Closing Argument by the Prosecution

MR. SCHENK: GOOD MORNING. ELIZABETH HOLMES HAD A CHOICE TO MAKE IN 2009, 2010, AND THEN AGAIN IN 2013. THERANOS WAS RUNNING OUT OF MONEY, AND MS. HOLMES HAD STOPPED RECEIVING POSITIVE FEEDBACK FROM THE LARGE PHARMACEUTICAL COMPANIES THAT THERANOS HAD BEEN DOING WORK WITH, AND SHE WAS SPENDING HER TIME INSTEAD ON THE PHONE WITH A THERANOS BANKER BEGGING HIM TO CLEAR A CHECK EARLY SO THAT THERANOS COULD PAY ITS EXPENSES. AND IT WAS IN THAT MOMENT THAT MS. HOLMES HAD A CHOICE TO MAKE. SHE COULD WATCH THERANOS SLOWLY FAIL, OR SHE COULD MAKE A DIFFERENT DECISION. AND WE NOW KNOW, THROUGH THE EVIDENCE, THAT SHE MADE A DIFFERENT DECISION. MS. HOLMES MADE THE DECISION TO DEFRAUD HER INVESTORS AND THEN TO DEFRAUD PATIENTS. SHE CHOSE FRAUD OVER BUSINESS FAILURE. SHE CHOSE TO BE DISHONEST WITH HER INVESTORS AND WITH PATIENTS. THAT CHOICE WAS NOT ONLY CALLOUS, IT WAS CRIMINAL. AND THAT'S WHY WE'VE SPENT THE LAST THREE-PLUS MONTHS TOGETHER. IT'S BECAUSE MS.

HOLMES KNEW ONE THING FOR CERTAIN, AND THAT WAS IN THAT TIMEFRAME -- LET'S SAY 2013, 2014 -- AN HONEST PITCH FILLED WITH HONEST REPRESENTATIONS TO HER INVESTORS AND TO PATIENTS WOULD NOT HAVE RESULTED IN ANY REVENUE FOR THERANOS, NO MONEY FOR THERANOS WITH HONEST STATEMENTS. IMAGINE FOR A MOMENT WHAT AN HONEST PITCH WOULD HAVE SOUNDED LIKE TO INVESTORS IN 2013. MS. HOLMES WOULD HAVE TOLD HER INVESTORS THAT THE COMPANY, THAT THERANOS HAD BEEN AROUND FOR ABOUT A DECADE BY THAT POINT AND ONLY HAD A HANDFUL OF TESTS OR ASSAYS ON ITS DEVICE, AND THOSE TESTS FREQUENTLY CAUSED PROBLEMS. THEY STILL REMAINED INACCURATE AND UNRELIABLE. MS. HOLMES WOULD HAVE TOLD THESE POTENTIAL INVESTORS THAT THERANOS HAD NOT BEEN VALIDATED BY PHARMACEUTICAL COMPANIES. MS. HOLMES WOULD HAVE TOLD INVESTORS THAT THERANOS DID NOT HAVE A HEALTHY AND GROWING OR EXPANDING RELATIONSHIP WITH WALGREENS. MS.

HOLMES WOULD HAVE TOLD HER INVESTORS THAT THERANOS DID NOT, OR ITS TECHNOLOGY WAS NOT ON MILITARY HELICOPTERS, MEDEVAC HELICOPTERS, IT WAS NOT DEPLOYED IN THE BATTLEFIELD, IT WAS NOT IN AFGHANISTAN, IT WAS NOT IN THE MIDDLE EAST. MS. HOLMES KNEW THAT THESE HONEST STATEMENTS WOULD NOT HAVE LED TO ANY REVENUE, AND SHE CHOSE A DIFFERENT PATH. NOW, AN HONEST PITCH TO PATIENTS WOULD HAVE BEEN MUCH SIMPLER, MORE STRAIGHTFORWARD. SHE WOULD HAVE INVITED PATIENTS TO USE THE BLOOD TESTING SERVICE AT WALGREENS, BUT THEN TOLD THEM NOT TO RELY ON THE RESULTS, THAT THE BLOOD TESTS WERE NOT OFTEN ACCURATE, THEY WERE NOT RELIABLE, AND YOU'RE WELCOME TO COME TO WALGREENS TO GET A BLOOD TEST, BUT YOU SHOULDN'T RELY ON THEM. YOU CAN TELL THAT AN HONEST PITCH, FIRST TO INVESTORS AND THEN TO PATIENTS, WOULD NOT HAVE RESULTED IN ANY REVENUE FOR HER, AND WHEN THERANOS WAS RUNNING OUT OF MONEY, THAT WAS NECESSARY.

NOW, I WANT TO GIVE YOU A LITTLE BIT OF A ROADMAP, WHAT WE'RE GOING TO TALK ABOUT THIS MORNING. I'M GOING TO START BY GOING THROUGH SOME SLIDES WITH YOU, AND THESE SLIDES COVER FOUR TOPICS. THE FIRST TOPIC IS A SUMMARY OF THE WITNESSES THAT TESTIFIED IN THE CASE. THE GOVERNMENT CALLED ABOUT 30 WITNESSES IN THIS CASE, AND I WANT TO REMIND YOU WHO TESTIFIED, WHERE THEIR TESTIMONY FITS INTO THE STORY, AND A HIGHLIGHT OR TWO FROM THEIR TESTIMONY. THE SECOND TOPIC WE'LL COVER ARE THE CRIMES THAT MS. HOLMES IS CHARGED WITH COMMITTING. SHE'S CHARGED WITH COMMITTING A COUPLE OF CRIMES, AND I WANT TO GO THROUGH THOSE WITH YOU AND EXPLAIN HOW THEY FIT INTO THE STORY. I THEN WANT TO TALK TO YOU ABOUT THE ELEMENTS OF THOSE CRIMES, WHAT THE GOVERNMENT IS REQUIRED TO PROVE BEYOND A REASONABLE DOUBT IN ORDER FOR YOU TO CONVICT MS. HOLMES. AND THEN FINALLY WITH THE SLIDES, WE'LL TALK ABOUT THE EVIDENCE. YOU'VE SEEN MANY EMAILS, TEXT MESSAGES, RECORDINGS.

WE'LL GO THROUGH SOME OF THOSE AND WE'LL TALK ABOUT HOW THE EVIDENCE FITS INTO THOSE ELEMENTS, HOW THE EVIDENCE PROVES THOSE ELEMENTS. AND THEN AFTER THAT WE'LL STEP AWAY FROM THE SLIDES FOR A WHILE. THERE ARE A FEW FINAL TOPICS THAT I WANT TO TALK TO YOU ABOUT BEFORE WE BRIEFLY RETURN TO THE SLIDES AT THE VERY END. SO LET'S START. THE FIRST WITNESS IN TRIAL WAS A WOMAN NAMED SO HAN SPIVEY. THAT'S HER NAME NOW. YOU RECALL AT THE TIME SHE WORKED AT THERANOS, HER NAME WAS DANISE YAM. SHE WAS THE CONTROLLER AT THERANOS. YOU ALSO MAY REMEMBER SHE TESTIFIED TWICE IN THIS TRIAL. SHE TESTIFIED AT THE VERY BEGINNING, AND THEN SHE CAME BACK AND TALKED ABOUT ONE PARTICULAR EMAIL, AND WE'LL TALK ABOUT THAT EMAIL A LITTLE BIT LATER ON THIS MORNING.

MR. SCHENK: MS. YAM, AS I'LL TRY TO REFER TO HER THIS MORNING BECAUSE THAT'S HOW YOU'LL SEE HER NAME IN DOCUMENTS, TOLD YOU THAT SHE HAD TALKED TO MS. HOLMES IN 2009 ABOUT THE CASH POSITION, ABOUT THE FINANCIAL TROUBLES AT THERANOS, THAT THERANOS WOULD NOT BE ABLE TO PAY ALL OF ITS VENDORS, AND THAT THEY WOULD HAVE TO CONTACT THIS PARTICULAR BANKER TO GET A CHECK CLEARED, WHAT I REFERENCED A MOMENT AGO. LET ME SAY ONE BRIEF THING ABOUT THESE SLIDES IN GENERAL. THEY WON'T BE BACK IN THE DELIBERATION ROOM WITH YOU. YOU WON'T HAVE A COPY OF THESE SLIDES. IN THE LOWER RIGHT CORNER, SOMETIMES YOU'LL SEE THE PAGE NUMBER FOR A TRANSCRIPT. YOU ALSO WON'T HAVE THE TRANSCRIPT OF THE TESTIMONY. YOUR MEMORY OF WHAT THE WITNESS TESTIFIED TO IS WHAT YOU SHOULD FOCUS ON. THERE ARE INSTANCES WHEN I WILL SHOW YOU AN EXHIBIT, AND THE EXHIBIT NUMBER WILL BE IN THE LOWER RIGHT CORNER, AND IF THAT'S AN EXHIBIT THAT TRIGGERS SOMETHING IN YOUR MIND, YOU MAY WANT TO JOT THAT DOWN.

THERE ALSO MAY BE INSTANCES WHEN I WILL ACTUALLY SUGGEST TO YOU THAT YOU WRITE SOMETHING DOWN FROM THE SLIDES. FORGIVE ME FOR BEING PRESUMPTUOUS IN THOSE MOMENTS. I THINK THERE MIGHT BE INSTANCES WHEN YOU'LL FIND IT USEFUL TO HAVE CERTAIN INFORMATION DURING YOUR DELIBERATIONS. ERIKA CHEUNG WAS THE NEXT WITNESS WHO TESTIFIED. MS. CHEUNG ALSO WORKED AT THERANOS, AND JUST ONE OF THE HIGHLIGHTS FROM HER TESTIMONY WAS THAT SHE DESCRIBED TO YOU THE REASON THAT SHE RESIGNED FROM THERANOS, AND IT WAS SIMPLE. SHE WAS UNCOMFORTABLE PROCESSING PATIENT SAMPLES. THE NEXT WITNESS WAS SUREKHA GANGADKHEDKAR. SHE ALSO WORKED AT THERANOS. SHE TOLD YOU THAT WHEN SHE RETURNED FROM A VACATION IN OR AROUND AUGUST IN 2013, SHE LEARNED THAT THERANOS WAS ABOUT TO BEGIN TESTING. THAT'S RIGHT AROUND THE TIME THEY OPENED WITH WALGREENS. THAT WAS SEPTEMBER OF 2013. AND MS. GANGAKHEDKAR FELT THAT THE VALIDATION PROCESS WAS BEING RUSHED. SHE FELT PRESSURE.

SHE SAID THAT PRESSURE CAME FROM THE DEFENDANT, AND SHE HAD SOME CONCERNS BECAUSE OF THAT. SHE ALSO TOLD YOU THAT WHEN SHE RESIGNED, SHE SPOKE TO MS. HOLMES ABOUT THE DECISION TO RESIGN. SHE EXPRESSED HER CONCERNS, AND HERE IT'S REFERRED TO AS THE EDISON 3.0. THEY HAD A 3 SERIES AND A 4 SERIES, AND WE'RE GOING TO TALK A FAIR AMOUNT ABOUT THOSE DIFFERENT DEVICES. YOU NOW KNOW THAT THE 3 SERIES WAS THE DEVICE THAT WAS USED TO TEST PATIENTS' BLOOD IN THE WALGREENS ROLLOUT. THE 4 SERIES WAS THE DEVICE THAT YOU SAW AT SOME POINT, A VIDEO OF WHERE THE SORT OF ARM WAS MOVING AND PICKING UP SAMPLES. A DEFENSE WITNESS NAMED DR. BONANNI TESTIFIED THAT WAS NEVER USED FOR PATIENT SAMPLES. THAT WAS A DIFFERENT DEVICE. SO WHAT MS. GANGAKHEDKAR WAS WORRIED ABOUT WAS THIS 3 SERIES DEVICE, THE ONE THAT THEY WERE GOING TO USE WITH WALGREENS PATIENTS. SHE CONFRONTED MS. HOLMES ABOUT IT, AND THE RESPONSE THAT SHE GOT WAS ELIZABETH HOLMES SAID, I MADE A PROMISE AND I NEED TO DELIVER.

ESSENTIALLY THE TRAIN IS ON THE TRACKS AND I CAN'T STOP IT. AND MS. GANGAKHEDKAR WAS UNCOMFORTABLE WITH THAT AND RESIGNED. DR. ZACHMAN WAS THE NEXT WITNESS WHO TESTIFIED. YOU RECALL THAT DR. ZACHMAN WAS TREATING A PATIENT OF HERS NAME BRITTANY GOULD. MS. GOULD WAS PREGNANT AND GOT AN HCG TEST AT THERANOS. YOU HEARD THAT THE NUMBERS, HCG NUMBERS ARE SUPPOSED TO CONSTANTLY GO UP, MAYBE DOUBLE OR SO IF THERE'S A HEALTHY, VIABLE PREGNANCY. MS. GOULD, BRITTANY GOULD, GOT A NUMBER AT THERANOS THAT SUGGESTED OTHERWISE, THAT SUGGESTED THAT THERE WAS A PROBLEM OR THAT THE PREGNANCY WAS NOT HEALTHY. AND FIRST DR. ZACHMAN TESTIFIED AND DESCRIBED THAT PROCESS TO YOU, SORT OF BACKGROUND ON THE HCG TEST, AND ALSO HER OPINION THAT THE BRITTANY GOULD TEST WAS NOT ACCURATE BECAUSE THE END OF THE STORY WAS BRITTANY GOULD DID HAVE A VIABLE PREGNANCY THAT SHE TOOK TO TERM. AND THEN MS. GOULD HERSELF TESTIFIED AFTERWARDS AND SHE WALKED YOU THROUGH SOME OF THE VARIOUS TESTS THAT SHE RECEIVED. IT'S THE THIRD ONE DOWN. THAT WAS THE ONE THAT WAS CONCERNING TO DR. ZACHMAN. THAT WAS THE ONE THAT SHOWED A SIGNIFICANT DROP FROM AROUND A NUMBER OF 12,000 TO A LITTLE OVER 100, AND THAT THAT WAS NOT AN ACCURATE TEST. BRITTANY GOULD ALSO TOLD YOU THAT BASED ON MARKETING MATERIALS, INFORMATION THAT SHE HAD HEARD ABOUT -- SHE LIVED IN ARIZONA. THERANOS MARKETED ITS SERVICES IN ARIZONA. MS. GOULD THOUGHT THAT, I WILL GET ACCURATE AND RELIABLE RESULTS IF I GO TO THERANOS.

MR. SCHENK: THIS HELPED SATISFY AN ELEMENT CALLED MATERIALITY. WE'LL TALK ABOUT THAT LATER WHEN WE GET TO THE ELEMENTS, BUT I JUST SORT OF WANT TO JUST PUT A PIN IN THAT RIGHT NOW SO YOU KNOW WHEN WE GET TO IT LATER THAT THIS IS ONE OF THE ARGUMENTS OR PIECES OF EVIDENCE THAT YOU HAVE HEARD THAT MAKES REFERENCES TO THE STATEMENTS THAT WERE MADE MATTERED, THE FALSE STATEMENTS THAT WERE MADE TO INVESTORS AND ALSO TO PATIENTS WERE OF THE TYPE THAT WOULD ACTUALLY INFLUENCE SOMEONE TO SPEND MONEY TO INVEST OR TO PURCHASE BLOOD TESTS. GENERAL MATTIS WAS THE NEXT WITNESS IN THE CASE. YOU MAY RECALL THAT GENERAL MATTIS WAS ON THE BOARD OF DIRECTORS AT THERANOS. AMONG THE THINGS THAT HE TOLD YOU WAS THAT HE BEGAN TO LEARN THINGS ABOUT THERANOS FROM THE PRESS.

