECIFICALLY RECALL.
DANIEL MOSLEY: I'M THERE.
JUDGE DAVILA: YES.
BY MR. WADE:
DANIEL MOSLEY: I DO.
MR. WADE: AND THIS WAS THE COVER CORRESPONDENCE FOR THE BINDERS THAT YOU RECEIVED; IS THAT RIGHT?
DANIEL MOSLEY: I BELIEVE IT WAS.
MR. WADE: OKAY. AND I'M GOING TO OFFER -- I ONLY HAVE ONE COPY, THANKFULLY, OF THIS. YOUR HONOR, I'VE GIVEN THE GOVERNMENT NOTICE. YOUR HONOR, I BELIEVE THIS IS JUST THE FULL BINDER SET, SO IF HE ADMITS IT, WE'LL JUST DISPLAY IT ELECTRONICALLY TO SAVE PAPER.
JUDGE DAVILA: ALL RIGHT. YOU HAVE A COPY OF THIS, MR. SCHENK?
MR. SCHENK: I HAVE AN ELECTRONIC COPY, YES.
JUDGE DAVILA: OKAY. THAT'S FINE.
JUDGE DAVILA: THAT'S FINE. GO AHEAD.
JUDGE DAVILA: YES.
DANIEL MOSLEY: THANK YOU.
BY MR. WADE:
MR. WADE: NOW, I'VE HANDED YOU THREE VOLUMES OF DOCUMENTS. I THINK IF YOU, IF YOU LOOK AT THEM, YOU'LL NOTICE THAT THEY'RE BATES LABELLED WITH THE MOSLEY BATES LABEL. AND DO YOU RECOGNIZE THIS TO BE THE COMPLETE COLLECTION OF MATERIALS THAT WAS SENT TO YOU BY?
DANIEL MOSLEY: IT PROBABLY IS. I CAN'T -- I MEAN, THAT WAS SEVEN YEARS AGO AND I CAN'T -- BUT IT LOOKS LIKE -- IT LOOKS LIKE WHAT I THINK I RECEIVED.
JUDGE DAVILA: 4173?
DANIEL MOSLEY: IT'S TX 14206.
JUDGE DAVILA: 14206? I'M SORRY, MR. SCHENK?
MR. SCHENK: NO OBJECTION.
JUDGE DAVILA: 14206 CONSISTS OF THREE BINDERS?
JUDGE DAVILA: THANK YOU. IT'S ADMITTED, AND YOU CAN PUBLISH THEM AS YOU EXAMINE.
(DEFENDANT'S EXHIBIT 14206 WAS RECEIVED IN EVIDENCE.)
BY MR. WADE:
MR. WADE: LET ME GO BACK TO THE LETTER, 4173. NOW, THESE BINDERS WERE SENT TO YOU, AND WHEN YOU HAD DISCUSSIONS WITH MS. HOLMES, DID YOU MAKE ANY SPECIFIC REQUESTS FOR MATERIALS?
DANIEL MOSLEY: YOU KNOW, I DON'T REMEMBER WHETHER I ASKED FOR DOCUMENTS OR SHE -- INFORMATION, OR SHE SAID, I'VE GOT A PACKAGE OF MATERIALS I'LL SEND YOU. I DON'T REMEMBER.
MR. WADE: OKAY. IN ANY EVENT, THE DOCUMENTS CAME IN IN EARLY AUGUST. DO YOU RECALL THAT? OR MID-AUGUST? I APOLOGIZE.
DANIEL MOSLEY: YOU KNOW, I HAVE GENERALLY A RECOLLECTION THAT THAT'S WHEN THEY CAME AND IT'S CONSISTENT WITH THE LETTER.
MR. WADE: AND IF WE LOOK AT THE LAST PARAGRAPH OF THE LETTER -- I'M SORRY, ON THE SECOND PAGE, THE LAST FINAL PARAGRAPH. DO YOU SEE IT SAYS, "I AM HAPPY TO PROVIDE MORE BACKGROUND ON ANY OF THE ABOVE, OR ANY OF THE MATERIALS ENCLOSED IN THIS PACKAGE." DO YOU SEE THAT?
