Motion to Exclude Fabrizio Bonanni Testimony and Late Disclosures

MS. SAHARIA: GREAT. WELL, LET ME DISCUSS THE RELEVANCE OF DR. BONANNI'S TESTIMONY AND, MORE GENERALLY, EVENTS OCCURRING IN 2016 AND LATER. JUST FOR THE COURT'S BACKGROUND, DR. BONANNI WAS A BOARD MEMBER AT THERANOS. HE JOINED THE BOARD IN MAY 2016 AND HE STAYED UNTIL THE END OF THE COMPANY IN 2018. HE HELPED GUIDE THE COMPANY AND MS. HOLMES THROUGH THE BUSINESS CHALLENGES THAT THEY WERE FACING AT THE TIME. HE OVERLAPPED ON THE BOARD WITH THE ONLY DIRECTOR THE GOVERNMENT HAS CALLED IN THIS CASE, WHICH WAS GENERAL MATTIS. THEY SERVED ON THE BOARD TOGETHER AT THE SAME TIME. AND HE SERVED ON THE BOARD AT THE TIME THAT THE GOVERNMENT ALLEGES AT LEAST ONE OF THE CONSPIRACIES TOOK PLACE. THE GOVERNMENT'S ALLEGATIONS AND THE INDICTMENT IN PARAGRAPH 22 IS THAT THE PATIENT FOCUSSED CONSPIRACY LASTED THROUGH 2016 AT A TIME WHEN DR. BONANNI WAS ON THE BOARD. THAT'S JUST BACKGROUND ON WHO HE IS. THE GOVERNMENT HAS AT TIMES SUGGESTED THROUGHOUT THIS CASE THAT EVENTS IN 2016 ARE NOT RELEVANT.

AS I'M GOING TO SHOW THE COURT, THAT IS NOT A CONSISTENT POSITION THAT THEY HAVE TAKEN. THEY HAVE THEMSELVES INJECTED THOSE EVENTS INTO THE CASE THEMSELVES. WE HAVE SOUGHT TO WORK AROUND THAT IN THEIR CASE AS -- IN ORDER TO MOVE THE CASE ALONG, BUT AS WE'RE NOW ENTERING THE DEFENSE CASE, IT IS CRITICAL THAT WE ARE PERMITTED TO PRESENT WHAT WE VIEW AS CRITICAL DEFENSE EVIDENCE RELEVANT TO THE CAPACITY OF THERANOS'S TECHNOLOGY AND RELEVANT TO MS. HOLMES'S INTENT, AND THAT DIRECTLY REBUTS EVIDENCE THE GOVERNMENT ELICITED IN ITS CASE. LET ME START WITH HOW DR. BONANNI'S TESTIMONY WILL BE RELEVANT TO THE CAPABILITIES OF THERANOS'S TECHNOLOGY. THIS IS AN ALLEGATION IN PARAGRAPH 12(A) OF THE INDICTMENT. THAT PARAGRAPH ALLEGES THAT MS. HOLMES KNOWINGLY MADE FALSE STATEMENTS CONCERNING THE CAPABILITIES OF THERANOS'S PROPRIETARY ANALYZER, THE TSPU, EDISON, OR MINILAB. DR. BONANNI WE EXPECT WILL TESTIFY ABOUT THE CAPABILITIES OF THE MINILAB.