THERE WAS AN ARTICLE THAT YOU HEARD ABOUT IN "THE WALL STREET JOURNAL" IN AROUND OCTOBER OF 2015 BY A REPORTER NAMED JOHN CARREYROU, AND THAT WAS SORT OF ONE OF THE FIRST INSTANCES WHEN NEGATIVE INFORMATION, SIGNIFICANT NEGATIVE INFORMATION ENTERED THE PUBLIC DOMAIN ABOUT THERANOS, AND EVEN BOARD MEMBERS WERE LEARNING THINGS IN THE PRESS. AND GENERAL MATTIS TOLD YOU THAT THAT LACK OF TRANSPARENCY WAS CONCERNING TO HIM. THE NEXT WITNESS THAT TESTIFIED WAS JUSTIN OFFEN. MR. OFFEN WORKS FOR PWC AND HE CAME HERE TO EXPLAIN TO YOU THE PROCESS OF EXTRACTING TEXT MESSAGES. THEN AFTER MR. OFFEN TESTIFIED, YOU BEGAN TO SEE A LOT MORE TEXT MESSAGES OVER THE COURSE OF THE TRIAL, AND MR. OFFEN DESCRIBED TO YOU THE PROCESS, HOW TEXT MESSAGES WERE DOWNLOADED FROM PHONES AND COMPUTERS. AND THERE'S ONE THREAD THAT WAS INTRODUCED THROUGH MR. OFFEN THAT I HAVE ON THE SCREEN NOW. FIRST LET ME HIGHLIGHT THE DATE FOR YOU, SEPTEMBER 22ND, 2015. THAT WAS DURING A CMS INSPECTION.

CMS IS THE CENTER FOR MEDICARE AND MEDICAID SERVICES WITHIN THE DEPARTMENT OF HEALTH AND HUMAN SERVICES. YOU HEARD THAT THEY HAVE A ROLE IN REGULATING CLINICAL LABORATORIES, AND THEY DO PERIODIC INSPECTIONS. THEY WERE DOING AN INSPECTION AT THIS TIME, AND HOLMES AND BALWANI ARE TEXTING EACH OTHER DURING THE INSPECTION. AND YOU CAN SEE SOME OF THE COMMENTS ARE, "VERY HOSTILE SO FAR. THEY HAVE COMPLAINTS." AND THEN FURTHER DOWN THEY TALK ABOUT NAMES OF INDIVIDUALS, TYLER, ADAM, AND JC, THAT'S TYLER SHULTZ, ADAM ROSENDORFF AND JOHN CARREYROU. HOLMES AND BALWANI ARE TRYING TO FIGURE OUT THE SOURCE, WHERE ARE THE COMPLAINTS THAT CMS IS FOLLOWING UP ON, AND THEY'RE IDENTIFYING TWO FORMER EMPLOYEES, YOU'VE HEARD THESE NAMES BEFORE, AND THE REPORTER. AND HOLMES AND BALWANI ARE SORT OF WONDERING -- AND MAYBE "INVESTIGATING" IS A FAIR WORD TO USE -- WHERE DID THESE COMPLAINTS COME FROM? HOW DID THE LEAKS HAPPEN? AND THEN MS. HOLMES WRITES, "PRAYING LITERALLY NONSTOP." MS.

HOLMES IS PRAYING DURING A CMS INSPECTION. THIS IS A POINT I'M GOING TO COME BACK TO LATER. WHEN MS. HOLMES WAS ON THE STAND, SHE TOLD YOU THAT WHEN CMS ISSUED A REPORT -- ACTUALLY, JUDGE DAVILA JUST A MOMENT AGO REFERRED TO IT -- IT'S THAT JANUARY 2016 REPORT FROM CMS. MS. HOLMES TOLD YOU THAT WHEN THAT REPORT CAME OUT, THAT WAS SORT OF A LIGHT BULB MOMENT FOR HER, A EUREKA, IF YOU WILL. SHE DISCOVERED THAT THE LAB HAD PROBLEMS, THAT MR. BALWANI WAS NOT THE BUSINESSMAN THAT HE SAID HE WAS, AND THAT THE LAB WASN'T THE BEST LAB IN THE COUNTRY. BUT DURING THE INSPECTION THE PRIOR YEAR, SHE'S PRAYING. WE'LL COME BACK TO THAT TESTIMONY THAT SHE GAVE A LITTLE BIT LATER. THE NEXT WITNESS THAT TESTIFIED WAS DR. ROSENDORFF. HE WAS THE LAB DIRECTOR AT THERANOS DURING ROUGHLY THAT FIRST YEAR WITH WALGREENS, SORT OF LATE 2013 TO 2014. DR.

ROSENDORFF DESCRIBED TO YOU WHY HE LEFT, WHY HE RESIGNED FROM THERANOS, AND HE TOLD YOU THAT HE REACHED A POINT WHERE HE CONCLUDED THAT AT THERANOS THEY CARED MORE ABOUT PR AND FUNDRAISING THAN PATIENT CARE. THAT'S ANOTHER CONCEPT THAT I'LL COME BACK TO A LITTLE BIT LATER. THE NEXT WITNESS THAT TESTIFIED WAS DR. SUNG. SHE WORKED FOR A COMPANY CALLED CELGENE. YOU'VE HEARD A LOT ABOUT WORK THAT THERANOS DID WITH VARIOUS PHARMACEUTICAL COMPANIES OVER THE YEAR, AND SORT OF THE DIFFERENCE BETWEEN WHAT THE PHARMACEUTICAL COMPANIES SAY THAT THEY DID AND WHAT MS. HOLMES TOLD OTHERS THEY DID. THERE'S A DIFFERENCE IN WHAT ACTUALLY HAPPENED BETWEEN THE PHARMACEUTICAL COMPANY AND THERANOS AND THE WAY THAT THAT RELATIONSHIP WAS DESCRIBED TO INVESTORS, AND MS. SUNG WAS THE FIRST OF THOSE TO COME AND TALK TO YOU.

MR. SCHENK: AND SHE TOLD YOU THAT CELGENE HAD NEVER VALIDATED, COMPREHENSIVELY VALIDATED THERANOS'S TECHNOLOGY. YOU'VE NOW SEEN A BUNCH OF TIMES A SLIDE IN THE BINDERS THAT WERE SENT TO POTENTIAL INVESTORS INFORMING POTENTIAL INVESTORS THAT THERANOS HAD BEEN COMPREHENSIVELY VALIDATED BY 10 OF THE 15 LARGEST PHARMACEUTICAL COMPANIES, A PHRASE SOMETHING LIKE THAT, AND THEN PHARMACEUTICAL COMPANIES CAME INTO THIS COURTROOM AND TOLD YOU, WE DIDN'T COMPREHENSIVELY VALIDATE. HERE'S THE FIRST ONE. THE NEXT WITNESS THAT TESTIFIED WAS STEVE BURD. MR. BURD WAS THE CEO OF SAFEWAY. LET ME TAKE A MOMENT TO TALK TO YOU ABOUT SOME OF THESE OTHER SORT OF THIRD PARTY ENTITIES THAT YOU'VE HEARD ABOUT IN THIS TRIAL: SAFEWAY, WALGREENS, THE DEPARTMENT OF DEFENSE. THE GOVERNMENT HAS NOT CHARGED MS. HOLMES WITH DEFRAUDING THOSE THIRD PARTIES, SAFEWAY, WALGREENS, THE DEPARTMENT OF DEFENSE. SO WHEN I'M POINTING OUT TO YOU FALSE STATEMENTS THAT WERE MADE FROM MS.

HOLMES OR THERANOS TO THESE THIRD PARTIES, IT'S FOR REALLY THESE TWO REASONS, TWO CONCLUSIONS THAT I THINK IT'S APPROPRIATE FOR YOU TO DRAW FROM THEM. THE FIRST IS THAT WHEN THE FALSE STATEMENT THAT IS MADE TO THESE THIRD PARTIES, LIKE SAFEWAY, IS EXACTLY LIKE THE FALSE STATEMENT THAT IS MADE TO AN INVESTOR, YOU BEGIN TO SEE THAT THERE'S A SCHEME GOING ON HERE. "SCHEME" IS A TERM OF ART, WE'LL GET TO IT A LITTLE BIT LATER IN THE ELEMENTS, BUT IT'S ALL THE SAME SCHEME THAT IS HAPPENING. THE INVESTORS HEARD IT, THE THIRD PARTIES HEARD IT, THE BOARD HEARD IT. SO IT'S VALUABLE. IT'S USEFUL EVIDENCE TO YOU FOR THAT CONCLUSION. BUT IT'S ALSO USEFUL FOR ANOTHER REASON, AND LET ME USE WALGREENS AS AN EXAMPLE.

YOU'VE HEARD FROM, AND I'LL SHOW YOU THEIR PHOTOS IN A MOMENT, SOME WALGREENS WITNESSES WHO CAME INTO THE COURTROOM AND SAID, HERE'S WHAT WE UNDERSTOOD THERANOS COULD DO, AND THEN WE STARTED THIS BUSINESS RELATIONSHIP WITH THERANOS, AND THEN WE TRACKED THE VENOUS DRAW PERCENT NUMBERS, AND IN ORDER TO GO NATIONAL, WE WANTED THAT TO BE LOW. WE SORT OF UNDERSTOOD THAT THE TECHNOLOGY AT THERANOS WAS FINGERSTICK BLOOD TESTING. BUT THEN THEY ROLL OUT AND THERE'S A REALLY HIGH PERCENTAGE, 40 PERCENT OR SO, OF VEIN DRAWS, AND THAT WAS CONFUSING TO WALGREENS. AND THE POINT HERE IS THAT WHEN THERANOS, WHEN MS. HOLMES AND MR. BALWANI ARE TELLING INVESTORS THAT WE ARE GOING TO ROLL OUT NATIONALLY WITH WALGREENS, THE RELATIONSHIP IS GOING WELL, THERE ARE SORT OF TWO WAYS THEY KNOW THAT HOLMES KNOWS THAT THAT'S FALSE.

ONE IS BECAUSE WALGREENS IS TELLING THEM, WE'RE CONCERNED ABOUT IT, WE'RE CONCERNED ABOUT VEIN DRAWS, WE'RE CONCERNED WITH OTHER SORT OF THINGS THAT ARE DIFFERENT THAN WHAT WE EXPECTED. BUT ANOTHER IS BECAUSE THE FOUNDATION OF THE RELATIONSHIP BETWEEN THERANOS AND WALGREENS WAS BUILT ON FRAUD. FALSE STATEMENTS MADE TO WALGREENS ARE VALUABLE BECAUSE MS. HOLMES DOESN'T NEED TO HEAR SOMEONE FROM WALGREENS TELL HER THERE'S TOO MANY VEIN DRAWS OR THAT THE PATIENT SATISFACTION SCORE ISN'T HIGH ENOUGH OR SOME OTHER FACT ABOUT THE RELATIONSHIP. SHE KNOWS THAT THE RELATIONSHIP IS DESTINED TO FAIL BECAUSE THE TECHNOLOGY CAN'T DO WHAT WALGREENS THINKS IT CAN DO. SO WHETHER SHE'S HEARING BACK FROM WALGREENS REPRESENTATIONS, STATEMENTS THAT WALGREENS IS CONCERNED, IS ONE WAY SHE KNOWS IT'S GOING TO FAIL. BUT IT ISN'T THE ONLY WAY. IT REALLY IS JUST A MATTER OF TIME BEFORE WALGREENS DISCOVERS THAT THEY HAD BEEN DEFRAUDED.

AND THERE ARE A FEW WAYS, AND WE'LL TALK ABOUT THEM, THAT FALSE STATEMENTS WERE COMMUNICATED TO WALGREENS. IN FACT, WALGREENS DID PURCHASE EQUITY AT SOME POINT. THEY BOUGHT EQUITY INTO THERANOS. YOU DON'T HAVE TO RESOLVE THE QUESTION. YOU'RE NOT GOING TO BE ASKED TO, IN YOUR VERDICT FORM, DECIDE IF SAFEWAY OR WALGREENS OR THE DEPARTMENT OF DEFENSE ARE VICTIMS. "VICTIMS" IN THIS CASE, AS I'M USING THAT WORD, REFER TO THE INVESTORS AND REFER TO THE PATIENTS, BUT THAT DOESN'T MEAN THAT THIS THIRD PARTY TESTIMONY ISN'T STILL RELEVANT AND VALUABLE TO YOU. AND STEVE BURD IS THIS FIRST EXAMPLE. THE CEO AT SAFEWAY DESCRIBED HIS INITIAL INTERACTIONS WITH MS. HOLMES AND WHAT HE WAS LEARNING, AND MR. BURD SAID THAT ELIZABETH HOLMES INFORMED HIM AND SAFEWAY AND THE DEPARTMENT OF DEFENSE ABOUT WORK THAT THERANOS HAD DONE, INCLUDING THE FACT THAT THE DEVICE WAS IN A MEDEVAC AROUND THE WORLD, PLACES THAT AMERICANS DIDN'T EVEN KNOW WE WERE. YOU KNOW THAT ISN'T TRUE, AND THAT'S WHY STATEMENTS LIKE THIS TO SAFEWAY ARE VALUABLE BECAUSE IT'S THE SAME KIND OF STATEMENT THAT INVESTORS HEARD.

MR. SCHENK: WADE MIQUELON WAS THE NEXT WITNESS TO TESTIFY. MR. MIQUELON WAS THE CFO AT WALGREENS, AND MR. MIQUELON TOLD YOU AND SHOWED YOU -- IN FACT, I THINK THIS MIGHT BE THE FIRST INSTANCE, IF YOU SEE IN THE LOWER RIGHT CORNER THERE'S AN EXHIBIT NUMBER, 617, THAT REFERS TO AN AGREEMENT, A MASTER SERVICES AGREEMENT BETWEEN THERANOS AND WALGREENS, AND IN THE AGREEMENT IT TALKED ABOUT THERE NEEDING TO BE SATISFACTION OF WALGREENS FOR FURTHER ROLLOUTS. YOU HEARD THAT TESTIMONY, BUT IT'S ALSO IN THE DOCUMENTS. SO A NATIONAL ROLLOUT OF WALGREENS, OF THERANOS STORES -- OR THERANOS SERVICE CENTERS WITHIN WALGREENS STORES CERTAINLY WASN'T GUARANTEED. IT WAS SOMETHING THAT WAS GOING TO BE EVALUATED, AND MR. MIQUELON TOLD YOU IT WAS GOING TO BE EVALUATED. AND AGAIN, THE TWO POINTS I MADE TO YOU: MS. HOLMES WAS TOLD BY WALGREENS THAT THERE WERE PROBLEMS; BUT ALSO, SHE DIDN'T NEED TO BE TOLD THAT THERE WERE PROBLEMS.

SHE KNOWS THAT THERE WERE FALSE STATEMENTS MADE TO WALGREENS ABOUT WHAT THE TECHNOLOGY COULD DO, AND THEREFORE, THE RELATIONSHIP WAS DESTINED TO FAIL. IT WAS JUST A MATTER OF TIME UNTIL WALGREENS LEARNED THAT THEY HAD BEEN DECEIVED. MR. AMENTA WAS THE NEXT WITNESS THAT TESTIFIED. YOU MAY RECALL THAT MR. AMENTA WORKED, OR WORKS, FOR THE FEDERAL RESERVE BANK IN NEW YORK, AND HE CAME TO COURT TO TALK TO YOU ABOUT SOMETHING CALLED FEDWIRE. FEDWIRE IS AN ELECTRONIC FUNDS TRANSFER SYSTEM. WHEN YOU WIRE MONEY FROM ONE BANK ACCOUNT TO ANOTHER BANK ACCOUNT, SOMETIMES IT USES FEDWIRE, AND WHEN IT DOES USE FEDWIRE, A WIRE CROSSES STATE LINES. WHEN WE GET TO THE ELEMENTS OF CERTAIN COUNTS THAT ARE CHARGED THAT YOU'RE GOING TO HAVE TO DELIBERATE ABOUT, ONE OF THE ELEMENTS IS AN INTERSTATE WIRE, AND IN THIS CASE ALL OF THE INVESTORS' INVESTMENTS WERE WIRES, ELECTRONIC FUNDS TRANSFERS, FROM ONE BANK ACCOUNT TO THERANOS'S BANK ACCOUNT AND MR.