DANIEL MOSLEY: I DO SEE IT.
MR. WADE: AND SO YOU UNDERSTOOD AT THE TIME THAT YOU GOT THESE MATERIALS THAT THERE WAS AN OPEN INVITATION FOR YOU TO GO AND SEEK OTHER INFORMATION; RIGHT?
DANIEL MOSLEY: I DID.
MR. WADE: AND IF THERE WAS ANYTHING WITHIN THE MATERIALS THAT YOU THOUGHT WAS UNCLEAR, THAT YOU HAD AN INVITATION TO GO BACK TO MS. HOLMES AND ASK FOR CLARITY ON THOSE MATERIALS; RIGHT?
DANIEL MOSLEY: I DID.
DANIEL MOSLEY: I WOULD HAVE.
MR. WADE: OKAY. YOUR HONOR, NOW MIGHT BE A GOOD TIME TO BREAK. I WAS GOING TO SHIFT, OR GO DEEPER INTO A TOPIC.
JUDGE DAVILA: YOU'RE RESTRAINING YOUR ENTHUSIASM FOR STARTING THE BINDERS.
(LAUGHTER.)
JUDGE DAVILA: LET'S DO THAT. LET'S TAKE OUR EVENING BREAK NOW, LADIES AND GENTLEMEN. WE'LL RESUME AGAIN AT 9:00 O'CLOCK, 9:00 O'CLOCK TOMORROW MORNING, PLEASE. LET ME REMIND YOU OF THE ADMONITION. IT REMAINS IN PLACE. YOU'VE BEEN DOING SO WONDERFULLY WITH IT. PLEASE DO REFRAIN FROM COMING INTO CONTACT AS BEST YOU CAN WITH ANY INFORMATION, ANY VERBAL INFORMATION, ANY RADIO, TELEVISION, SOCIAL MEDIA, OR ANYTHING ELSE, INCLUDING CONVERSATIONS, ANYTHING TO DO WITH THIS CASE. I'LL ASK YOU TOMORROW MORNING IF YOU WERE ABLE TO, ONCE AGAIN, SUCCESSFULLY ACCOMPLISH THAT. HAVE A GOOD EVENING. WE'LL SEE YOU TOMORROW. LET ME SAY, I THINK -- I JUST WANT TO GO OVER -- MONDAY, NOVEMBER 29TH, PLEASE RECALL WE'RE GOING TO START MONDAYS, I THINK TWO MONDAYS FROM NOW, ON THE 29TH, I'M HOPING THAT WE CAN BEGIN PROBABLY AROUND 10:00 O'CLOCK, I THINK, BUT WE'LL GET MORE INFORMATION ON THAT AS WE GET CLOSER.
COURT CLERK: TOMORROW IS 3:00.
JUDGE DAVILA: AND TOMORROW IS 3:00 O'CLOCK, YES, TOMORROW WE END AT 3:00 O'CLOCK. LET ME ASK COUNSEL WHILE THE WITNESS IS HERE, IS IT LIKELY WE'LL FINISH THIS WITNESS'S EXAMINATION TOMORROW?
JUDGE DAVILA: DO YOU AGREE WITH THAT, MR. SCHENK?
MR. SCHENK: I DO.
DANIEL MOSLEY: THANK YOU.
JUDGE DAVILA: THAT'S HELPFUL INFORMATION. HAVE A GOOD EVENING, LADIES AND GENTLEMEN. WE'LL SEE YOU TOMORROW MORNING. YOU CAN STAND DOWN, SIR. THANK YOU.
(JURY OUT AT 4:01 P.M.)