THE GOVERNMENT ALSO PUT THIS AT ISSUE IN ITS OPENING STATEMENT. THIS IS AT PAGE 539 OF THE TRANSCRIPT. "THE DEFENDANT DECEIVED INVESTORS ABOUT THE CAPABILITIES AND READINESS OF THE THERANOS MINIATURE BLOOD ANALYZER. THERANOS'S BLOOD ANALYZER WENT BY MANY NAMES, EDISON 3.5, 4.0, 4S MINILAB, AND THERANOS SAMPLE PROCESSING UNIT." DURING THE ENTIRETY OF THE CONSPIRACY PERIOD IN THIS CASE, THE MINILAB IS THE PRODUCT THAT THE COMPANY WAS WORKING ON. IT IS THE DEVICE THAT ROGER PARLOFF DESCRIBED YESTERDAY SEEING IN THE BOIES SCHILLER OFFICES AND HAD HIS BLOOD TESTED ON. IT IS THE TECHNOLOGY THAT THERANOS OBTAINED AN FDA APPROVAL FOR IN 2015. THAT EVIDENCE CAME INTO THE RECORD THROUGH MR. EDLIN. IT IS THE SAME FUNDAMENTAL TECHNOLOGY THAT MS. HOLMES WAS DESCRIBING TO INVESTORS DURING THE ALLEGED CONSPIRACY. NOW, THE GOVERNMENT OFTEN MERGES THESE VARIOUS FORMS OF TECHNOLOGY, AS THEY DID IN THAT PORTION OF THE OPENING STATEMENT THAT I JUST READ. SO WHEN MS.

HOLMES IS DESCRIBING THERANOS TECHNOLOGY TO INVESTORS AND THE CAPACITY OF THAT TECHNOLOGY, THE GOVERNMENT WANTS TO LINK THAT TO THE EDISON DEVICE THAT WAS OPERATING IN THE CLIA LAB WHICH, AS WE BY NOW KNOW, OPERATED A SMALL NUMBER OF TESTS. BUT, IN FACT, THE MINILAB TECHNOLOGY THAT THERANOS WAS WORKING ON THROUGHOUT THE ENTIRE CONSPIRACY PERIOD HAD A MUCH GREATER CAPACITY. DR. BONANNI IS FAMILIAR WITH THAT CAPACITY. HE'S FAMILIAR WITH THE MINILAB. AND HE WILL COME IN AND TESTIFY ABOUT THE CAPACITY OF THE MINILAB. THE GOVERNMENT INVITED THIS TESTIMONY ITSELF DURING AN ARGUMENT ABOUT THE ADMISSIBILITY OF MS. HOLMES'S STATEMENTS IN 2016 AT THE AAC CONFERENCE. YOU PROBABLY REMEMBER THERE WAS A LOT OF DISCUSSION ABOUT WHETHER WE COULD PRESENT HER ORAL STATEMENTS AT THAT CONFERENCE, AND THE GOVERNMENT OBJECTED ON THE GROUND THAT IT WAS HEARSAY AT TRANSCRIPT 4591. "WE CERTAINLY OBJECT TO WHOLESALE STATEMENTS BY THE DEFENDANT UNSWORN ABOUT WHAT HER TECHNOLOGY CAN DO. IF SHE WANTS TO STAND BY THOSE STATEMENTS, SHE SHOULD TAKE THE STAND AND SAY IT UNDER OATH SUBJECT TO CROSS-EXAMINATION." WE ARE BRINGING A WITNESS WHO WILL BE SUBJECT TO OATH, SUBJECT TO CROSS-EXAMINATION TO DESCRIBE WHAT THAT TECHNOLOGY CAN DO. AND, AGAIN, THE TECHNOLOGY THAT DR. BONANNI WILL DESCRIBE THAT HE BECAME FAMILIAR WITH IS THE SAME FUNDAMENTAL TECHNOLOGY THAT THERANOS WAS WORKING ON THROUGHOUT THE CONSPIRACY PERIOD AND THAT MS. HOLMES WAS DESCRIBING TO INVESTORS.