AMENTA PROVIDED THE TESTIMONY AND THE DOCUMENTS TO SHOW YOU THAT THOSE WIRES CROSSED STATE LINES. THERE IS ALSO ONE COUNT RELATED TO THE PATIENT FRAUD THAT ALSO WAS AN INTERSTATE WIRE. THERANOS BOUGHT A MEDIA BUY, ADVERTISEMENTS IN THE ARIZONA MARKET, AND THEY DID THAT WITH AN ELECTRONIC WIRE. SO THE INTERSTATE NEXUS ELEMENT IS SATISFIED BY MR. AMENTA'S TESTIMONY. THAT'S WHY HE CAME. THE NEXT WITNESS WAS NIMESH JHAVERI. MR. JHAVERI ALSO WORKED AT WALGREENS. HE TOLD YOU THAT HIS JOB WAS SORT OF TO OPERATIONALIZE THE BUSINESS RELATIONSHIP. WHEN MR. MIQUELON STEPPED BACK, HE DID THE NEGOTIATION OF THE TWO PARTIES, HELPED SORT OF FORMULATE THE AGREEMENTS. BUT THEN WHEN THEY STARTED TO ROLL OUT IN STORES, MR. JHAVERI PLAYED MORE OF A ROLE. AND MR. JHAVERI DESCRIBED TO YOU THESE PERIODIC, MAYBE MONTHLY -- I CAN'T REMEMBER EXACTLY HOW OFTEN -- MEETINGS BETWEEN THERANOS AND WALGREENS, AND THE TOPICS THAT WERE DISCUSSED.

HE EVEN TESTIFIED ABOUT SOME POWERPOINT SLIDES THAT WERE SHOWN DURING THESE PERIODIC MEETINGS. AND ONE OF THE THINGS THAT WALGREENS WAS TRACKING WAS VENOUS DRAW NUMBERS TO SEE IF THAT NUMBER EVER GOT LOW. THAT'S WHAT WALGREENS WAS EXPECTING WAS THAT THE TESTING WOULD BE DONE BY A FINGERSTICK. IT WASN'T THAT THAT WAS SURPRISING TO WALGREENS. THEY TRACKED IT. THEY TALKED TO THERANOS ABOUT IT. IT WAS MR. BALWANI WHO WAS PRESENT IN THESE MEETINGS. YOU SAW AN EMAIL, AND I'LL SHOW IT TO YOU A LITTLE LATER, WHERE MR. BALWANI RECEIVES AN EMAIL FROM MR. JHAVERI CONCERNED ABOUT THE VENOUS DRAW NUMBERS, AND MR. BALWANI FORWARDS THAT EMAIL TO MS. HOLMES. SO SHE WAS NOT AT MEETINGS BETWEEN MR. JHAVERI AND MR. BALWANI, BUT SHE KNOWS ABOUT THE INFORMATION THAT WAS BEING DISCUSSED AT THE MEETINGS. MR. JHAVERI ALSO TALKED TO YOU ABOUT SOME TEXT MESSAGES. YOU MAY RECALL HE READ SOME TEXT MESSAGES. AND THE ONE I HAVE ON THE SCREEN NOW IS FROM OCTOBER 16, 2015.

THIS IS RIGHT WHEN THAT NEGATIVE "WALL STREET JOURNAL" ARTICLE CAME OUT. I THINK IT CAME OUT OCTOBER 15TH, 2016 -- I'M SORRY -- OCTOBER 15TH, 2015. SO AT THAT TIME HOLMES AND BALWANI ARE TEXTING EACH OTHER AND MR. BALWANI IS SAYING, OK WAG, W-A-G, WALGREENS, IS FREAKING OUT. LACK OF TRANSPARENCY. "WHY DIDN'T WE TELL THEM ABOUT TURNING OFF THE NANOTAINER." YOU HEARD THAT AT THERANOS WHEN THEY USED FINGERSTICK, THE BLOOD WAS COLLECTED IN A DEVICE, AND SOMETIMES YOU'VE HEARD THAT DEVICE CALLED A NANOTAINER, SOMETIMES YOU'VE HEARD IT CALLED A CTN, A CAPILLARY TUBE AND NANOTAINER. AND AT THIS POINT IN TIME, OCTOBER 2015, THERANOS HAD STOPPED USING THAT DEVICE. THEY WERE DOING THE BLOOD TESTING BY VEIN DRAW.

MR. SCHENK: AND WALGREENS, THERANOS'S BUSINESS PARTNER, IS READING IN "THE WALL STREET JOURNAL" THAT THAT HAPPENED. AND MR. BALWANI IS HAVING A PHONE CALL WITH WALGREENS, AND WALGREENS WAS FRUSTRATED THAT THEY'RE LEARNING ABOUT THAT FACT. THEY TURNED IT OFF. THEY STOPPED USING THE NANOTAINER. AND MS. HOLMES SAYS, "THEN LET'S SHOW THEM THAT THIS LITERALLY IS STILL UP IN AIR SO WE LITERALLY JUST DECIDED SINCE THE DISCUSSION IS GETTING AIRED OUT IN PRESS." LET'S TELL WALGREENS THE DECISION TO STOP USING THE NANOTAINER IS SOMETHING THAT WE'RE STILL CONSIDERING, WE'RE STILL SORT OF FIGURING OUR WAY THROUGH. MR. BALWANI WRITES, "HOWEVER ISSUE IS WE DIDN'T TELL THEM IN ADVANCE ABOUT SWITCHING." MS. HOLMES RESPONDS, REPLIES, "WE'LL HAVE TO PRESENT WELL THAT WE HADN'T DECIDED TO." AND MR. BALWANI WRITES, "BAD IDEA. AT THIS POINT THEY KNOW. SO NEED TO BE TRANSPARENT." MR. BALWANI ISN'T SAYING SORT OF SOMETHING THAT FLOWS FROM THE IDEA OF HONESTY IS THE BEST POLICY.

HE'S NOT SURPRISED THAT ELIZABETH HOLMES IS SUGGESTING TO HIM, LET'S SAY SOMETHING OTHER THAN THE COMPLETE TRUTH TO WALGREENS. MR. BALWANI IS SAYING, WE CAN'T BE DECEPTIVE IN THIS ONE INSTANCE ON THIS ONE OCCASION BECAUSE WALGREENS ALREADY KNOWS, SO WE HAVE TO SAY SOMETHING DIFFERENT. YOUR SUGGESTED STATEMENT TO WALGREENS, MS. HOLMES, IS NOT A GOOD IDEA BECAUSE WALGREENS WILL CATCH US IN THIS FALSE STATEMENT. THE NEXT WITNESS THAT TESTIFIED WAS DR. DHAWAN. DR. DHAWAN WAS A LABORATORY DIRECTOR AT THERANOS. HE ALSO, AS YOU KNOW, WAS SUNNY BALWANI'S DERMATOLOGIST. WHEN DR. ROSENDORFF LEFT THERANOS, THERE WERE SEVERAL LAB DIRECTORS WHO FOLLOWED, AND YOU HEARD FROM THEM, DR. DHAWAN, DR. SAWYER, AND DR. DAS. DR. DHAWAN WAS THE FIRST OF THOSE NEXT GROUP OF LAB DIRECTORS AND DR. DHAWAN TOLD YOU FROM WHEN HE STARTED, WHICH WAS FROM NOVEMBER 2014 TO ABOUT JUNE OR JULY OF 2015 -- SO I'LL CALL IT SEVEN MONTHS -- HE SPENT A TOTAL OF FIVE TO TEN HOURS WORKING ON THERANOS THINGS.

COMPARE THAT FOR JUST A MOMENT TO YOUR IMPRESSION OF DR. ROSENDORFF, THE LAB DIRECTOR WHO WAS THERE FOR THAT PRIOR YEAR, FALL '13 TO FALL '14. FIVE TO TEN HOURS IN SEVEN MONTHS. THE NEXT WITNESS WHO TESTIFIED WAS DAN EDLIN. MR. EDLIN ALSO WORKED AT THERANOS. AND A LOT OF HIS JOB, DURING THE TIME THAT HE WAS TESTIFYING ABOUT, WAS WORKING VERY CLOSELY WITH ELIZABETH HOLMES ON SPECIAL PROJECTS, THINGS LIKE THE WORK THAT THEY WERE DOING WITH THE MILITARY, AND MR. EDLIN TOLD YOU THAT IN HIS KNOWLEDGE, THE THERANOS DEVICE WAS IN NONE OF THOSE PLACES. AND YOU CAN SEE THERE ARE SORT OF A LIST OF THEM. WAS IT EVER USED BY THE MILITARY CLINICALLY IN THE TREATMENT OF SOLDIERS? ON THE BATTLEFIELD FOR CLINICAL USE? IN THE MIDDLE EAST AT ALL? ON MEDEVAC? AND HIS ANSWER WAS, NOT TO MY KNOWLEDGE. AT THAT POINT YOU HAD HEARD FROM GENERAL MATTIS WHO SAID SIMILAR THINGS. YOU SORT OF HEARD EXTERNALLY FROM THERANOS THAT IT WASN'T USED IN THOSE PLACES. AND THEN YOU HEARD INTERNALLY FROM DAN EDLIN.

AND THEN YOU ALSO HEARD, WHEN MS. HOLMES GOT ON THE STAND, SHE AGREED TO THESE THINGS. IT ISN'T REALLY IN DEBATE ABOUT WHETHER IT WAS USED IN THESE PLACES. THE QUESTION IS MUCH MORE: WERE THESE REPRESENTATIONS MADE TO INVESTORS? THE NEXT WITNESS THAT TESTIFIED WAS SHANE WEBER. MR. WEBER WORKED AT PFIZER, AND YOU'VE HEARD A LOT ABOUT THE USE OF LOGOS ON CERTAIN VALIDATION DOCUMENTS THAT THE PHARMACEUTICAL COMPANIES DIDN'T AUTHORIZE. IN SOME INSTANCES THEY DIDN'T WRITE, THEY DIDN'T AUTHORIZE THE APPLICATION, THE APPLYING OF THE LOGO TO THE DOCUMENT, AND THEY DIDN'T REACH THE CONCLUSIONS IN THE DOCUMENT. AND THE FIRST OF THOSE KIND OF WITNESSES WAS MR. WEBER AND HE TOLD YOU THOSE WERE TRUE, THE LINE THAT I JUST RAN THROUGH, VIS-À-VIS PFIZER, PFIZER DIDN'T AGREE TO THE LOGO AND DIDN'T ASK TO APPLY THEIR LOGO AND THEY DIDN'T VALIDATE THERANOS'S TECHNOLOGY. BRYAN TOLBERT WAS THE NEXT WITNESS. MR. TOLBERT WAS THE FIRST VICTIM INVESTOR THAT YOU HEARD FROM IN THIS CASE.

HE WORKS FOR A COMPANY CALLED HALL GROUP. AND MR. TOLBERT TALKED TO YOU ABOUT HALL HAD INVESTED TWICE. THEY INVESTED BACK IN 2016 AND THEY INVESTED AGAIN AT THE END OF 2013. AND IN THOSE LAST COUPLE OF WEEKS OF 2013 IN DECEMBER, HALL AND OTHER INVESTORS WERE DECIDING WHETHER TO INVEST AGAIN, WHETHER TO MAKE ANOTHER INVESTMENT IN THERANOS, AND THERE WAS A CALL TO DISCUSS THERANOS TO HEAR UPDATES. AND MR. TOLBERT'S BOSS, CRAIG HALL, MIGHT NOT BE ABLE TO MAKE THAT CALL, SO BRYAN TOLBERT MADE THE DECISION TO RECORD THE CALL.

MR. SCHENK: IN THAT CLIP, YOU HEARD MS. HOLMES HAS THE CAPABILITY OF EXPLAINING TO AN INVESTOR WHEN SOMETHING HAS NOT YET BEEN ACCOMPLISHED AT THERANOS. SHE SUCCESSFULLY COMMUNICATED TO BRYAN TOLBERT THAT THERANOS WOULD HAVE THE OPPORTUNITY TO BE THE LARGEST LAB IN THE COMPANY. SHE CAN SUCCESSFULLY COMMUNICATE CONCEPTS THAT ARE ASPIRATIONAL. IN THAT SAME CLIP, THOUGH, SHE TALKS ABOUT THERANOS HAVING THE ABILITY TO RUN ANY LAB TEST THAT IS DONE IN TRADITIONAL LABS. MR. TOLBERT, AND ALL OF THE OTHER INVESTORS WHO COMMUNICATED WITH MS. HOLMES, LEFT INTERACTIONS WITH HER WITH THE UNDERSTANDING THAT THAT WAS A PRESENT CAPABILITY, THAT THERANOS'S TECHNOLOGY COULD RUN ANY TEST. WHEN SHE WANTS TO COMMUNICATE SOMETHING ASPIRATIONAL, SHE CAN. IT WAS OBVIOUS TO MR. TOLBERT, AND I THINK IT WAS KNOWN TO HIM EVEN IF SHE HADN'T SAID IT, THAT THERANOS WASN'T YET THE LARGEST LAB COMPANY IN THE COUNTRY.

BUT WHEN SHE WANTED TO COMMUNICATE FACTS FAVORABLE TO HER COMPANY, LIKE WE CAN RUN ANY TESTS, SHE COMMUNICATED THAT SUCCESSFULLY TO MR. TOLBERT ALSO. THE NEXT WITNESS THAT TESTIFIED WAS LISA PETERSON. MS. PETERSON WORKS FOR RDV, THE DEVOS FAMILY INVESTMENT. AND WE'LL GO THROUGH MANY EXAMPLES OF WHAT MS. PETERSON HEARD. ONE OF THE FACTS SHE HEARD -- RDV'S INVESTMENT WAS IN 2014 -- WAS THAT THE WALGREENS RELATIONSHIP WAS FINE, THAT IT WASN'T STALLING, AND THERE WERE NO PROBLEMS. THAT FOLDS INTO A FINANCIAL PROJECTION THAT SHE RECEIVED AND MR. MOSLEY RECEIVED, AND WE'LL TALK ABOUT THAT IN A MOMENT. BUT ONE OF THE THINGS THAT IS IMPORTANT IS THE FINANCIAL PROJECTION IS BASED UPON A HEALTHY AND EXPANDING WALGREENS RELATIONSHIP, AND MS. PETERSON HAD THE UNDERSTANDING THAT THE RELATIONSHIP BETWEEN THERANOS AND WALGREENS WAS HEALTHY AND EXPANDING. THE NEXT WITNESS THAT TESTIFIED WAS DR. CULLEN. DR. CULLEN WORKED AT SCHERING-PLOUGH, AND SORT OF SIMILAR TO MR. WEBER FROM PFIZER, DR.

CULLEN CAME IN AND TOLD YOU, WE DIDN'T AGREE TO PUT OUR LOGO ON THAT DOCUMENT, THESE CONCLUSIONS IN THIS DOCUMENT, THE DOCUMENT YOU SEE IS EXHIBIT 259, THESE ARE THERANOS'S CONCLUSIONS, THEY'RE NOT SCHERING-PLOUGH'S. SHE ALSO WENT A LITTLE BIT FURTHER AND DESCRIBED TO YOU WHERE THE WORK HAD BEEN DONE, SORT OF WHAT THE STUDY WAS AND WHERE THAT WORK WAS DONE, AND SHE TOLD YOU THAT FOR THE SCHERING-PLOUGH WORK, THE DEVICES, THE THERANOS DEVICES STAYED AT THERANOS AND THAT TESTING THAT WAS RUN WAS AT THERANOS. AND AS A RESULT, SHE'S SAYING, WE COULDN'T HAVE REACHED THESE CONCLUSIONS. WE DIDN'T WRITE THIS DOCUMENT. BUT ALSO WE WOULDN'T HAVE BEEN IN A POSITION TO DO IT BECAUSE OF WHAT THE WORK WAS, THE STUFF THAT WAS DONE WAS ALL DONE AT THERANOS.