MR. WADE: IF YOU WANT TO LEAVE THOSE THERE, MR. MOSLEY, WE'LL KEEP THEM IN SAFEKEEPING. THE COURT HAS MARSHALS.
JUDGE DAVILA: THEY MAY GET LOST, MR. MOSLEY. HOPE SPRINGS ETERNAL. WE'LL SEE YOU TOMORROW AT 9:00 O'CLOCK.
DANIEL MOSLEY: THANK YOU, YOUR HONOR.
JUDGE DAVILA: PLEASE BE SEATED, LADIES AND GENTLEMEN. THE RECORD SHOULD REFLECT THAT THE JURY HAS LEFT FOR THE DAY, MR. MOSLEY HAS LEFT THE COURTROOM, AND ALL COUNSEL AND MS. HOLMES REMAIN PRESENT. I'M GOING TO CHECK ON THE HVAC. GOSH, IT GETS WARM HERE IN THE AFTERNOON. WE'LL SEE WHAT WE CAN DO TO ACCOMPLISH RECTIFYING THAT. I ALSO WANTED TO SHARE WITH COUNSEL, MS. KRATZMANN RECEIVED A COMMENT FROM THE JURORS THAT THEY APPARENTLY REQUESTED THAT -- I'M JUST GOING TO READ THIS -- IF WHEN THE BLOWUP OF AN EXHIBIT, IF THEY CAN RAISE IT HIGHER SO TEXT IS NOT AT THE BOTTOM. I'M SURE YOUR I.T. PEOPLE KNOW WHAT THAT MEANS.
JUDGE DAVILA: I'LL JUST PASS THAT ON. THAT'S FROM THE JURORS.
MR. SCHENK: THANK YOU.
JUDGE DAVILA: ANYTHING ELSE THEN BEFORE WE LEAVE FOR THE EVENING? MR. SCHENK?
MR. SCHENK: YES. THANK YOU, YOUR HONOR. JUST BRIEFLY. I KNOW WE HAVE A BUSY SCHEDULE FOR TOMORROW MORNING'S SESSION, SOME OF THE DISCUSSIONS WE WERE HAVING TODAY WE PUNTED, AND I THINK ONE OF THE THINGS WE WERE THINKING ABOUT TALKING ABOUT WAS THE MOSLEY 2015 DOCUMENTS. I ASSUME WE CAN DEAL WITH THEM NOW VERY QUICKLY. THE COURT HAS SEEN THE DIRECT. MR. MOSLEY -- I DIDN'T COVER 2015 WITH HIM, AND MR. MOSLEY HIMSELF SAID THAT THE FINANCIAL PROJECTIONS IN 2015 WERE LESS RELIABLE BECAUSE THEY WERE FURTHER INTO THE FUTURE. SO THE COURT WILL RECALL MR. WADE SAID THIS EVIDENCE, THE 2015 DOCUMENTS, MIGHT BE APPROPRIATE IMPEACHMENT IF THE WITNESS DOES NOT RECALL HAVING THE OPINION THAT PROJECTIONS INTO THE FUTURE ARE CHALLENGING. WE ARE NOT FACED WITH THAT SITUATION, AND IT NOW SEEMS TO ME CLEAR THAT THE COURT CAN EXCLUDE THIS TYPE OF EVIDENCE, AND I DON'T THINK WE NEED TO TAKE TIME, MUCH MORE TODAY, OR ANY TOMORROW.
MR. WADE: I NOTED THE SAME THING MR. SCHENK DID WITH RESPECT TO THE TESTIMONY, AND I THINK WHAT I WOULD ASK IS MAYBE JUST TO HAVE A CHANCE TO LOOK AT IT IN THE TRANSCRIPT. I THINK, I THINK MAYBE I WOULD ASK SOME QUESTIONS AROUND THE TOPIC, BUT IT MAY WELL BE I DON'T NEED TO PUT IN A COUPLE OF THOSE EMAILS. BUT I'LL LOOK BACK AT IT, AND I'LL ADVISE MR. SCHENK IF I FEEL OTHERWISE.