MS. SAHARIA: AND LET ME JUST POINT THE COURT TO THE TESTIMONY OF MR. EDLIN AND SECRETARY MATTIS. THE GOVERNMENT TWICE ASKED MR. EDLIN IN DIRECT EXAMINATION, AND THEN IN REDIRECT, WHY HE LEFT THE COMPANY, AND HE PROVIDED TESTIMONY THAT HE LEFT THE COMPANY BECAUSE HE LOST CONFIDENCE IN THE COMPANY'S REPRESENTATIONS ABOUT THE CAPACITY OF THE TECHNOLOGY. HE LEFT THE COMPANY IN DECEMBER OF 2016. AND I'LL JUST READ INTO THE RECORD THE SECOND OF THESE COLLOQUIES BECAUSE I THINK IT'S QUITE RELEVANT AT PAGE 3304. THIS IS ON REDIRECT. THIS WAS THE LAST Q AND A OF THE ENTIRE REDIRECT. "QUESTION: REMIND US WHEN YOU DECIDED TO LEAVE THERANOS. "ANSWER: DECEMBER OF 2016. "QUESTION: AND WHEN YOU MENTIONED THAT PART OF YOUR REASON TO LEAVE WAS ABOUT THE DESIRE TO ATTEND BUSINESS SCHOOL? "ANSWER: YES. "QUESTION: AND WERE THERE ALSO THINGS ABOUT THERANOS OR THINGS THAT YOU UNDERSTOOD THAT CAUSED YOU TO NO LONGER WANT TO WORK THERE? "ANSWER. YES. "QUESTION: CAN YOU SUMMARIZE THOSE FOR US?

"ANSWER: WELL, IN THE YEAR AFTER THE INITIAL "WALL STREET JOURNAL" ARTICLES CAME OUT, THE COMPANY CLAIMED THAT IT WOULD BE ABLE TO PROVE THAT THE TECHNOLOGY WORKED, AND PROVE THAT THOSE CLAIMS WERE NOT TRUE, AND THAT THE COMPANY WAS UNABLE TO CONVINCE ANYONE THAT THOSE CLAIMS WERE UNTRUE AND THAT ITS TECHNOLOGY AND SCIENCE WORKED, AND THAT GAVE ME SERIOUS DOUBTS AS TO WHETHER THE COMPANY WAS CAPABLE OF PROVING THAT THE TECHNOLOGY WORKED. "AND THERE WERE A NUMBER OF DIFFERENT OPPORTUNITIES THAT THE COMPANY HAD TO PROVE ITSELF, AND THEY WERE ALL UNSUCCESSFUL AND I ULTIMATELY REACHED THE CONCLUSION THAT THOSE ATTEMPTS WERE UNSUCCESSFUL BECAUSE THEY COULDN'T HAPPEN AND THEY WERE NEVER GOING TO HAPPEN." DR. BONANNI WILL REBUT THAT TESTIMONY. HE WILL, WE EXPECT, SAY THAT HE BELIEVED THE TECHNOLOGY AND SCIENCE WORKED. HE WILL DESCRIBE THE EFFORTS THE COMPANY TOOK TO PROVE ITSELF, AND HE WILL DESCRIBE WHAT HE VIEWED AS THE SUCCESSES IN THOSE EFFORTS TO PROVE ITSELF.

MS. SAHARIA: WELL, SO THE INTENT ISSUE IS THAT THE GOVERNMENT HAS, AGAIN, PUT INTO EVIDENCE THROUGH A SERIES OF WITNESSES EVIDENCE INTENDING TO SUGGEST THAT MS. HOLMES'S EFFORTS TO ADDRESS CONCERNS AFTER THOSE CONCERNS WERE RAISED WERE NOT GENUINE. THE GOVERNMENT HAS ARGUED THAT THOSE -- AND I'LL SPEAK TO THOSE -- THAT THOSE ARE EVIDENCE OF CONSCIOUSNESS OF GUILT. THEY HAVE SPECIFICALLY ARGUED THAT THE LACK OF GENUINENESS IS EVIDENCE THAT SHE DID NOT BELIEVE THAT THE TECHNOLOGY WORKED, AND THAT IT GOES TO HER STATE OF MIND. AND LET ME JUST GIVE THE COURT THREE EXAMPLES. FIRST OF ALL, GENERAL MATTIS. THE GOVERNMENT ELICITED TESTIMONY FROM GENERAL MATTIS -- THIS IS AT 1593 OF THE TRANSCRIPT -- THAT HE AND OTHER MEMBERS OF THE BOARD RECOMMENDED THAT THE COMPANY ENGAGED IN COMPARATIVE TESTING OR BLIND TESTING OF THE DEVICES, AND THAT THAT DIDN'T HAPPEN.