AND, IN FACT, SHE TESTIFIED ABOUT AN INSTANCE WHEN SHE AND SOME OTHERS FROM SCHERING-PLOUGH FLEW FROM NEW JERSEY TO PALO ALTO, WENT TO A MEETING AT THERANOS, AND ASKED QUESTIONS TO TRY TO LEARN ABOUT THE DATA THAT WAS GENERATED, AND SHE FELT THAT MS. HOLMES WASN'T FORTHCOMING IN THAT MEETING. WE'LL TALK ABOUT THAT IN A LITTLE BIT. DAN MOSLEY WAS THE NEXT WITNESS WHO TESTIFIED. HE WAS ALSO AN INVESTOR. YOU'LL RECALL THAT MR. MOSLEY WAS AN ATTORNEY FOR A LAW FIRM IN NEW YORK, AND HE HAD A BACKGROUND IN TRUSTS AND ESTATES, AND HE HAD AS CLIENTS OTHER INDIVIDUALS, DR. KISSINGER WAS ONE OF THEM. DR. KISSINGER ASKED MR. MOSLEY TO LOOK AT THERANOS AND LET DR. KISSINGER KNOW WHAT MR. MOSLEY THOUGHT. AND TO ACCOMPLISH THAT, DAN MOSLEY RECEIVED A BINDER OF DOCUMENTS, AN INVESTOR BINDER. YOU HEARD ABOUT INVESTOR BINDERS IN THIS CASE, AND WE'LL TALK A LITTLE BIT MORE ABOUT THEM THIS MORNING. IN THE INVESTMENT BINDER WAS THE PFIZER REPORT. SO THAT PFIZER DOCUMENT WASN'T JUST SENT TO WALGREENS.

IT WAS ALSO SENT TO INVESTORS. AND IT WAS PARTICULARLY SIGNIFICANT TO MR. MOSLEY. MR. MOSLEY THOUGHT PFIZER WROTE THE DOCUMENT, AND MR. MOSLEY THOUGHT THAT IT WAS, THE PFIZER REPORT, WAS THE MOST VALUABLE VALIDATION, INDEPENDENT VALIDATION OF THE EFFICACY OF THE THERANOS TECHNOLOGY. AND YOU KNOW HE THOUGHT THAT, HE TESTIFIED ABOUT IT, BUT HE ALSO PREPARED A DOCUMENT FOR DR. KISSINGER, AND IN IT, AND I'LL SHOW IT TO YOU A LITTLE LATER, HE SAYS THAT, HE SAYS HOW IMPORTANT THE PFIZER DOCUMENT IS, AND I THINK THERE'S EVEN UNDERLINING IN IT. HE TALKS ABOUT THE TIME THAT HE SPENT WITH THAT PARTICULAR DOCUMENT. CHRIS LUCAS WAS THE NEXT WITNESS. HE WAS ALSO AN INVESTOR.

MR. SCHENK: MR. LUCAS HAD A FUND CALLED BLACK DIAMOND VENTURES. AND IN ADDITION TO BEING AN INVESTOR FOR MULTIPLE OCCASIONS, HE ALSO DID SOME WORK WITH THERANOS. I THINK HE SAID HE WAS HELPING OUT WITH FINANCIALS, LOOKING AT SOME OF THE DATA IN EXCEL CHARTS. AND ALL OF THAT EXPOSURE, BEING A MULTIPLE TIME INVESTOR AND DOING SOME WORK WITH THERANOS, HE STILL TOLD YOU THAT HE WOULD HAVE BEEN SURPRISED IF HE LEARNED THAT THERANOS'S TECHNOLOGY, ITS ANALYZER, COULD NEVER DO MORE THAN 12 TESTS. LOOK AT ALL OF THE EXPOSURE THAT SOMEONE HAD TO THE COMPANY, INVESTING MULTIPLE TIMES, DOING SOME WORK FOR THE COMPANY, AND STILL SORT OF THE FUNDAMENTAL TRUTH ABOUT THERANOS WAS SURPRISING TO MR. LUCAS. DR. SAWYER TESTIFIED NEXT. SHE WAS ALSO A LAB DIRECTOR. SHE WORKED AT THERANOS AROUND THE SAME TIME, EVEN OVERLAPPING WITH DR. DHAWAN AT SOME POINT IN TIME. AND IF IT WAS POSSIBLE, SHE SPENT LESS TIME WORKING AT THERANOS THAN DR. DHAWAN. DR. DHAWAN'S FIVE TO TEN HOURS THAT HE ESTIMATED, DR.

DHAWAN WENT TO THE LAB. DR. SAWYER NEVER SET FOOT IN THE LAB. SHE NEVER SAW THE EDISON DEVICE. SHE NEVER SPOKE TO DOCTORS. SHE NEVER SPOKE TO PATIENTS. AND SHE WAS NEVER SPOKEN TO ABOUT CRITICAL VALUES. IF A LAB TEST WAS CONDUCTED AT THERANOS AND THE VALUE WAS VERY HIGH, WAS OF THIS -- OR VERY LOW -- WAS OF THIS SORT THAT WAS CALLED A CRITICAL VALUE, SHE WAS NEVER CONSULTED, NOT ONE TIME ON ANY OCCASION. DR. DAS WAS THE NEXT WITNESS. HE WAS THE LAB DIRECTOR AFTER SAWYER AND DHAWAN. AND DR. DAS TALKED TO YOU ABOUT THE PRACTICE AT THERANOS LATER ON OF VOIDING TESTS. AFTER THE CMS INSPECTION AND REPORT CAME OUT, THERANOS THEN VOIDED ALL OF THE TESTS RUN ON THE THERANOS DEVICE, AND HE SAID HE DID THAT BECAUSE HE FOUND THE DEVICE UNSUITABLE FOR, AS IT SAYS HERE, CLINICAL USE. MR. EISENMAN WAS THE NEXT WITNESS. MR. EISENMAN WAS ALSO AN INVESTOR. YOU MAY RECALL SOME OF THE FRUSTRATIONS THAT WERE PRESENT ON BOTH SIDES, ON MR. EISENMAN'S PART AND ON THERANOS'S PART. MR.

EISENMAN WANTED MORE INFORMATION AND THERANOS WAS NOT PROVIDING MORE INFORMATION. HERE MR. EISENMAN IS THIRSTY FOR INFORMATION, SO HE'S DOING RESEARCH, AND HE DISCOVERS A UBS ANALYST REPORT. AND IN THAT REPORT THE ANALYST -- THIS IS BEFORE THE 2015 "WALL STREET JOURNAL" ARTICLE COMES OUT THAT SAYS WHAT IS HAPPENING WITHIN THE FOUR WALLS OF THERANOS -- MR. EISENMAN DISCOVERS THIS UBS ANALYST SAYING THINGS LIKE THEY DRAW BLOOD MOSTLY THROUGH VENIPUNCTURE, THEY THEN SHIP THE BLOOD TO A REGIONAL LAB, AND IT'S HIGHLY UNLIKELY THAT ALL OF THE TESTS ARE BEING DONE ON ONE MACHINE. THIS IS SURPRISING TO MR. EISENMAN. THAT'S NOT WHAT HIS UNDERSTANDING OF THE TECHNOLOGY WAS OR THE WAY THE BLOOD WAS TESTED. SO HE SENDS THAT REPORT TO HOLMES AND BALWANI AND SAID, LOOK AT THIS LINK, THE UBS ANALYST IS MAKING SOME CLAIMS, THE BLOOD IS SENT TO PALO ALTO, THE TESTING IS LESS RELIABLE THAN TRADITIONAL LAB TESTING, TURNAROUND TIMES IS OVER 24 HOURS. MR.

BALWANI RESPONDS, DOESN'T SURPRISE US, SOUNDS LIKE AN UNINFORMED CONSULTANT. AND THEN YOU SEE ON THE LEFT SIDE OF THE SCREEN, MR. BALWANI FORWARDS WHAT HE RESPONDED TO MR. EISENMAN TO MS. HOLMES. BRIAN GROSSMAN WAS THE NEXT WITNESS, AND HE WORKED FOR PFM AND THEY WERE ALSO AN INVESTOR. MR. GROSSMAN TALKED ABOUT WHAT HE LEARNED IN SOME OF THE MEETINGS WHEN PFM WAS MAKING SOME DECISIONS TO INVEST. AND HE WAS TOLD THAT THEY COULD DO OVER A THOUSAND CPT CODES WITH THEIR TECHNOLOGY. YOU'VE HEARD THAT CPT CODES ARE A BILLING CODE, AND THERE'S BEEN SOME DISCUSSION AFTER THAT ABOUT WHETHER THAT REALLY MEANS A THOUSAND TESTS, OR DO CODES COVER MORE THAN ONE TEST? SO WOULD ONE TEST APPLY TO MULTIPLE CODES BRING THE NUMBER DOWN? I'LL SHOW YOU A LITTLE BIT LATER AN INSTANCE WHERE IT IS CLEAR THAT A THOUSAND TESTS IS REPRESENTED. BUT FOR NOW, NOTICE WHAT MR. GROSSMAN TALKED ABOUT, AND YOU ACTUALLY ALSO HEARD IT JUST A MOMENT AGO IN THAT RECORDING. MR.

GROSSMAN SAYS THAT THERANOS WAITED TO LAUNCH UNTIL THEY COULD HAVE A CERTAIN COVERAGE OF THE TESTING MARKET. HERE IT'S 100 PERCENT OF WHAT THE BIG PLAYERS COULD DO, SORT OF THE QUEST AND LABCORP OF THE WORLD. THERANOS DIDN'T GO OUT PREMATURELY AND DIDN'T GO OUT WHEN THEY COULD ONLY DO 12 TESTS, DIDN'T GO OUT WHEN THEY NEEDED TO MODIFY SOME THIRD PARTY DEVICES IN ORDER TO DO TESTING. HIS UNDERSTANDING WAS THERANOS WAITED TO LAUNCH UNTIL THEY HAD A CERTAIN AMOUNT OF COVERAGE, AND YOU HEARD VERY SIMILAR STATEMENTS IN THE RECORDING FROM TOLBERT A MOMENT AGO.

MR. SCHENK: THE NEXT WITNESS WAS ERIN TOMPKINS. MS. TOMPKINS TESTIFIED ABOUT AN HIV TEST THAT SHE RECEIVED. SHE TOLD YOU THAT SHE TOOK AN HIV 1 PLUS 2 ANTIBODIES TEST AND IT CAME BACK REACTIVE. AND SHE DESCRIBED TO YOU THAT SHE DIDN'T HAVE ANY OTHER SYMPTOMS OF HIV, AND SHE HAD A TEST AFTERWARDS LATER ON THAT SHOWED SHE WAS NEGATIVE FOR HIV, AND THEREFORE, SHE QUESTIONED WHETHER THE RESULT THAT SHE GOT FROM THERANOS WAS ACCURATE. DR. BURNES TESTIFIED NEXT. DR. BURNES WAS THE TREATING PHYSICIAN FOR DR. ELLSWORTH. IN THIS CASE HE WAS A PATIENT. MEHRL ELLSWORTH IS ALSO A DOCTOR, AND HIS PHYSICIAN, DR. ELLSWORTH'S PHYSICIAN WAS DR. BURNES. DR. BURNES TOLD YOU ABOUT THE PSA TEST FOR PROSTATE CANCER AND WHAT IT TESTS FOR. AND DR. BURNES DESCRIBED TO YOU -- ACTUALLY WHAT I HAVE HERE IS SOMETHING THAT HE SAID ON CROSS-EXAMINATION, THAT ERRORS IN PSA SCORES IN HIS EXPERIENCE ACTUALLY ARE RARE. ON DIRECT HE TALKED ABOUT WHY THE SCORES THAT HIS PATIENT, DR.

ELLSWORTH, RECEIVED, WHY THOSE WERE NOT ACCURATE. THERE WERE, YOU MAY RECALL -- AND I'LL SHOW YOU IN A MOMENT -- THEY WERE AROUND 1 OR 2 AND THEN 20, AND THEN AROUND 1 AND 2 AND THEN 20. AND DR. BURNES TOLD YOU, IN MY EXPERIENCE AND KNOWING THIS PATIENT, I DON'T THINK THOSE 20 WERE ACCURATE. BUT HE ALSO WENT A LITTLE FURTHER ON CROSS-EXAMINATION AND HE TOLD YOU INACCURACY IN PSA TESTING IS RARE IN MY EXPERIENCE. DR. ELLSWORTH FOLLOWED, AND HE TALKED ABOUT HIS TESTS. THE FIRST TEST THERE, THE MAY 14TH BLOOD DRAW IS A COUNT IN THE INDICTMENT. WE'LL GET TO THAT A LITTLE BIT LATER, BUT IT'S ACTUALLY ONE OF THE CHARGES THAT YOU DELIBERATE OVER AND YOU DECIDE ON THE VERDICT FORM, YOU WRITE GUILTY OR NOT GUILTY. AND IT WILL BE NEXT TO -- ON THE VERDICT FORM IT SAYS M.E., IT HAS HIS INITIALS, MEHRL ELLSWORTH, AND IT IS THIS FIRST BLOOD TEST. THE BLOOD DRAW WAS MAY 14TH, AND THE RESULT WAS FAXED BACK TO HIS DOCTOR, DR. BURNES'S OFFICE TWO DAYS LATER ON MAY 16TH.

SO THE DATE ON THE TEST IS MAY 16TH, BUT IT'S THIS SCORE OF 26, AND THERE'S AN EMAIL I'LL SHOW YOU WHERE INTERNALLY AT THERANOS THEY'RE SORT OF ANALYZING THIS PROBLEM AND THEY TRACK WHICH DEVICE THE TESTS WERE DONE ON. HE GOT -- DR. ELLSWORTH GOT FOUR PSA TESTS ALL WITHIN ABOUT A MONTH AND A HALF AT THERANOS. THE FIRST ONE WAS ON AN EDISON, THE SECOND ONE WAS ON A COMMERCIAL, THE THIRD ONE WAS ON EDISON, THE THERANOS DEVICE, AND THE FOURTH ONE WAS ON A COMMERCIAL, AND YOU SEE THAT HERE: 26, 1, 22, 1. AND THEN FOR GOOD MEASURE A COUPLE YEARS LATER, DR. ELLSWORTH TOLD YOU HE WENT TO LABCORP AND GOT A TEST AND IT STILL WAS STILL 2. THE GOVERNMENT'S FINAL WITNESS WAS ROGER PARLOFF. MR. PARLOFF WAS A REPORTER, IS A REPORTER, AND HE WROTE A STORY FOR "FORTUNE" MAGAZINE IN 2014 ABOUT MS. HOLMES AND THERANOS.