JUDGE DAVILA: OKAY.
MR. WADE: I DON'T NECESSARILY OTHERWISE SEE THE EXAMINATION GOING INTO THAT TIME PERIOD, AND IF WE'RE NOT GOING TO GO INTO THOSE COMMUNICATIONS, THEN WE MAY HAVE THE RECORD WE NEED ON THAT. THERE IS ONE OTHER -- THAT RELATE TO, I THINK, TWO OR THREE OF THE EMAILS THAT MR. SCHENK HANDED UP TO THE COURT. THERE IS ANOTHER EMAIL THAT MR. -- OR ANOTHER DOCUMENT, EMAIL AND ATTACHMENT I THINK THAT RELATES TO TEST RESULTS THAT MR. MOSLEY RECEIVED AT A WALGREENS, AT A THERANOS CENTER AT A WALGREENS, WHICH WAS IN 2015. AND I THINK THAT WOULD BE -- I DON'T THINK WE ADDRESSED THAT THIS MORNING. IF WE DID, I DON'T RECALL.
JUDGE DAVILA: I DON'T RECALL DISCUSSING A TEST RESULT FROM MR. MOSLEY.
MR. WADE: YEAH. I THINK THAT DOCUMENT WOULD BE ADMISSIBLE IN THE SAME WAY THAT MANY OTHER DOCUMENTS OF PATIENT TEST RESULTS HAVE BEEN, YOU KNOW, ADMISSIBLE IN THIS CASE. THE GOVERNMENT HAS OFFERED MANY OF THEM, HAS SUGGESTED THEY'RE PROBATIVE OF ACCURACY AND RELIABILITY. AS THE COURT KNOWS, WE SUGGESTED OTHERWISE IN MOTIONS PRACTICE AT SOME LENGTH, AND WHILE IT HAS PROBABLY LIMITED PROBATIVE VALUE, THERE HAVE BEEN OTHER TEST RESULTS THAT HAVE COME IN FROM OTHER WITNESSES, AND WE THINK IT'S ONLY FAIR THAT MR. MOSLEY BE PERMITTED TO TALK ABOUT HIS WHICH WERE, AS I UNDERSTAND IT, ACCURATE OR CONSISTENT WITH HIS OTHER TEST RESULTS.
JUDGE DAVILA: SO YOU INTEND TO ASK THE WITNESS, THIS WITNESS, MR. MOSLEY, WHETHER HE WENT TO A WALGREENS, TOOK A TEST USING THE THERANOS EQUIPMENT, FINGERSTICK, VENOUS, WHATEVER IT IS, AND IF HE RECEIVED A TEST RESULT, AND WHAT THAT TEST RESULT WAS?
MR. WADE: ESSENTIALLY. AND THAT HE FOUND IT TO BE CONSISTENT WITH PRIOR TEST RESULTS THAT HE'S RECEIVED. HE RECEIVED A FINGERSTICK TEST AT WALGREENS.
JUDGE DAVILA: IS THERE A COMPARATOR AT THE TIME PERIOD THAT YOU WOULD COMPARE IT TO, OR --
MR. WADE: I BELIEVE HIS STATEMENTS ARE THAT HE SENT THEM TO HIS DOCTOR, I THINK. I MAY HAVE CONFUSED HIS TEST RESULTS WITH ANOTHER WITNESS'S.
JUDGE DAVILA: OKAY.
MR. WADE: BUT I THINK HE SENT THEM TO HIS DOCTOR. I THINK HE SAID IT WAS A CHOLESTEROL TEST, AND I THINK THEY WERE BASICALLY CONSISTENT WITH OTHER CHOLESTEROL TESTS.
JUDGE DAVILA: MR. SCHENK?