THIS IS AN ALLEGATION IN THE GOVERNMENT'S 404(B) NOTICE THAT THEY SERVED ON US A LONG TIME AGO WHERE THEY ARGUE THAT THAT IS EVIDENCE OF CONSCIOUSNESS OF GUILT. DR. BONANNI, WHO SERVED ON THE BOARD AT THE SAME TIME AS GENERAL MATTIS, WILL REBUT THAT TESTIMONY. WE EXPECT HIM TO DESCRIBE TO THE COMPANY -- TO DESCRIBE TO THE JURY THE DIFFERENT OPTIONS AVAILABLE TO THERANOS FOLLOWING "THE WALL STREET JOURNAL" ARTICLE, THE PROS AND CONS OF THOSE APPROACHES, WHAT HE RECOMMENDED TO THE COMPANY, WHY HE RECOMMENDED THAT THE COMPANY PURSUE FDA APPROVAL AS OPPOSED TO THE COMPARATIVE TESTING THAT GENERAL MATTIS WAS SUGGESTING, AND WHY THE COMPANY ULTIMATELY AGREED WITH DR. BONANNI'S APPROACH AND NOT WITH GENERAL MATTIS'S APPROACH. SO THAT TESTIMONY DIRECTLY REBUTS THE SUGGESTION FROM THE GOVERNMENT THAT THE LACK OF ENGAGEMENT AND COMPARATIVE TESTING SOMEHOW SHOWS CONSCIOUSNESS OF GUILT. DR. DAS. THE GOVERNMENT ELICITED TESTIMONY FROM DR. DAS AT 5824 AND 5834 ABOUT SUPPOSED PUSH BACK FROM MS.

HOLMES THAT HE RECEIVED WHEN HE RAISED ISSUES IN THE CLINICAL LAB. AND WHEN WE HAD ARGUMENT ABOUT THAT AND ARGUMENT ABOUT THE VOIDING ISSUE IN PARTICULAR, THE GOVERNMENT ARGUED, THIS IS A QUOTE, DR. DAS WILL SAY THAT WHEN HE TOLD MS. HOLMES WE NEED TO VOID THE TESTS, HE GOT PUSH BACK. SHE DID NOT WANT TO DO THAT. SHE CAME UP WITH ALTERNATIVE REASONS FOR IT, AND THAT PUSH BACK IS CONSCIOUSNESS OF GUILT. IT GOES TO HER STATE OF MIND ABOUT THERANOS'S TECHNOLOGY." THAT'S AT 5589 AND -90. AND THEN ON THE NEXT PAGE AGAIN THE GOVERNMENT SAYS, "THE WHOLE TRUTH HERE IS THEY CAME UP WITH AN EXPLANATION FOR WHY THEY WERE VOIDING THE TESTS, THEY MINIMIZED THOSE ISSUES TO THEIR INVESTORS, AND WHEN SHE'S GOING TO ACC AND THESE OTHER THINGS, IT'S A PR SPIN, NOT GENUINE INDICATION OF CONFIDENCE IN HER TECHNOLOGY. IT GOES RIGHT TO HER STATE OF MIND." THAT'S AT 5590. AND THEN WE HEARD FROM LISA PETERSON THE SAME TYPE OF EVIDENCE, THAT SHE BELIEVED THAT MS.