AND IN THAT PROCESS, HE SAT DOWN AND INTERVIEWED ELIZABETH HOLMES, AND HE HAD HOURS OF TAPES AND NOTES FROM THOSE INTERVIEWS, AND HE DESCRIBED THAT PROCESS TO YOU, AND IT RESULTED IN THE CREATION OF AN ARTICLE. AND THERE ARE SORT OF TWO ARTICLES THAT PLAY A SIGNIFICANT ROLE, OR PLAY A ROLE IN THIS TRIAL. ONE IS A 2013 "WALL STREET JOURNAL" ARTICLE BY JOE RAGO, R-A-G-O, AND A 2014 "FORTUNE" ARTICLE BY ROGER PARLOFF. AND THE REASON THOSE TWO ARE SIGNIFICANT -- AND YOU HAVE COPIES OF THEM, THEY ARE IN EVIDENCE -- WAS BECAUSE THERANOS, MS. HOLMES TOOK THOSE ARTICLES AND SENT THEM TO INVESTORS. AND PART OF THE SCHEME THE GOVERNMENT ALLEGES OCCURRED HERE WAS MS. HOLMES USED THE MEDIA TO DO SOME OF THE WORK FOR HER. SHE MADE FALSE STATEMENTS TO THE MEDIA, AND THEN WHEN THOSE FALSE STATEMENTS APPEARED IN ARTICLES, SHE THEN SENT THOSE ARTICLES TO INVESTORS. AND PARLOFF AND RAGO -- THOSE ARE THE AUTHORS OF THOSE TWO ARTICLES -- YOU HEARD SOME RECORDINGS FROM MR. PARLOFF. ONE OF THE TOPICS THAT WAS DISCUSSED WAS MR. PARLOFF UNDERSTANDS THAT ON OCCASION AN INDIVIDUAL, A PATIENT, GOES TO A WALGREENS AND GETS A VEIN DRAW, AND HE'S ASKING MS. HOLMES, HELP ME UNDERSTAND WHY THAT HAPPENS. AND YOU CAN SORT OF -- YOU CAN HEAR IT. I'LL PLAY IT FOR YOU. HE'S A LITTLE CONFUSED AS WHY IT'S FINGERSTICK BLOOD TESTING, AND HELP ME UNDERSTAND THE CIRCUMSTANCES THAT WOULD CAUSE AN INDIVIDUAL TO GO TO A WALGREENS AND GET A VEIN DRAW.

MR. SCHENK: SO IN THAT CLIP, FORGIVE ME, HE'S NOT ASKING ABOUT THE VEIN DRAWS, HE'S ASKING ABOUT SEEING THE DEVICES. AND HE WANTS TO TOUR THE LAB IN ARIZONA, AND MR. PARLOFF IS SORT OF ASKING QUESTIONS ABOUT THAT. WHAT DOES IT LOOK LIKE? CAN I COME OUT AND SEE IT? AND MS. HOLMES SAYS, IT'S NOT OPERATIONAL YET, BUT YOU'VE SEEN IT. REMEMBER WHEN YOU SAW ALL OF OUR DEVICES STACKED UP, WELL, THE LAB LOOKS JUST LIKE THAT, THE LAB IS JUST THAT. YOU KNOW AS JURORS NOW, BECAUSE YOU'VE LISTENED TO THE TRIAL, THAT ISN'T TRUE. THERANOS ACTUALLY TESTED -- YOU CAN THINK OF IT IN THREE WAYS. THERANOS TESTED ON EDISON DEVICES, THE BANKS OF DEVICES THAT SHE'S TALKING ABOUT HERE, AND THEN THEY ALSO TESTED BLOOD ON THIRD PARTY DEVICES, AND THOSE THIRD PARTY DEVICES SEPARATE INTO TWO CATEGORIES. SOMETIMES THEY MODIFIED THEM. THERANOS CHANGED THEM SO THAT THE DEVICE COULD ACCEPT A SMALLER AMOUNT OF BLOOD, AND SOMETIMES THERANOS DID NOT MODIFY THE DEVICE. SO ESSENTIALLY THREE.

THE EDISON, MODIFIED THIRD PARTY, AND UNMODIFIED THIRD PARTY. AND YOU'VE HEARD IN THIS TRIAL WHEN MS. HOLMES WAS TESTIFYING THAT "I DID NOT," MS. HOLMES DID NOT TELL INVESTORS OR WALGREENS OR THIRD PARTIES ABOUT THE USE OF THIRD PARTY DEVICES BECAUSE IT WAS A TRADE SECRET. AND THIS CLIP WITH MR. PARLOFF IS ILLUMINATING ON THAT POINT. ONE, EVEN IF YOU ACCEPT FOR A MOMENT THAT THE USE OF THE THIRD PARTY DEVICES WAS A TRADE SECRET, SHE'S STILL MAKING FALSE STATEMENTS TO MR. PARLOFF. SHE'S SAYING, HERE'S WHAT THE LAB LOOKS LIKE, IT LOOKS LIKE A BUNCH OF OUR DEVICES. SO I DON'T THINK YOU SHOULD ACCEPT THE FACT THAT TRADE SECRETS GIVE HER PERMISSION TO MADE FALSE STATEMENTS ABOUT IT. BUT IT'S ACTUALLY MORE THAN THAT. THE USE OF UNMODIFIED THIRD PARTY DEVICES, THE ONE THEY MADE NO CHANGES TO, WAS NOT A TRADE SECRET AT THERANOS. THAT WAS JUST A SECRET.

AT THERANOS THEY JUST DIDN'T TELL PEOPLE THAT THEY WERE USING THIRD PARTY DEVICES TO TEST BLOOD BECAUSE IT WAS INCONSISTENT WITH THE NARRATIVE THAT THEY WERE PITCHING. SO THE TRADE SECRET, I'M GOING TO CALL IT EXCUSE, EVEN IF YOU ACCEPT IT, IS ONLY AN EXCUSE FOR THE MODIFIED THIRD PARTY. IT'S NOT AN EXCUSE FOR THE FALSE STATEMENT TO PARLOFF THAT THEN ENDS UP IN AN ARTICLE, AND IT ISN'T AN EXCUSE FOR WHY THE USE OF THIRD PARTY DEVICES, THE ONES THAT DON'T GET CHANGED, THE ONES THAT DON'T GET MODIFIED, WHY THAT NEEDS TO BE HIDDEN FROM INVESTORS. I TOLD YOU THAT WE WERE GOING TO TALK ABOUT FOUR TOPICS WITH THE SLIDES. THE FIRST WAS WITNESSES. THE SECOND TOPIC IS CHARGES IN THIS CASE. MS. HOLMES IS CHARGED WITH COMMITTING TWO CRIMES. THE FIRST CRIME IS THE CRIME OF CONSPIRACY TO COMMIT WIRE FRAUD. THE SECOND CRIME IS THE CRIME OF WIRE FRAUD. EACH OF THOSE TWO CRIMES IS CHARGED TWO DIFFERENT WAYS. THINK OF IT FROM THE PERSPECTIVE OF THE VICTIMS, INVESTORS AND PATIENTS.

SO THERE'S A CONSPIRACY TO COMMIT WIRE FRAUD FOR INVESTORS, AND THEN THERE'S SUBSTANTIVE WIRE FRAUD COUNTS FOR DEFRAUDING INVESTORS. AND THEN THE SAME REPEATS. THERE'S A CONSPIRACY TO COMMIT WIRE FRAUD TO DEFRAUD PATIENTS, AND THEN THERE ARE SUBSTANTIVE WIRE FRAUD COUNTS FOR PATIENTS. THE LENGTH OF THE CONSPIRACY PERIOD IS A LITTLE BIT DIFFERENT. YOU SEE IT HERE FOR THE INVESTORS, IT'S 2010 TO 2015. FOR PATIENTS, IT'S THE WALGREENS PERIOD, IT'S 2013 TO 2016. THE SUBSTANTIVE COUNTS OF WIRE FRAUD, FOR INVESTORS THERE ARE SIX OF THEM. YOU'VE HEARD FROM THE INVESTORS. WE'VE JUST WENT THROUGH SOME OF THEM AND I'LL SPEND SOME MORE IN TIME IN A MOMENT TALKING ABOUT THEM. THE PATIENTS, THERE WERE THREE PATIENT COUNTS. NOTICE COUNT NINE IS NOT BEFORE YOU. WHEN THE JUDGE READS YOU JURY INSTRUCTIONS AND TALKS ABOUT THE COUNTS, THAT COUNT IS NOT BEFORE YOU. YOU MAY RECALL THAT THE GOVERNMENT DISMISSED THAT COUNT RIGHT AT THE CLOSE OF THE GOVERNMENT'S EVIDENCE.

SO THERE ARE THREE PATIENT COUNTS FOR YOU TO DELIBERATE ON. YOU WON'T SEE A COUNT NINE ON YOUR VERDICT FORM. THE FIRST TWO PATIENT COUNTS INVOLVE SPECIFIC PATIENTS, TOMPKINS AND ELLSWORTH. THE FINAL COUNT IN THE INDICTMENT, THE FINAL PATIENT COUNT, COUNT TWELVE, INVOLVES THAT TRANSFER, THE WIRE TRANSFER TO PURCHASE ADS IN THE ARIZONA MARKET, THE MEDIA BUY. EACH OF THE COUNTS, EACH CRIME, HAS ELEMENTS, THINGS THAT THE GOVERNMENT MUST PROVE. AFTER I FINISH CLOSING, THE DEFENSE HAS AN OPPORTUNITY TO GIVE A CLOSING, THE GOVERNMENT CAN THEN GIVE A REBUTTAL, AND THEN THE JUDGE READS YOU JURY INSTRUCTIONS, GUIDELINES OR GUIDANCE FOR YOUR DELIBERATION.

MR. SCHENK: AND IN THOSE, YOU ARE READ THE LAW ON THE CRIME OF CONSPIRACY, SECTION 1349, THE CRIME OF WIRE FRAUD, SECTION 1343. AND CRIMES HAVE ELEMENTS. THE GOVERNMENT HAS TO PROVE EACH ELEMENT BEYOND A REASONABLE DOUBT IN ORDER FOR YOU TO CONVICT FOR THAT COUNT. AND THE ELEMENTS THE JUDGE IS GOING TO READ TO YOU. WHAT THE JUDGE SAYS CONTROLS. HERE ARE TWO ELEMENTS OF CONSPIRACY THAT I THINK THE JUDGE IS GOING TO READ TO YOU: THAT THERE WAS AN AGREEMENT BETWEEN TWO OR MORE PERSONS TO COMMIT WIRE FRAUD; AND THAT MS. HOLMES BECAME A MEMBER OF THE CONSPIRACY KNOWING OF AT LEAST ONE OF ITS OBJECTS AND INTENDING TO HELP ACCOMPLISH IT. IN ORDER TO BREAK THOSE DOWN, THE AGREEMENT FIRST SHOULD BE DEFINED. WHAT IS THE AGREEMENT BETWEEN HOLMES AND BALWANI? WELL, FOR THE INVESTOR SIDE, IT'S TO GET MONEY FROM INVESTORS THROUGH FRAUD, THROUGH FRAUD STATEMENTS. THEY EACH HAVE A DIFFERENT ROLE IN THE CONSPIRACY. MS.

HOLMES'S ROLE IS TO RECRUIT INVESTORS BY MAKING FALSE STATEMENTS, AND I'VE LISTED JUST A COUPLE. WE'LL GO THROUGH MORE OF THEM LATER. BUT THE FALSE STATEMENTS FALL INTO DIFFERENT CATEGORIES, AND THOSE FALSE STATEMENTS YOU WILL SEE ARE REPEATED IN THE SUBSTANTIVE WIRE FRAUD COUNTS. WHEN SHE MAKES FALSE STATEMENTS TO SOMEONE LIKE EISENMAN OR MOSLEY, IT'S THE SAME KIND OF FALSE STATEMENT THAT ARE PART OF THE CONSPIRACY, AND THOSE FALSE STATEMENTS ARE ABOUT THINGS LIKE THE CAPABILITY OF THE TECHNOLOGY, THE FINANCIAL HEALTH OF THE COMPANY, THE RELATIONSHIP WITH WALGREENS, DOD WORK. IT'S THE TOPICS THAT WE HAVE ALREADY BEEN DISCUSSING THIS MORNING. MR. BALWANI ALSO HAD A ROLE IN THIS CONSPIRACY, THE INVESTOR CONSPIRACY. MR. BALWANI RAN THE LAB. YOU HEARD THAT REFERRED TO AS SORT OF RUNNING OPERATIONS AT THE LAB. THAT WAS USEFUL.

WHEN THERANOS HAD A LAB AND THEN PITCHED INVESTORS, IT WAS USEFUL TO HAVE THAT LAB OPERATING, TO BE RUNNING, BECAUSE INVESTORS WOULD VIEW IT AS A SORT OF PROOF OF CONCEPT, AS SORT OF A VALUABLE THING THAT THERANOS HAD TO MAKE THE INVESTMENT MORE ATTRACTIVE. HE ALSO -- MR. BALWANI ALSO RECRUITED INVESTORS. ALAN EISENMAN TOLD YOU THAT HE HAD CONVERSATIONS WITH MR. BALWANI. BRIAN GROSSMAN TOLD YOU THAT HE HAD CONVERSATIONS WITH MR. BALWANI. SO THE LINES, THE DIVISION WASN'T A CLEAR LINE BETWEEN HOLMES AND BALWANI IN THE CONSPIRACY. THEY EACH DID EACH OTHER'S JOB AT TIMES, BUT MR. BALWANI RAN THE LAB AND MS. HOLMES RECRUITED INVESTORS, THOUGH AGAIN, AS I SAID, MR. BALWANI ALSO RECRUITED INVESTORS. IN PARTICULAR WHEN MR. BALWANI WAS COMMUNICATING WITH INVESTORS, IT WAS OFTEN ABOUT THE TOPIC OF FINANCES. MR. BALWANI HANDLED THE FINANCES, I THINK IS A FAIR WORD, MORE THAN MS. HOLMES AT THERANOS.

ONE OF THE INSTANCES WHEN YOU'VE SEEN THIS SORT OF IN ITS MOST STARK FORM IS IN SOME PROJECTIONS THAT WERE GIVEN TO LISA PETERSON WITH RDV AND MOSLEY, AND THOSE PROJECTIONS SHOWED THAT IN 2014 -- AND THIS DOCUMENT WAS COMMUNICATED IN OCTOBER OF 2014 -- THERANOS'S REVENUE WOULD BE ABOUT $140 MILLION. AND IN 2015, THERANOS'S REVENUE WOULD BE ABOUT A BILLION DOLLARS, $990 MILLION. AND YOU'VE HEARD WITNESSES LIKE MR. MOSLEY TALK ABOUT -- AND PETERSON AS WELL -- WHEN YOU RECEIVED THIS DOCUMENT IN OCTOBER OF 2014, YOU THINK TEN MONTHS OF THE YEAR ARE DONE, THAT NUMBER IS PROBABLY PRETTY GOOD, PRETTY ACCURATE. 2015, I THINK MOSLEY SAID, CUT THEM SOME SLACK. YOU MIGHT GET THAT NUMBER WRONG. IN 2014, YOU MIGHT NOT BE ABLE TO ACCURATELY PREDICT YOUR REVENUE IN 2015. THERE'S A BALLPARK, AND IT SHOULD BE SOMEWHERE IN THAT BALLPARK. BUT I THINK MR. MOSLEY COMMUNICATED TO YOU THAT HE WASN'T EXPECTING THEM TO HIT THE 2015 NUMBER RIGHT ON THE NOSE. HE THOUGHT THAT ONE MIGHT BE OFF.

YOU'VE HEARD NOW IT WAS OFF BY ABOUT A BILLION DOLLARS. BUT IN 2014, THE NUMBER IN MOSLEY AND PETERSON'S MIND SHOULD HAVE BEEN CLOSER, AND IT WAS BASED ON A NUMBER OF WALGREENS STORES, ANTICIPATED NUMBER OF WALGREENS STORES. SO IT'S THINGS LIKE THAT WHERE MR. BALWANI IS PLAYING AN ACTIVE ROLE IN THE CONSPIRACY. WE'RE GOING TO SPEND A LITTLE BIT OF TIME TALKING ABOUT INSTANCES WHERE MS. HOLMES EXERCISED CONTROL AT THERANOS. THIS IS GOING TO BE USEFUL TO US BECAUSE IT'S A CONCEPT THAT WILL PLAY OUT IN ALL OF THE COUNTS.