MR. SCHENK: THIS MORNING I HANDED UP FOUR DOCUMENTS TO YOUR HONOR. MR. MOSLEY AND ACTUALLY HIS DAUGHTER'S TEST RESULTS WERE PART OF THAT STACK, SO THE COURT HAS THE DOCUMENT THAT MR. WADE IS REFERRING TO. I WOULD SUGGEST THAT WE WAIT AND SEE. I MAY HAVE RELEVANCE OBJECTIONS DEPENDING ON THE FOUNDATION THAT IS ESTABLISHED. I'M NOT SURE IT IS PROBATIVE OF THE ACCURACY OF THERANOS TESTS, BUT I THINK WE NEED TO WAIT AND SEE THE QUESTIONS AND WHAT MR. MOSLEY UNDERSTOOD WAS OCCURRING THROUGH THIS PROCESS. I -- IT IS OF A DIFFERENT SORT THAN MY 2015 OBJECTIONS.
JUDGE DAVILA: RIGHT.
MR. SCHENK: MY 2015 OBJECTIONS WERE HIS KNOWLEDGE IN '15 WAS NOT RELEVANT FOR INVESTMENT. THIS IS DIFFERENT AND I DON'T OBJECT ON THE SAME GROUNDS, BUT I'D LIKE TO WAIT AND SEE THE QUESTIONS.
JUDGE DAVILA: ALL RIGHT. WELL, LET'S DO THAT. LET ME JUST SAY, IN THE SPIRIT OF FULL DISCLOSURE, AFTER YOUR DIRECT, MY QUESTION ASKING WHETHER WE WOULD FINISH WITH THE WITNESS TOMORROW, MR. MOSLEY, WAS PREDICATED ON THE FACT THAT THERE IT SOUNDS LIKE THERE WAS NO FORAY INTO 2015, AND SO I WAS THINKING THAT YOU PROBABLY WOULDN'T GO INTO WHAT YOU WOULD -- WHAT WE TALKED ABOUT THIS MORNING BECAUSE THERE WAS NO REASON TO. BUT I APPRECIATE YOUR OBSERVATIONS. YOU'RE GOING TO THINK ABOUT IT OVERNIGHT. THAT'S PROBABLY A GOOD THING. TOMORROW I THINK WE'RE TALKING ABOUT SOME OTHER WITNESSES THAT ARE NOT EVEN GOING TO BE TESTIFYING THIS WEEK. SO I'D LIKE TO -- AS I UNDERSTAND IT, I THINK.
MR. SCHENK: I THINK THAT BB MAY TESTIFY THIS WEEK.
JUDGE DAVILA: OKAY.
MR. SCHENK: I THINK IT'S MR. PARLOFF THAT WOULD NOT.
JUDGE DAVILA: OKAY. THANK YOU. LET'S START OUR CONVERSATION TOMORROW ON BB AND SEE WHERE WE GO WITH THAT. I DON'T WANT TO INVEST TIME, NOT THAT PARLOFF IS NOT IMPORTANT, BUT IT'S NOT IMPORTANT FOR THIS WEEK'S SCHEDULE, AND I'D LIKE TO KEEP US GOING FORWARD AS BEST WE CAN. SO LET'S DO THAT. AND WHEN THE FOLKS CALL IN, OUR DEAR FRIENDS FROM THE EAST COAST CALL IN, WE CAN KIND OF TELL THEM THAT THEY'RE KIND OF IN A HOLDING PATTERN, AND LET'S SEE WHAT WE CAN GET ACCOMPLISHED TOMORROW AT ABOUT 8:15 IF THAT WORKS.
MR. SCHENK: YES, YOUR HONOR.
JUDGE DAVILA: OKAY.
JUDGE DAVILA: SURE.
(DISCUSSION AMONGST DEFENSE COUNSEL OFF THE RECORD.)
MR. WADE: THE ONE ISSUE JUST TO ADDRESS, I DON'T KNOW WHAT THE GOVERNMENT'S SCHEDULE IS WITH RESPECT TO MR. PARLOFF, BUT MR. CLINE HAS A COMMITMENT TO ANOTHER COURT AND WILL NOT BE HERE ON THURSDAY.
