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Federal Criminal Trialtrial-daytrial-dayJohn C. BosticRobert S. LeachKevin M. DowneyLance A. WadeKingshuk DasAlan EisenmancrossredirectrecrossdirectDay 31 - November 10, 2021Kingshuk Das defended his laboratory review and testified that Holmes supported voiding results but disputed how the problems were characterized. Investor Alan Eisenman described the company representations behind his investments, later information concerns, and the written risk terms he accepted.
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Day 31 - November 10, 2021

Das on Laboratory Failures; Eisenman on Investment Representations and Risks

Judge Edward J. Davila
6Proceedings
2Pages
2Witnesses
3,247Lines
Day 31 of 51
Appearing:

Kingshuk Das defended his laboratory review and testified that Holmes supported voiding results but disputed how the problems were characterized. Investor Alan Eisenman described the company representations behind his investments, later information concerns, and the written risk terms he accepted.

Full day summary

Before the jury entered, the parties disputed whether a defense argument based on missing laboratory information system data would open the door to evidence explaining the system's unavailability. The court made no final determination, and the defense agreed to provide notice by 4:00 p.m. the next day. On cross-examination, laboratory director Kingshuk Das testified that his review of historical quality-control data revealed deficiencies that should have been identified earlier. He said Holmes supported voiding Edison 3.5 results and shutting down microbiology testing, but on redirect testified that she controlled laboratory resources and disagreed with attributing the voided results to the instrument rather than quality systems. On recross, Das confirmed that counsel prepared two CMS letters he signed and said Holmes lacked experience in laboratory operations, validation, and quality-control programs. Investor Alan Eisenman then described representations about Theranos's technology, pharmaceutical relationships, revenue, an IPO, cartridge demand, and cash flow that informed his investments. He testified that later publicity and company communications led him to invest another $99,990 in 2013, while a subsequent UBS report conflicted with his understanding and prompted unsuccessful requests for information and liquidity. On cross-examination, Eisenman acknowledged contractual warnings about speculative projections, limited operating history, an absent public market, and the possibility of total loss, while maintaining that Holmes had described an intended IPO. The court recessed testimony until November 15 and set further scheduling discussions as the government approached the end of its case.

1. Kingshuk Das — Cross/Redirect/Recross (Continued)

Argument over unavailable laboratory data preceded Kingshuk Das's cross-examination, redirect, and recross about Edison testing, remediation, communications with CMS, and Holmes's role in the laboratory response.

Procedural
LIS Evidence and Door-Opening Hearing

The parties debated whether a possible missing-LIS argument would open the door to evidence about the system's unavailability, and the defense agreed to provide limited notice by the next afternoon. The government also announced a limited recall of Danise Yam concerning an email.

Cross
Kingshuk DasLance A. Wade
1682 lines

Das said Holmes supported his independent laboratory judgments and remediation, while he maintained that Edison validation failures required voiding the results and that the assays should never have been offered.

Redirect
Kingshuk DasRobert S. Leach
186 lines

Das clarified that the next-generation device was not used clinically, described Holmes's control over laboratory resources, and said broader quality-control data supported voiding tests despite disagreement over how to characterize the problems.

Recross
Kingshuk DasLance A. Wade
121 lines

Das confirmed signing counsel-prepared CMS letters, qualified his agreement with their characterization, and said Holmes lacked clinical-laboratory expertise in several technical areas.

Highlights

2. Alan Eisenman — Direct/Cross

Alan Eisenman's direct and cross-examination addressed his Theranos investments, the representations he said informed them, and the risks and information limits he accepted. The day ended with evidentiary rulings, a long-weekend jury admonition, and scheduling discussions.

Direct
Alan EisenmanJohn C. Bostic
357 lines

Early Theranos investor Alan Eisenman described statements he attributed to Holmes about the company's technology, pharmaceutical work, revenue, production, cash flow, and possible liquidity. He also identified his contemporaneous notes and an admitted email chain documenting his later efforts to obtain company information.