HOLMES WAS NOT BEING FORTHCOMING, THAT SHE WAS DOWNPLAYING THE ISSUES THAT WERE OCCURRING IN THE PRESS THAT SUGGESTED THAT MS. HOLMES WAS NOT TAKING THESE ISSUES SERIOUSLY, AGAIN, AS EVIDENCE OF CONSCIOUSNESS OF GUILT. DR. BONANNI WILL REBUT ALL OF THIS TESTIMONY. HE WILL SPEAK TO MS. HOLMES'S STATE OF MIND IN, IN SEEKING PROACTIVELY TO CORRECT ISSUES IN THE COMPANY. HE WILL TESTIFY TO HER ACTIONS IN 2016 AND BRINGING OUTSIDERS INTO THE COMPANY TO EXAMINE THE TECHNOLOGY, NEW DIRECTORS, LIKE HIMSELF, WITH RELEVANT EXPERTISE IN THE AREA OF MEDICAL TECHNOLOGY, MEMBERS OF THE SCIENTIFIC AND MEDICAL ADVISORY BOARD, AND MEMBERS OF THE TECHNOLOGY ADVISORY BOARD. HE WAS TESTIFY TO HER EFFORTS TO OBTAIN FDA APPROVAL FOR THE MINILAB TECHNOLOGY DURING THIS TIME, TO PRESENT THAT TECHNOLOGY TO THE FDA FOR REVIEW. HE, WE EXPECT, WILL BE TESTIFYING TO HER WILLINGNESS TO EXPOSE THE TECHNOLOGY TO INDUSTRY SCRUTINY AT THE AAC CONFERENCE. AND HE WILL TESTIFY THAT SHE BELIEVED IN THE TECHNOLOGY UNTIL THE VERY END.

MS. SAHARIA: JUST I THINK THREE POINTS, YOUR HONOR -- FOUR POINTS. WE HAVE COMPLIED WITH OUR JENCKS OBLIGATION. WE HAVE NO WRITTEN STATEMENTS FROM MR. BONANNI TO PRODUCE OTHER THAN WHAT WE HAVE PRODUCED TO THE GOVERNMENT. I DON'T KNOW WHAT ELSE TO SAY. WE'RE IN COMPLIANCE WITH OUR JENCKS OBLIGATION. I HEARD MR. SCHENK ARGUE THAT LULLING STATEMENTS THAT OCCURRED IN 2016 ARE RELEVANT. IF THAT'S THE CASE, I DON'T SEE HOW THE GOVERNMENT CAN ARGUE THAT MR. BONANNI CAN'T TESTIFY TO SIMILAR ACTIONS BY MS. HOLMES THAT SHOW THAT SHE WAS NOT INTENDING TO LULL INVESTORS, THAT SHE WAS NOT INTENDING TO DECEIVE THE PUBLIC IN 2016, THAT SHE WAS ENGAGED IN GOOD FAITH IN TRYING TO CORRECT ISSUES AT THE COMPANY.

WITH RESPECT TO THE ISSUE OF HIS PREFERENCE AS TO WHAT ACTIONS THE COMPANY SHOULD TAKE WITH RESPECT TO FDA APPROVAL VERSUS COMPARATIVE TESTING, THE GOVERNMENT ELICITED FROM GENERAL MATTIS WHAT HIS PREFERENCE WAS, AND THEY WANT TO USE THAT, AS THEY'VE MADE VERY CLEAR IN THEIR 404(B) NOTICE, TO ARGUE TO THE JURY THAT MS. HOLMES HAD THE INTENT TO DECEIVE BECAUSE SHE DIDN'T PUT HER TECHNOLOGY TO COMPARATIVE TESTING AND THAT REFLECTS HER KNOWLEDGE THAT THE TECHNOLOGY WAS NOT CAPABLE OF DOING WHAT SHE HAD SAID. IT'S HIGHLY RELEVANT TO HER STATE OF MIND THAT SHE RECEIVED COMPETING ADVICE FROM ANOTHER MEMBER OF HER BOARD. AND THAT, BY THE WAY, IS THE ADVICE THAT THE COMPANY ULTIMATELY TOOK. THAT'S, OF COURSE, RELEVANT TO HER STATE OF MIND AND TO REBUTTING THE GOVERNMENT'S THEORY. AND THEN ON THE POINT OF THE INVESTOR CONSPIRACY, AS I SAID, HE WILL TESTIFY TO THE CAPACITY OF THE MINILAB TECHNOLOGY. IT'S CLEARLY RELEVANT TO THE INVESTOR CONSPIRACY. IT'S ALLEGED IN THE INDICTMENT AT PARAGRAPH 12(A), AND WE'RE ENTITLED TO BRING A WITNESS TO DESCRIBE TO THE JURY WHAT THAT TECHNOLOGY WAS CAPABLE OF DOING.