JUDGE DAVILA: OH, SOMETHING THAT IS MORE IMPORTANT THAN THIS COURT, MR. WADE?
(LAUGHTER.)
JUDGE DAVILA: YES.
MR. WADE: WE WERE DARK ON THURSDAYS. SO HE WON'T BE HERE. I ONLY RAISE THAT BECAUSE I DON'T THINK HE WOULD BE IN A POSITION TO ADDRESS IT ON THURSDAY, AND SO I JUST WANTED TO BE CLEAR WITH THE COURT. I DON'T KNOW WHAT THE TIMING OF THE GOVERNMENT IS WITH THAT WITNESS.
MR. SCHENK: WE WERE AWARE OF MR. CLINE'S CONFLICT. WE KNEW THAT DR. CULLEN WAS MR. CLINE'S WITNESS AND WE MADE SURE SHE TESTIFIED ON A DAY THIS WEEK THAT MR. CLINE WAS AVAILABLE. I KNOW THAT -- I THINK WHAT MR. WADE IS GETTING AT IS, ARE WE GOING TO DISCUSS MR. PARLOFF ON THURSDAY OR WAIT UNTIL THE FOLLOWING WEEK, TUESDAY I THINK?
JUDGE DAVILA: RIGHT. ARE WE AVAILABLE ON THE MONDAY, ADRIANA, THE 8TH?
COURT CLERK: WE DO HAVE A CALENDAR, YOUR HONOR, IN THE AFTERNOON.
JUDGE DAVILA: COULD WE TALK IN THE MORNING?
COURT CLERK: YOU'RE AVAILABLE IN THE MORNING.
JUDGE DAVILA: ARE YOU BACK, MR. WADE, ON THE 8TH?
JUDGE DAVILA: OKAY.
MR. CLINE: THAT WOULD BE FINE.
JUDGE DAVILA: OKAY. SO MAYBE WE CAN DO IT THEN, I THINK, ON A MONDAY MORNING. MR. BOSTIC, DOES THAT WORK FOR YOU?
MR. BOSTIC: THAT'S CERTAINLY FINE FOR THE GOVERNMENT, YOUR HONOR. MR. PARLOFF WILL NOT TESTIFY BEFORE THE 9TH. AM I REMEMBERING CORRECTLY THAT TRIAL IS NOT IN SESSION ON THE 8TH?
JUDGE DAVILA: THAT'S RIGHT.
MR. BOSTIC: OKAY. THE GOVERNMENT COULD CERTAINLY BE AVAILABLE TO ARGUE THE ISSUE ON THAT DAY, THOUGH.
JUDGE DAVILA: IF, IF -- RIGHT. OKAY. THAT'S AN ALTERNATIVE, I THINK. WE CAN JUST COME IN THE MORNING, OR WHATEVER TIME WORKS FOR THE PARTIES THAT DAY, AND WE CAN TALK ABOUT MR. PARLOFF.
MR. CLINE: THAT'S FINE, YOUR HONOR.
JUDGE DAVILA: OKAY. LET'S KEEP THAT AS A BACK-UP SCHEDULE. THANK YOU. I APPRECIATE IT. I APPRECIATE YOUR -- I KNOW WE'RE NOT IN SESSION THAT DAY, BUT -- WITH THE JURY. BUT IF WE CAN GET SOME WORK DONE, I WOULD APPRECIATE IT.
MR. BOSTIC: GREAT.
JUDGE DAVILA: GREAT. THANK YOU. I THINK THAT'S IT. I THINK THAT'S ALL I HAVE. THANK YOU. OKAY. HAVE A GOOD EVENING.
MR. SCHENK: THANK YOU, YOUR HONOR.
COURT CLERK: COURT IS ADJOURNED.
(COURT ADJOURNED AT 4:11 P.M.)