Procedural
Exhibit 713 Admissibility Hearing

The court admitted Government's Exhibit 713 after ordering the bottom message on page 4 redacted, noting the defense's hearsay and relevance objections.

Direct
Alan EisenmanJohn C. Bostic
311 lines

Alan Eisenman said technology claims, favorable publicity, and company communications led him to invest another $99,990 in Theranos in December 2013. He later encountered information that contradicted his understanding of the testing system and testified that repeated requests for company updates were unsuccessful.

Cross
Alan EisenmanKevin M. Downey
481 lines

Defense counsel challenged Alan Eisenman's recollection with a contemporaneous email, the 2006 stock-purchase agreement, and prior deposition testimony. Eisenman acknowledged substantial private-investment risks and contractual warnings while maintaining that Holmes's representations informed his decision.

Procedural
Long-Weekend Jury Admonition

The court recessed until November 15 at 9:00 a.m. and renewed its admonition against juror communications, research, and exposure to outside case information.

Procedural
Witness Communications and Disclosure Scheduling

Counsel agreed on limited scheduling contact with Alan Eisenman, defense witness and Jencks disclosures, and a November 15 scheduling discussion.

Highlights

Alan Eisenman — Directtestimony highlightEisenman described taking notes during every call and testified that Holmes projected approximately $50 million to $60 million in coming-year revenue, potentially $200 million in 2008, and a possible IPO within 12 to 18 months.Alan Eisenman — Direct“IF A COMPANY SAYS SOMETHING AND IT CHANGES, THAT'S OKAY, BUT IF IT KEEPS CHANGING YEAR AFTER YEAR AFTER YEAR, IT RAISES SUSPICION.”— Alan EisenmanEisenman described how repeatedly postponed expectations affected his assessment of the company.Alan Eisenman — Direct (Resumed)“MY UNDERSTANDING WAS THE TECHNOLOGY WAS PROVEN, AND THEY WERE OFFERING THE SHAREHOLDERS A DISCOUNTED VALUE BEFORE THEY RAISED THE PRICE AND RAISED A SIGNIFICANT AMOUNT OF ADDITIONAL CAPITAL TO GROW THE COMPANY, AND THIS IS WHAT I THOUGHT WAS GROWTH CAPITAL.”— Alan EisenmanThis states Eisenman's understanding of the company's maturity and the purpose of the 2013 financing.Alan Eisenman — Direct (Resumed)evidence eventGovernment's Exhibit 4845 was published, and Eisenman identified a December 30, 2013 wire transfer of $99,990 to Theranos. He explained why the company's claims and favorable third-party attention overcame his prior difficulty obtaining information.Alan Eisenman — Direct (Resumed)testimony highlightAfter Exhibit 2223 was admitted, Eisenman said a UBS report about off-site processing, venipuncture, longer turnaround, and multiple testing platforms contradicted his prior understanding. He said Theranos had not disclosed its use of third-party analyzers to him.Alan Eisenman — CrossadmissionEisenman acknowledged signing provisions addressing the absence of a public market, speculative projections, limited operating history, and the possibility of a complete loss, while repeatedly emphasizing that Holmes had described an intended IPO.Alan Eisenman — Cross“BECAUSE PRIVATE COMPANIES HAVE A HIGHER LEVEL OF RISK BUT A HIGHER LEVEL OF RETURN. AND TO BE SUCCESSFUL, WHAT MOST PEOPLE DO IS THAT THEY INVEST IN A LOT OF COMPANIES, BECAUSE SOME OF THEM ARE GOING TO GO OUT OF BUSINESS AND SOME OF THEM ARE GOING TO DO REALLY WELL. IT'S A HIGH RISK, HIGHER POTENTIAL REWARD SITUATION.”— Alan EisenmanEisenman expressly acknowledged his understanding of the substantial risk associated with private-company investments.
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