MR. SCHENK: THERE WEREN'T EVENTS OCCURRING THAT SHE WASN'T AWARE OF, THAT SHE WASN'T INTERESTED IN, THAT OCCURRED WITHOUT HER DECISIONS OR INVOLVEMENT, AND BECAUSE OF THAT, IT SHOWS THAT SHE HAD KNOWLEDGE THAT CERTAIN STATEMENTS THAT WERE COMMUNICATED WERE FALSE, AND THAT THEY WERE COMMUNICATED WITH THE INTENT THAT THEIR PURPOSE BE TO DEFRAUD. THE FIRST AREA IS PUBLIC RELATIONS AND LEGAL. IN THIS TEXT MESSAGE, MR. BALWANI IS TELLING MS. HOLMES THAT HE DOES NOT LIKE, HE DISLIKES THE DIRECTION THAT SHE'S TAKEN WITH ALL OF THIS PR AND LEGAL WORK AND A LOT OF OTHER THINGS. SHE HAS CONTROL IN THOSE AREAS. IN BUSINESS DEVELOPMENT, STEVE BURD TOLD YOU, THE CEO AT SAFEWAY -- REMEMBER HE WAS SAYING SOME COMPLIMENTARY THINGS ABOUT MS. HOLMES, HOW SHE OWNED A ROOM, HOW SHE PRESENTED TO HIS BOARD, HOW THOUGHTFUL AND ARTICULATE AND CLEAR SHE WAS IN HER DESCRIPTIONS, AND HOW SHE ALSO PLAYED SIMILAR ROLES WITH DOD AND WALGREENS AND SHE WAS INVOLVED WITH BUSINESS DEVELOPMENT.

IT WAS NOT THAT SHE WAS PUTTING THE 4 SERIES TOGETHER AT HER DESK AND SOMEONE WAS OUT THERE PITCHING THE BUSINESS. SHE WAS INVOLVED IN THAT. SHE WAS RESPONSIBLE. SHE KNOWS HOW THOSE RELATIONSHIPS ARE GOING AND WHAT REPRESENTATIONS ARE BEING MADE. IN PRESENTATIONS TO INVESTORS, MR. GROSSMAN TOLD YOU THAT MS. HOLMES DID MOST OF THE TALKING IN THIS PARTICULAR MEETING, DECEMBER OF 2013. IN THE CLIA LAB -- YOU'VE HEARD THE CLINICAL LAB WHERE PATIENT TESTING OCCURRED, THERE WERE TWO LABS AT THERANOS, THE R&D LAB, AND SOMETIMES IT'S BEEN CALLED THE CLIA LAB, SOMETIMES THE CLINICAL LAB, THAT'S WHERE THE PATIENT TESTING WAS DONE. IN THE CLIA LAB, MS. HOLMES ON THE STAND DESCRIBED TO YOU SORT OF A HANDS OFF APPROACH. SHE WASN'T QUALIFIED BECAUSE SHE WASN'T THE LAB DIRECTOR. BUT THE EMAILS ACTUALLY SUGGEST SOMETHING DIFFERENT, AND THIS EXHIBIT 4189 TALKS ABOUT ELIZABETH DECIDING WHETHER TO PUT COMMENTS WHEN CERTAIN REPORTS OR RESULTS ARE WITHHELD.

SO "PER ELIZABETH'S REQUEST, IN THE SHORT TERM, PLEASE DO NOT PUT ANY COMMENT OR NOTE ON THE RESULT REPORT IF C02 VALUES ARE VOIDED. IF DOCTORS CALL TO INQUIRE, WE HAVE PROVIDED THE FOLLOWING MESSAGING TO CUSTOMER SERVICE TEAM:" AND THEN THERE'S A MESSAGING BELOW. SO MS. HOLMES KNOWS THAT CERTAIN TESTS, LIKE IN THIS INSTANCE, C02, MAY NOT GET REPORTED, AND SHE'S MAKING THE DECISION ABOUT WHETHER THE LAB REPORT, THE RESULT SHOULD SAY SOMETHING ABOUT THAT, AND THEN WHAT TO DO IF THERE'S A PHYSICIAN WHO ORDERS A C02 TEST FOR A PATIENT GETS THE RECORD BACK AND SEES THAT IT'S MISSING AND THEN CALLS, WHAT IS THAT PHYSICIAN GOING TO BE TOLD? SHE'S INVOLVED IN THAT, TOO. THE SCRIPTING TO DOCTORS. I SHOWED YOU AN INSTANCE WHERE SHE'S DECIDING WHAT TO PUT ON THE REPORT. SHE'S ALSO INVOLVED IN WHAT TO SAY TO DOCTORS. THIS IS AN EMAIL ABOUT A DISCREPANCY OF AN INR TEST AT THERANOS. AND YOU SEE THE EMAIL AT THE TOP FROM CHRISTIAN HOLMES, MS. HOLMES'S BROTHER WHO WORKED AT THERANOS.

HE SAID HE'S GOING TO WORK WITH ELIZABETH ON SCRIPTING WHILE SUNNY ADDRESSES ROOT CAUSE. SO IT'S NOT JUST WHAT APPEARS ON THE REPORT. IT'S ALSO WHAT DOCTORS ARE GOING TO CALL WHEN THERE'S A DISCREPANCY, WHEN THERE ARE QUESTIONS ABOUT THE REPORT. SHE'S INVOLVED IN THAT, TOO. INVESTOR BINDERS. YOU'VE HEARD SEVERAL INVESTORS MADE THEIR DECISION TO INVEST AFTER RECEIVING A BINDER OF DOCUMENTS FROM THERANOS. MS. HOLMES WAS INVOLVED IN REVIEWING AND DETERMINING THE CONTENT OF THOSE BINDERS. DAN EDLIN TOLD YOU THAT SHE APPROVED MATERIALS, AND HERE'S AN EMAIL WHERE SHE'S ASKING ABOUT THE CONTENTS OF TWO BINDERS. THE DOD. DAN EDLIN TOLD YOU THAT MS. HOLMES WAS VERY INVOLVED IN THE INTERACTIONS WITH THE DOD. IF HE WAS GOING TO SEND AN EMAIL TO SOMEONE AT DOD, HE REVIEWED THAT DRAFT EMAIL WITH HER. IF AN EMAIL CAME IN FROM DOD, SHE WOULD REVIEW IT WITH DAN EDLIN, BUT SHE WAS VERY INVOLVED IN THE DOD RELATIONSHIP. THERANOS HAD A WEBSITE.

YOU MAY RECALL AROUND THE TIME OF THE WALGREENS LAUNCH IN SEPTEMBER OF 2013, WHEN THAT WEBSITE WENT LIVE, THERE WAS EMAIL TRAFFIC WITH A LAWYER DISCOURAGING CERTAIN WORDS, THE USE OF CERTAIN WORDS TO MS. HOLMES. AND DAN EDLIN TOLD YOU THAT THE CONTENT OF THE WEBSITE WAS SOMETHING THAT MS. HOLMES WAS VERY INVOLVED IN AND WAS, HIS WORD, DETAILED ORIENTED. FINANCIALS. MS. YAM TOLD YOU THAT SHE REVIEWED FINANCIALS WITH MS. HOLMES, THINGS LIKE THE CASH POSITION. YOU HAVE HEARD TESTIMONY THAT MR. BALWANI WAS MORE INVOLVED IN THAT AREA, BUT ELIZABETH HOLMES WASN'T IGNORANT OF THE FINANCIAL STATE OF THE COMPANY AT THERANOS.

MR. SCHENK: DANISE YAM SAID, I REPORTED TO ELIZABETH HOLMES AND I SHARED THE INFORMATION ABOUT THE FINANCIAL HEALTH OF THE COMPANY. THE PHARMACEUTICAL RELATIONSHIP. DR. CULLEN FROM SCHERING-PLOUGH DESCRIBED THAT OCCASION WHEN SHE FLEW OUT TO PALO ALTO AND MET WITH MS. HOLMES AND OTHERS FROM THERANOS TO DISCUSS THE WORK THAT THE TWO HAD DONE, THE THERANOS AND SCHERING-PLOUGH RELATIONSHIP, AND DR. CULLEN DESCRIBED TO YOU ASKING QUESTIONS OF THE THERANOS FOLKS ABOUT THE WORK THAT WAS DONE, AND MS. HOLMES WAS ANSWERING ALL OF THE QUESTIONS. AND DR. CULLEN MADE AN EFFORT TO DIRECT QUESTIONS TO OTHER THERANOS EMPLOYEES DURING THE MEETING, AND DR. CULLEN SAID MS. HOLMES WOULD INTERRUPT OR ANSWER THOSE QUESTIONS, TOO. ELIZABETH HOLMES WAS INVOLVED IN THE RELATIONSHIP BETWEEN THERANOS AND PHARMACEUTICAL COMPANIES. SO THE SECOND ELEMENT IS MEMBERSHIP -- THIS IS THE CONSPIRACY COUNT FOR INVESTORS. THE SECOND ELEMENT IS MEMBERSHIP IN THE CONSPIRACY, KNOWLEDGE OF ITS OBJECTIVE AND INTENT.

SO THE OBJECTIVE OF THE CONSPIRACY TO DEFRAUD INVESTORS IS TO GET MONEY FROM INVESTORS THROUGH FRAUD. KNOWLEDGE OF THE OBJECTIVE. HOW DO WE KNOW THAT MS. HOLMES KNEW THAT WAS THE OBJECTIVE? THROUGH TEXT MESSAGES, EMAILS, AND FROM DANISE YAM SHARING FINANCIALS WITH ELIZABETH HOLMES THAT CREATE THE NEED TO GET THE MONEY. INTENT TO ACCOMPLISH. THERE ARE EMAILS THAT WE WILL TALK ABOUT THAT THE GOVERNMENT WILL SUBMIT TO YOU SHOW INTENT, BUT THERE IS ALSO A MORE BROAD OR OVERARCHING INTENT POINT HERE. MS. HOLMES COMMUNICATED FALSE STATEMENTS TO INVESTORS, WE CAN RUN ALL OF THE TESTS, WE HAVE A HEALTHY RELATIONSHIP WITH WALGREENS, DOD WORK. THERE ARE A LOT OF THINGS THAT SHE SAID TO INVESTORS THAT WERE FALSE. THERE ARE SUGGESTIONS THAT SHE KNEW THOSE STATEMENTS WERE FALSE. SO SHE'S COMMUNICATING KNOWINGLY FALSE STATEMENTS TO INVESTORS. IMAGINE FOR A MOMENT, THOUGH, SHE'S COMMUNICATING A DIFFERENT KIND OF KNOWINGLY FALSE STATEMENT TO AN INVESTOR.

IF SHE TELLS AN INVESTOR, THERANOS ISN'T A REAL COMPANY, IT'S A P.O. BOX, WE DON'T HAVE REAL EMPLOYEES, WE DON'T DO ANY REAL WORK, IF SHE HAD SAID THAT TO INVESTORS, THAT, TOO, WOULD HAVE BEEN A KNOWINGLY FALSE STATEMENT ABOUT THERANOS. IT WAS A COMPANY WITH EMPLOYEES. IT WASN'T JUST A P.O. BOX. BUT IT'S SORT OF HARD TO THINK THAT THAT WOULD BE COMMUNICATED WITH THE INTENT TO DEFRAUD. THAT WOULD DISCOURAGE AN INVESTOR FROM INVESTING. WHEN ELIZABETH HOLMES COMMUNICATES KNOWINGLY FALSE STATEMENTS TO INVESTORS, THEY'RE THE FAVORABLE KIND. THEY'RE THE KIND THAT CAUSE AN INVESTOR TO WANT TO INVEST IN THERANOS, AND THAT IS USEFUL INTENT EVIDENCE. THE KIND OF INFORMATION THAT SHE COMMUNICATES THAT IS KNOWINGLY FALSE IS KNOWINGLY AND FAVORABLE INFORMATION. KNOWLEDGE OF THE OBJECTIVE. THERE ARE TEXT MESSAGES WHERE MS. HOLMES AND MR. BALWANI ARE TALKING ABOUT INVESTOR MONEY COMING IN.

THIS ONE IS TALKING ABOUT ALICE WALTON INVESTING 50 MILLION; GREG PENNER INVESTING 100 MILLION; RUPERT MURDOCH IN FOR OVER 100. THEY'RE PAYING ATTENTION TO THAT MONEY COMING IN. INTENT TO ACCOMPLISH. MR. EISENMAN TOLD YOU THAT HE INVESTED ON DIFFERENT OCCASIONS, AND BEFORE HIS INVESTMENT IN 2013, HE THOUGHT THERANOS WAS RUDE -- I'M NOT SURE HE WOULD ADOPT THAT WORD -- BUT HE WAS UNSATISFIED WITH THE RELATIONSHIP, WITH THE DISCUSSIONS. AND AFTER HIS INVESTMENT, HE WAS SIMILARLY DISSATISFIED. I THINK PROBABLY BOTH SIDES WERE UNHAPPY WITH THOSE INTERACTIONS. BUT ALAN EISENMAN DESCRIBED TO YOU SORT OF THAT STRANGE PERIOD OF TIME WHERE THEY WERE SURPRISINGLY NICE TO HIM RIGHT BEFORE HE MADE THE DECISION TO INVEST IN 2013. THIS IS SORT OF LIKE A CATCH FLIES WITH HONEY IDEA. THEY KNEW WHAT TO SAY TO INVESTORS, HOW TO TREAT INVESTORS AT A TIME WHEN THEY WERE INTERESTED IN INVESTING. THAT IS ALSO INTENT EVIDENCE. SO WE TALKED ABOUT THE CONSPIRACY TO DEFRAUD INVESTORS.

WE'RE NOW GOING TO MOVE TO THE CONSPIRACY TO DEFRAUD PATIENTS. THERE IS MORE INTENT EVIDENCE, MORE KNOWLEDGE EVIDENCE THAT WE'LL GO THROUGH WHEN WE GET TO THE SUBSTANTIVE WIRE FRAUD INVESTOR COUNTS, AND I'M GOING TO ASK YOU TO CONSIDER THAT EVIDENCE FOR THE CONSPIRACY COUNT ALSO. I DON'T JUST WANT TO REPEAT THE EVIDENCE OVER AND OVER. SO SOME OF IT I'M GOING TO SAVE FOR THE SUBSTANTIVE WIRE FRAUD COUNTS BECAUSE THEY HAVE, AS AN ELEMENT, INTENT AND KNOWLEDGE AND SOME OF THE THINGS THAT WE'VE TALKED ABOUT. THE PATIENT SIDE.

MR. SCHENK: IT'S THE SAME TWO ELEMENTS, CONSPIRACY UNDER 1349 TO DEFRAUD INVESTORS, AND IT HAS THE SAME ELEMENTS THAT CONSPIRACY UNDER 1349 TO DEFRAUD PATIENTS HAS. AGAIN, THE ROLES. ON THE PATIENT SIDE, ELIZABETH HOLMES -- I'M SORRY. THE AGREEMENT WAS TO GET MONEY FROM PATIENTS. NOW, OF COURSE, THE AMOUNT OF MONEY IS MUCH, MUCH SMALLER, THE $5, $10 BLOOD TESTING. BUT IT'S A VOLUME BUSINESS. THE IDEA IS TO SET UP THE LAB AND GET THE PATIENTS TO BEGIN BUYING BLOOD TESTS, BECAUSE IT IS STILL REVENUE, TOO. AND YOU'VE SEEN EXCEL SPREADSHEETS WHEN THERANOS WAS DOWN TO ABOUT $7 MILLION. THEY STILL NEEDED REVENUE. IT'S A MUCH SMALLER AMOUNT, OF COURSE, FROM INDIVIDUAL BLOOD TESTS. IT'S A VOLUME BUSINESS. MS. HOLMES'S ROLE IN THE PATIENT FRAUD IS TO RECRUIT INVESTORS THROUGH FALSE STATEMENTS, FALSE STATEMENTS THAT WERE MADE IN THE PRESS, FALSE STATEMENTS THAT WERE MADE ON THE WEBSITE, ABOUT THINGS LIKE THE ACCURACY, THE RELIABILITY OF THE BLOOD TESTING. MR.