MS. TREFZ: I COMPLETELY UNDERSTAND, YOUR HONOR. MY POINT WAS SIMPLY THAT I WOULD LIKE TO KNOW WHAT THEIR CONCERN ACTUALLY IS. I'M NOT SURE WHAT MR. SCHENK WAS REFERRING TO THAT WAS PROVIDED THIS MORNING. IT MAY BE THAT THE EVIDENCE THAT THEY'RE POINTING TO OR THE PARTICULAR EXHIBIT, IT MAY BE THAT IT'S SOMETHING THAT WE ACTUALLY WILL NOT OFFER AND SO IT MAY NOT BE AN ISSUE. I JUST, I DO NOT KNOW WHAT IT IS. THE VIDEO CLIPS, YOU KNOW, I CAN EXPLAIN THAT, YOU KNOW, WHAT THEY ARE ARE VIDEOS OF THE TECHNOLOGY THAT'S BEEN DESCRIBED MULTIPLE TIMES IN THE CASE. THE GOVERNMENT HAS LONG HAD NOTICE OF THE PARTICULAR VIDEO, ON THE -- THE FULL VIDEO ON THE WITNESS LIST, OR THE EXHIBIT LIST. WE ARE ONLY PLAYING SMALL -- WE INTEND TO PLAY FOR DEMONSTRATIVE PURPOSES SMALL CLIPS THAT DR. BONANNI CAN, YOU KNOW, EXPLAIN WHAT IS HAPPENING SO THAT THE JURY UNDERSTANDS HOW THIS TECHNOLOGY WORKS AND PROVIDE VISUAL EVIDENCE AND -- YOU KNOW, RATHER THAN SIMPLY A WITNESS DESCRIPTION.

SO MANY OF THE VIDEOS -- THERE ARE FOUR VERY SHORT CLIPS, AND THEY WILL -- MY INTENTION WAS TO OFFER THEM FOR DEMONSTRATIVE PURPOSES. AGAIN, I'M HAPPY TO HEAR WHAT THE CONCERNS ARE. I THINK A GENERAL STATEMENT THAT THERE WAS LATE DISCLOSURE IS A LITTLE BIT -- IS PERHAPS AN OVERSTATEMENT, AND I WOULD LIKE THE OPPORTUNITY TO ADDRESS WITH THE GOVERNMENT WHAT THE PARTICULAR CONCERNS THEY HAVE ARE BECAUSE WE MAY BE ABLE TO ADDRESS THEM. AND SO I JUST -- I DON'T WANT THE COURT TO BE LEFT WITH THE MISIMPRESSION THAT THERE WAS SOMEHOW NO DISCLOSURE HERE. THE MAJORITY OF THE EXHIBITS THAT WE HAVE PROVIDED HAVE BEEN ON OUR LIST SINCE ONE OF THE VERY FIRST DISCLOSURES IN THE CASE, AND THERE ARE OTHER ITEMS THAT HAVE COME UP AS THE TRIAL PROGRESSES, AS IS ALWAYS THE CASE. AND SO I, I DIDN'T MEAN TO SUGGEST THAT, YOU KNOW, THAT THERE SHOULD BE SOME KIND OF, YOU KNOW, ADJOURNMENT. MY INITIAL POINT, AND STILL MY POSITION, IS THAT WE -- WHAT WE SHOULD HAVE THE OPPORTUNITY TO DO IS TO TALK WITH THE GOVERNMENT AND TO UNDERSTAND WHAT THEIR CONCERNS ARE. ANOTHER OPTION WOULD BE, YOU KNOW, IF THEY'RE ACTUALLY -- IF THEY HAVE CONCERNS AND THEY WOULD LIKE THE OPPORTUNITY TO RECALL THE WITNESS ON CROSS TO PUT IN MORE -- PUT IN MORE EVIDENCE, THAT COULD POTENTIALLY BE SOMETHING TO DO AS WELL. I JUST -- I'M HESITANT TO ACCEPT THE REPRESENTATION THAT THERE IS SOME KIND OF UNFAIRNESS HERE BECAUSE I DON'T BELIEVE THAT THAT'S THE CASE.