BALWANI ALSO PLAYED A ROLE IN THE CONSPIRACY TO DEFRAUD PATIENTS. YOU'VE HEARD THAT HE RAN OPERATIONS IN THE LAB. AND YOU CAN ALSO TELL A LOT ABOUT WHAT THEY VALUE BY THE DECISION, THERE'S AN EMAIL WHERE THEY SUGGEST CUTTING OR FIRING DR. ROSENDORFF. HE ENDS UP RESIGNING. BUT WHO DO THEY REPLACE DR. ROSENDORFF WITH? DR. ROSENDORFF IS COMPLAINING ABOUT ACCURACY, ASKING THEM TO DO MORE PROFICIENCY TESTING. WHO THEY REPLACE HIM WITH IS SUNNY BALWANI'S DERMATOLOGIST WHO WORKS FIVE HOURS OVER SIX OR SEVEN MONTHS, AND LYNETTE SAWYER, WHO WORKS LESS. YOU CAN TELL WHAT THEY VALUE AND WHAT THEIR INTENT IS BY WHO THEY GET TO RUN THE LAB, AND YOU KNOW THE DIFFERENCE IN LAB DIRECTORS, JUST THE ENGAGEMENT -- I DON'T MEAN AS PEOPLE, I JUST MEAN THE LEVEL OF ENGAGEMENT, THE KINDS OF ISSUES THAT ARE RAISED TO THE LAB DIRECTOR AND THE KIND OF ISSUES THAT THE LAB DIRECTOR RAISES ARE VERY DIFFERENT BETWEEN ROSENDORFF AND DHAWAN AND SAWYER.

SO THE SECOND ELEMENT FOR A CONSPIRACY FOR PATIENTS IS THE SAME, MEMBERSHIP IN THE CONSPIRACY, KNOWLEDGE OF THE OBJECTIVE, AND INTENT TO ACCOMPLISH IT. AGAIN, YOU GATHER THIS EVIDENCE FROM THE TEXT MESSAGES. THERE'S A TEXT MESSAGE THAT YOU PROBABLY REMEMBER, WE'LL LOOK AT IT A COUPLE OF TIMES, WHERE MR. BALWANI TELLS MS. HOLMES THAT THE LAB IS A DISASTER. THERE'S AN EXPLETIVE IN THE TEXT. AND THERE ARE EMAILS WHERE MS. HOLMES AND MR. BALWANI ARE INFORMED OF ALL OF THE PROBLEMS IN THE LAB. AND THEN INTENT, AGAIN, THE KINDS OF FALSE STATEMENTS THAT THEY'RE COMMUNICATING TO PATIENTS THROUGH THE PRESS, THE MEDIA AND THE WEBSITE, ARE THE KIND THAT WOULD GET THE PATIENT TO GO THERE ABOUT ACCURACY, RELIABILITY, SPEED, PRICE, THINGS LIKE THAT, FINGERSTICK, THOSE ARE ALL THINGS THAT ARE SAID TO ENCOURAGE SOMEONE TO PURCHASE BLOOD TESTS. HERE'S THE TEXT THAT I JUST REFERRED TO. THE NORMANDY LAB IS A DISASTER ZONE, MR. BALWANI SAYS TO MS. HOLMES. THIS IS IN NOVEMBER OF 2014.

I'LL MAKE A POINT OF NOTING THAT FOR YOU A LITTLE BIT LATER ON THIS MORNING. IN 2014, AND ACTUALLY EARLIER, IN 2014 MS. HOLMES IS TOLD ABOUT PROBLEMS IN THE LAB AND THEY GO ON FURTHER TO DISCUSS THE USE OF HUMAN JUDGMENT, OF PEOPLE IN THE LAB MAKING THE DECISIONS. RECALL ONE OF THE PITCHES, ONE OF THE BENEFITS TO THE THERANOS DEVICE WAS THAT IT DID ALL OF THE WORK ON ITS OWN SO YOU DIDN'T HAVE TO HAVE PEOPLE IN THE LAB MAKING JUDGMENTS, MAKING DECISIONS. THIS SORT OF PREANALYTICAL PHASE WHERE THERE WERE A LOT OF ERRORS IN LAB TESTING OCCUR, THE BENEFIT THAT INVESTORS AND PATIENTS WERE TOLD WAS THAT THERANOS ELIMINATED THAT. IN FACT, WHAT THEY SEE IS INDIVIDUALS, PEOPLE IN THE LAB USING THEIR JUDGMENT BECAUSE THE DEVICE DOESN'T WORK THAT WAY. PRICE. THE THERANOS PRICE WAS ADVERTISED. THIS IS IN A BINDER OF DOCUMENTS SENT TO INVESTORS, BUT YOU'LL SEE TESTIMONY FROM EDLIN SAYING IT'S THE SAME KIND OF INFORMATION THAT APPEARED ON THERANOS'S WEBSITE. ANOTHER SLIDE ABOUT PRICE. IN THE MEDIA, THIS IS THE PARLOFF ARTICLE, THE 2014 "FORTUNE" ARTICLE. THE STATEMENTS THAT MS. HOLMES MADE TO MR. PARLOFF MAKE IT INTO THE ARTICLE AND THEN ARE AVAILABLE FOR POTENTIAL PATIENTS TO READ AND USE TO MAKE DECISIONS TO USE THE SERVICE, AND IT SAYS THINGS LIKE THE COST, TRANSPARENCY, ADVERTISING OF THE PRICE, THINGS LIKE THAT.

MR. SCHENK: THIS IS THE EMAIL THAT I MENTIONED A MOMENT AGO WHERE RIGHT BEFORE THE WEBSITE GOES LIVE, AN ATTORNEY SENDS MS. HOLMES AN EMAIL SAYING, REMOVE THIS STUFF FROM YOUR WEBSITE, THESE WORDS, THESE PHRASES, THINGS LIKE "ALL TESTS," BECAUSE IT IS UNLIKELY THAT A LAB CAN PERFORM EVERY CONCEIVABLE TEST. AND THEN THESE COMPARATIVE WORDS, REPLACE "FASTER AND EASIER" WITH "FAST AND EASY," ALL TO AVOID MISLEADING PEOPLE. AND YOU HEARD MS. HOLMES WHEN SHE WAS ON THE STAND TALK ABOUT THIS, AND WHAT SHE SAID WAS, IT WAS SOMEBODY ELSE'S JOB AT THERANOS TO MAKE THE CHANGES TO THE WEBSITE. DAN EDLIN TOLD YOU HOW INVOLVED SHE WAS IN THE WEBSITE. BUT THAT ALSO MISSES THE POINT. SHE'S INFORMED ABOUT THE MISLEADING NATURE OF THESE WORDS, HOW SOMEONE MIGHT GET THE WRONG IMPRESSION AND THINK THAT THERANOS COULD ACTUALLY DO ALL OF THE TESTS BY USING THESE PHRASES. IT'S STRONG INTENT EVIDENCE FOR THAT REASON. EDLIN TOLD YOU MS. HOLMES WAS INVOLVED IN THE WEBSITE. SO IT WASN'T THAT MS.

HOLMES NEVER LOOKED AT THE WEBSITE, HAD NO IDEA THAT PATIENTS OR POTENTIAL PATIENTS MIGHT LOOK AT IT. SHE WAS INVOLVED IN THAT ALSO. THE QUESTIONS ABOUT QUALITY APPEARED ON THE LEFT IN AN INVESTOR BINDER. BUT DAN EDLIN SAID, I ALSO RECOGNIZE THAT AS SOMETHING THAT APPEARED ON THE WEBSITE. SO IT WASN'T JUST PRICE THAT THEY ADVERTISED TO LURE PATIENTS. QUALITY. ACCURACY. NOW WE'LL MOVE ON TO THE WIRE FRAUD COUNTS. THE CRIME OF WIRE FRAUD HAS FOUR ELEMENTS. I TOLD YOU THAT THERE ARE SIX COUNTS RELATED TO INVESTORS, AND THEN THREE COUNTS RELATED TO PATIENTS. LET'S START BY FOCUSSING ON THE COUNTS RELATED TO INVESTORS. THE FOUR ELEMENTS ARE THAT MS. HOLMES KNOWINGLY PARTICIPATED IN A SCHEME OR PLAN TO DEFRAUD, OR A SCHEME OR PLAN FOR OBTAINING MONEY OR PROPERTY BY FALSE REPRESENTATIONS. IT MIGHT BE EASIER TO BREAK THAT INTO TWO, TO ACTUALLY FOCUS ON THE EXISTENCE OF A SCHEME OR PLAN, AND THEN KNOWLEDGE. SO THAT'S THE WAY THAT WE WILL TALK ABOUT IT.

THE SECOND ELEMENT IS MATERIALITY, THAT THE FALSE STATEMENTS WERE THE KIND OF FALSE STATEMENTS THAT COULD WOULD CAUSE SOMEONE TO SPEND MONEY OR PART WITH MONEY. THE THIRD ELEMENT IS THAT MS. HOLMES ACTED WITH THE INTENT TO DEFRAUD. AND THE FOURTH ELEMENT IS THAT INTERSTATE ELEMENT THAT I MENTIONED TO YOU EARLIER, AN INTERSTATE WIRE. HERE'S A SLIDE THAT I'M GOING TO ASK YOU TO TAKE A FEW NOTES ON IF YOU'LL ALLOW ME TO MAKE THAT REQUEST. THE VERDICT FORM FOR THESE COUNTS SAYS COUNT THREE, THE DATE -- SO FOR COUNT THREE, DECEMBER 30TH, 2013 -- AND THE AMOUNT, THE DOLLAR AMOUNT. THE VERDICT FORM DOES NOT SAY THE NAME OF THE INVESTOR, AND WE ALL WANT TO MAKE SURE THAT YOU REACH THE VERDICT THAT YOU HAD WANT TO REACH. IF YOU INTEND TO CONVICT HER OF THE EISENMAN COUNT AND ACQUIT HER OF THE BLACK DIAMOND OR THE LUCAS COUNT, KNOWING WHICH COUNT APPLIES TO WHICH INVESTOR IS USEFUL. SO COUNT THREE IS EISENMAN; COUNT FOUR IS LUCAS, OR BDV, BLACK DIAMOND VENTURES.

LUCAS INVESTED A LITTLE OVER 5 MILLION; COUNT FIVE IS BRYAN TOLBERT, OR THE HALL GROUP, AND THEY INVESTED A LITTLE UNDER 5 MILLION; COUNT SIX IS BRIAN GROSSMAN, OR PFM, AND THIS WIRE, THIS INVESTMENT WAS A LITTLE OVER $38 MILLION; COUNT SEVEN WAS LISA PETERSON, OR RDV, THIS WAS ABOUT $100 MILLION; AND, COUNT EIGHT WAS DAN MOSLEY, AND HIS INVESTMENT WAS JUST UNDER $6 MILLION. SO YOU SEE WHICH COUNT APPLIES TO WHICH INVESTOR. I TOLD YOU THAT THE FALSE STATEMENTS THAT WERE MADE IN THIS CASE FALL INTO DIFFERENT CATEGORIES. THERE ARE DIFFERENT KINDS OF FALSE STATEMENTS THAT MS. HOLMES MADE IN ORDER TO DEFRAUD INVESTORS, AND SOME INVESTORS HEARD MORE THAN ONE OF THEM, SOME HEARD ONE, BUT NOT ANOTHER. IT'S NOT THE CASE THAT EVERY INVESTOR HEARD EVERY STATEMENT. THERE ARE CERTAIN KINDS OF STATEMENTS, THOUGH, I THINK THAT ARE A THREAD THROUGH THIS SCHEME, ESPECIALLY THIS FIRST ONE ABOUT THE CAPABILITIES OF THE ANALYZER, AND IN PARTICULAR ITS ACCURACY. AND, IN FACT, THE ACCURACY OF THE TESTING ALSO WAS A FALSE STATEMENT ON THE PATIENT SIDE. IT'S SORT OF THE UNDERLYING FALSE STATEMENT IN THE CASE, BUT IT IS CERTAINLY NOT THE ONLY FALSE STATEMENT. THERE ARE FALSE STATEMENTS IN MANY CATEGORIES ABOUT THE FULL RANGE OF TESTS, ABOUT WHAT DEVICE THEY USED, THAT THE TESTING WAS DONE ON THE FINGERSTICK. THERE'S FALSE STATEMENTS ABOUT THE FINANCIAL STABILITY OR THE FINANCIAL HEALTH OF THE COMPANY.

MR. SCHENK: THERE ARE FALSE STATEMENTS ABOUT MISLEADING DEMONSTRATIONS, OR YOU MAY RECALL THAT ON OCCASION VIP'S -- AT THERANOS A VIP WAS A POTENTIAL INVESTOR. A VIP WOULD COME INTO THERANOS AND HAVE A DEMONSTRATION OF THE BLOOD TEST AND THAT WOULD OFTEN BE DONE ON A DEVICE THAT THERANOS DID NOT USE AT WALGREENS, THE 4 SERIES DEVICE. OFTEN THE TESTING OF THAT BLOOD WAS NOT DONE ON THE DEVICE IN THE ROOM. IT WAS DONE BACK AT THE LAB, AND WE'LL GO THROUGH SOME EMAILS ON THAT. SO THIS -- THE PROCESS, THE SETTING UP AND USING OF THE DEMONSTRATIONS WAS ALSO A WAY THAT THERANOS DEFRAUDED POTENTIAL INVESTORS. OTHER CATEGORIES.

THE WALGREENS RELATIONSHIP, THAT IT WAS HEALTHY AND EXPANDING; THE DEPARTMENT OF DEFENSE WORK, THAT THE TECHNOLOGY HAD BEEN DEPLOYED ON THE BATTLEFIELD; THE USE OF THIRD PARTY DEVICES, OR THE NOT REVEALING THE FACT THAT THEY USED THIRD PARTY DEVICES; VALIDATION BY LARGE PHARMACEUTICAL COMPANIES, YOU KNOW THAT FOR PEOPLE LIKE DAN MOSLEY WAS IMPORTANT; AND THEN THE USE OF FALSE STATEMENTS IN THE MEDIA. I TOLD YOU THAT SOME OF THE WORK WASN'T DONE JUST BY HOLMES AND BALWANI MAKING FALSE STATEMENTS TO POTENTIAL INVESTORS, BUT MS. HOLMES WOULD MAKE FALSE STATEMENTS TO RAGO OR PARLOFF AND IT WOULD APPEAR IN AN ARTICLE AND THEN THEY WOULD SENT THAT ARTICLE TO POTENTIAL INVESTORS. THAT FIRST CATEGORY, THE CAPABILITIES OF THE ANALYZER. FIRST LET'S TALK ABOUT WHERE YOU CAN FIND THAT FALSE STATEMENT. IF YOU ARE A POTENTIAL INVESTOR, WHERE ARE THE PLACES YOU MAY HAVE SEEN IT? THE INVESTOR BINDERS THERE ARE FALSE STATEMENTS IN. IT ALSO APPEARED IN THE PRESENTATION TO THE BOARD.

THE BOARD WAS TOLD THINGS ABOUT THE CAPABILITIES OF THE ANALYZER THAT INVESTORS WERE ALSO -- AND YOU CAN THINK OF THAT SIMILARLY TO THE WAY THAT AT THE BEGINNING THIS MORNING I ASKED YOU TO THINK ABOUT FALSE STATEMENTS MADE TO SAFEWAY OR THE DEPARTMENT OF DEFENSE. IT IS ALL THE SAME SCHEME. IT IS ALL THE SAME KIND OF FALSE STATEMENTS THAT ARE BEING TOLD TO INVESTORS AND TO THE BOARD AND ON OCCASION TO PATIENTS. YOU FIND THE FALSE STATEMENTS IN INTERVIEWS AND IN THE MEDIA. WE'LL LOOK AT SOME PORTIONS OF THE ARTICLES. AND THEN DIRECTLY. THERE WERE OCCASIONS -- YOU HEARD A RECORDING ALREADY THIS MORNING -- WHERE MS. HOLMES IS SPEAKING TO POTENTIAL INVESTORS. SO IT'S WRITTEN, IT'S SPOKEN. HERE'S ONE OF THE FIRST LOCATIONS. THIS IS WITHIN A BINDER, AN INVESTOR BINDER. INVESTORS ARE TOLD THAT THERANOS'S PROPRIETARY, PATENTED TECHNOLOGY RUNS COMPREHENSIVE BLOOD TESTS FROM A FINGERSTICK AND FROM MICRO-SAMPLES.

AND THEN YOU SEE THE LITTLE CHART ON THE LOWER LEFT SHOWS YOU WHICH INVESTOR, WHICH EXHIBIT NUMBER. IT WAS IN THE MOSLEY BINDER, IT WAS IN THE PETERSON BINDER, AND IT WAS IN THE MURDOCH BINDER. YOU'VE HEARD ABOUT THE MURDOCH BINDER THROUGH TESTIMONY. THESE EXHIBIT NUMBERS ARE GOING TO REPEAT IN MANY OF THE SLIDES. THIS IMAGE ABOUT THE SAME TESTS, A WHOLE NEW APPROACH. THERANOS RUNS ANY TEST AVAILABLE IN CENTRAL LABORATORIES AND PROCESSES ALL SAMPLE TYPES. AND THEN THIS IMAGE SORT OF COMPARING THE VERY SMALL BLOOD DRAW AT THERANOS VERSUS THE FOUR VIALS OF BLOOD THAT TRADITIONAL LABS USE TO FURTHER PAINT THE IMAGE OR LAND THE POINT THAT THERANOS'S TECHNOLOGY IS DIFFERENT AND IT'S -- THE HALLMARK OF IT IS FINGERSTICK WITH MUCH SMALLER BLOOD. IT APPEARS IN THESE OCCASIONS. IN FACT, ON SOME OCCASIONS, SOME OF THE IMAGES LOOK A LITTLE DIFFERENT BETWEEN THE INVESTOR BINDERS.

SOMETIMES THEY DIDN'T HAVE A VERSUS PHRASE OR ABBREVIATION BETWEEN THE TWO IMAGES, BUT IMAGES LIKE THIS APPEARED IN THESE LOCATIONS. THE BOARD GOT IT, INVESTORS GOT IT, EVEN ROGER PARLOFF GOT IT. THERE WERE FALSE STATEMENTS ABOUT THE QUALITY, THERANOS AUTOMATES PRE- AND POST-ANALYTICAL PROCESSES, AND IT REDUCES ERROR. AGAIN, HERE ARE THE LOCATIONS THAT THAT APPEARED. THEY WERE COMMUNICATING THIS CONCEPT TO THE INVESTORS, TO THE BOARD, AND TO MR. PARLOFF. ACCURACY AND SPEED. THESE WERE COMMUNICATED. THE HIGHEST LEVELS OF ACCURACY, AND SPEED, FASTER ANSWERS, FASTER RESULTS. BUT YOU KNOW THAT IF THERANOS TESTING ACTUALLY WAS THE BLOOD DRAW OCCURRED IN A WALGREENS, AND THEN IT WAS SHIPPED TO A CENTRAL LAB IN CALIFORNIA AND RUN ON AN UNMODIFIED THIRD PARTY DEVICE, IT WOULDN'T BE FASTER, NOR ACCURACY FOR A MOMENT, NOR RELIABILITY FOR A MOMENT, IT WOULD BE WHAT LABCORP AND QUEST ALREADY ARE. THERE WOULD BE NO COMPARATIVE ADVANTAGE TO THERANOS FOR THAT PORTION OF THINGS IN ISOLATION. FINANCIAL STABILITY.

MR. SCHENK: YOU HEARD THE CONCEPT THAT I WAS JUST EXPLAINING TO YOU, THAT THEY WERE COMMUNICATING TO INVESTORS THAT THERANOS WAS MAKING MONEY, WAS MAKING MONEY TO GROW CASH FROM ITS OPERATIONS DOING THE PHARMACEUTICAL WORK. BUT YOU THEN HEARD FROM THE PHARMACEUTICAL COMPANY EMPLOYEES SAYING WE WEREN'T INTERESTED IN FURTHER WORK WITH THERANOS. THERANOS WASN'T MAKING MONEY FROM PHARMACEUTICAL COMPANIES TO SURVIVE. THERANOS WENT -- AND YOU HEARD TESTIMONY ABOUT GOING TO PEER VENTURES AT ONE POINT. I THINK IT WAS RELATED TO DON LUCAS, TO GET MONEY AT A POINT WHEN THEY WERE PARTICULARLY LOW. THE DEMOS THAT I MENTIONED A MOMENT AGO. DAN EDLIN WAS INVOLVED IN SETTING UP THOSE DEMOS AND HE TOLD YOU THAT THE CHOICE, THE DECISION OF WHICH DEVICE TO PUT IN THE CONFERENCE ROOM WAS MADE BY EITHER HOLMES OR BALWANI. AND IN THIS EMAIL, EXHIBIT 871, THERE'S A DISCUSSION ABOUT WHICH DEVICES TO PUT IN THERE, A MINILAB, A 4S, OR A MONOBAY WITH THE NORMANDY SHELL.

SO 4S, MONOBAY, THOSE WERE NOT DEVICES THAT THERANOS USED TO TEST PATIENT BLOOD. SO BRING AN INVESTOR IN THE ROOM AND PUT A DEVICE IN THE ROOM AND THAT ISN'T A DEVICE THAT THEY USED TO TEST PATIENT BLOOD, AND THEN THEY PUT SOMETHING ON THE DEVICE, SOMETHING CALLED A NORMANDY SHELL. AND YOU'VE SEEN WHAT THAT IS. THE DEMO APP OR THE NORMANDY APP IN THIS EMAIL, WHICH IS 959, IT TALKS ABOUT THE VALUE OF THAT NORMANDY OR DEMO APP AT THE BOTTOM. SO THE PROCESS LOOKS EFFORTLESS IN FRONT OF THE CLIENT, AND AT THE TOP IT SAYS, "THE DEMO APP MERELY SHIELDS PROTOCOL FAILURES FROM THE CLIENT." ALSO IN THERE YOU SEE A DESCRIPTION OF THE COLLECTION PROCESS. "MOST LIKELY WE WILL COLLECT A NUMBER OF SAMPLES AND STORE THEM IN THE SHIPPING CONTAINER LIKE THE LAST MEETING WE HAD, AND THEN PROCESS THEM SEPARATELY IN THE LAB." SO THE BLOOD ISN'T BEING TESTED ON THE DEVICES IN THE ROOM, BUT BLOOD IS BEING TAKEN TO THE THERANOS LAB FOR TESTING. THE WALGREENS PARTNERSHIP.

YOU HEARD FROM LISA PETERSON THAT SHE WAS TOLD THERANOS EXPECTED TO HAVE 900 WALGREENS STORES IN 2015. AND THAT NUMBER, 900, WAS IMPORTANT BECAUSE SHE RECEIVED THIS DOCUMENT. AND MR. MOSLEY ALSO RECEIVED THIS DOCUMENT. THIS IS MS. PETERSON'S HANDWRITING ON IT. AND YOU SEE ABOVE THE 2015 NUMBERS, SHE WRITES, 900 LOCATIONS, SORT OF THE REVENUE PROJECTION. THE $990 MILLION REVENUE PROJECTION WAS BASED ON THERANOS GOING INTO 900 WALGREENS STORES IN 2015, AND IT'S FALSE, AND IT'S FALSE FOR A COUPLE OF REASONS. ONE, BECAUSE HOLMES AND BALWANI WERE BEING TOLD BY WALGREENS THAT THEY WEREN'T GOING TO EXPAND FURTHER, THEY NEEDED THE FINGERSTICK NUMBERS TO GET MUCH HIGHER, THE VEIN DRAW NUMBERS TO GET MUCH LOWER. BUT IT'S ALSO FALSE BECAUSE HOLMES AND BALWANI KNOW THAT THE WALGREENS RELATIONSHIP WILL INEVITABLY FAIL. THE WALGREENS RELATIONSHIP WAS BASED ON FALSE STATEMENTS. WALGREENS LOOKED AT THE THINGS LIKE THE PFIZER REPORT FOR VALIDATION.

WALGREENS IS SITTING THERE WAITING FOR THE VENOUS NUMBERS TO DROP BECAUSE WALGREENS THINKS THAT THERANOS IS A FINGERSTICK BLOOD TESTING COMPANY. SO TO SUGGEST TO A POTENTIAL INVESTOR THAT IT IS EVEN POSSIBLE THAT WE MIGHT HIT A BILLION DOLLARS OF REVENUE NEXT YEAR -- REMEMBER, THIS IS COMMUNICATED AROUND OCTOBER OF 2014 -- TO SUGGEST THAT YOU'RE GOING TO GET A BILLION DOLLARS OF REVENUE WITH WALGREENS AND 900 STORES SUGGESTS TO THE INVESTOR THAT IT'S REASONABLE THAT YOU MIGHT HIT 900 STORES. AND THAT IS OBVIOUSLY FALSE WHEN WALGREENS IS SAYING, WE'RE MONITORING THE VENOUS DRAW NUMBERS, AND WHEN THE RELATIONSHIP WAS BASED ON FALSE STATEMENTS THAT WALGREENS WAS PROVIDED. DOD. MS. HOLMES LOOKED AT, ACCORDING TO DAN EDLIN, THIS DOCUMENT. THIS SPECIFIC DOCUMENT WAS REVIEWED AND APPROVED BY ELIZABETH HOLMES. THIS WAS SENT TO SPECIAL OPERATIONS COMMAND US SOC, AND IN IT THERANOS IS DESCRIBING THE FINGERSTICK BLOOD TESTING TECHNOLOGY, HIGHER QUALITY DATA THAN PREVIOUSLY POSSIBLE. BUT LOOK AT THAT FIRST BULLET, "EACH THERANOS DEVICE CAN RUN EVERY TEST CURRENTLY AVAILABLE THROUGH THE TRADITIONAL AND CENTRALIZED OR HOSPITAL LABORATORY INFRASTRUCTURE." THERE'S NO AMBIGUITY HERE. THE DEPARTMENT OF DEFENSE IS COMMUNICATING AND BEING TOLD THE SAME THING THAT THE INVESTORS TESTIFIED THAT THEY UNDERSTOOD, THAT EACH THERANOS DEVICE COULD RUN ANY TEST. IT WASN'T SOME ASPIRATIONAL STATEMENT. IT WASN'T SOME CLEARLY DELINEATED, NO, I MEAN THE 4 SERIES WHEN WE EVENTUALLY GET THERE.

MR. SCHENK: YOU HEARD IN THERE MS. HOLMES STARTS BY TELLING MR. TOLBERT AND OTHERS THAT THE MILITARY IS A BIG DEAL FOR US. YOU'VE ACTUALLY SEEN NOW THE CONTRACTS AND THE LACK OF WORK THERE. SHE SAID CONFIDENTIALLY, SAID TO TRY TO DISCOURAGE FURTHER DISCUSSION. THERE'S ALSO, I'LL SHOW YOU A LITTLE BIT LATER, COMMUNICATIONS TO GENERAL MATTIS THAT ARE SIMILAR. ONE IS IN THE CONTEXT OF WORK IN THE MIDDLE EAST, AND SPECIFICALLY IN AFGHANISTAN. MS. HOLMES TESTIFIED THAT THERE WASN'T WORK IN THE MIDDLE EAST OR AFGHANISTAN. AND SHE ALSO SAYS THAT WE'VE BEEN DOING A LOT OF WORK THERE WHEN SHE TALKS ABOUT MEDEVACS. SHE'S MAKING FALSE STATEMENT AFTER FALSE STATEMENT ABOUT WORK THAT THERANOS HAD DONE, WAS DOING WITH THE DEPARTMENT OF DEFENSE IN ORDER TO GET INVESTORS TO INVEST, FOR INVESTORS TO BELIEVE THAT THE TECHNOLOGY WORKED WASN'T JUST VALIDATED BY ITS WORK WITH PHARMACEUTICAL COMPANIES, BUT ALSO THROUGH ITS WORK WITH THE DEPARTMENT OF DEFENSE.

LISA PETERSON TOLD YOU THAT SHE THOUGHT, BECAUSE SHE WAS TOLD, THAT THERANOS WAS USING THE DEVICES ON MILITARY HELICOPTERS. CHRIS LUCAS TOLD YOU THAT HE WAS TOLD THAT THE THERANOS ANALYZER WAS ACTIVELY BEING USED BY THE MILITARY TO TREAT SOLDIERS IN THE FIELD. IN THE LETTER TO DAN MOSLEY, MR. MOSLEY WAS TOLD THAT THERANOS'S PRIOR WORK WAS FOCUSSED ON CONTRACTS WITH MILITARY CLIENTS. BRIAN GROSSMAN WAS TOLD THAT WITH REGARD TO THE DEPARTMENT OF DEFENSE, THE TECHNOLOGY HAD BEEN USED IN THE BATTLEFIELD ON MEDEVACS. THERE IS ALSO FALSE STATEMENTS THAT FALL INTO THIS CATEGORY ABOUT THE USE OF THIRD PARTY DEVICES. BRYAN TOLBERT TOLD YOU THAT HE DID NOT KNOW THAT THERANOS USED THIRD PARTY TESTING OR THIRD PARTY MACHINES TO DO SOME OR THE MAJORITY OF ITS TESTING. AND HE DID NOT KNOW THAT THE TSPU, THE THERANOS SAMPLE PROCESSING UNIT, THAT IT COULD ONLY DO 12 TESTS. LET ME REMIND YOU WHAT YOU HEARD FROM MS.

HOLMES WAS, THE REASON THAT I DIDN'T TELL INDIVIDUALS, LIKE INVESTORS, ABOUT THE USE OF THIRD PARTY DEVICES WAS TO PROTECT TRADE SECRETS. I MENTIONED TO YOU THAT THAT WOULD NOT APPLY TO THE UNMODIFIED TRADE SECRETS. THAT WAS JUST A SECRET AT THERANOS. BUT ALSO THERE WAS THE OPPORTUNITY TO SIGN CDA'S, THE CONFIDENTIAL DISCLOSURE AGREEMENTS, THAT WOULD STILL COVER THE TRADE SECRET, THAT REALLY THE TRADE SECRET EXCUSE IS A RED HERRING. IT IS TO NOW JUSTIFY TO YOU WHY THEY DIDN'T TELL INVESTORS ABOUT THE USE OF THIRD PARTY DEVICES. IT WAS NOT THE REASON AT THE TIME. ALAN EISENMAN TOLD YOU THAT HE DID NOT KNOW THAT THERANOS WAS PURCHASING ANALYZERS FROM OTHER MANUFACTURERS. BRIAN GROSSMAN GOT EVEN A LITTLE MORE NUANCED. HE ASKED, WHAT IS THE SQUARE FOOTAGE THAT IT WOULD TAKE TO COVER THE PHOENIX, THE MARKET IN ARIZONA? HOW BIG A LAB DO YOU NEED? AND HE'S TOLD 200 SQUARE FEET.

AND THAT -- HIS UNDERSTANDING IS THAT'S ONLY POSSIBLE BECAUSE THERANOS DOES ITS TESTING USING ITS SMALL DEVICES. AND THERE'S EVEN SORT OF AN ADDITIONAL LEVEL AT WHICH THIS IS DECEPTIVE. YOU'VE HEARD THAT LABS HAVE DIFFERENT COMPLEXITIES, THAT CLIA CERTIFIES SOME AS HIGH COMPLEXITY AND SOME AS MODERATE COMPLEXITY. YOU HEARD THAT THE LAB IN CALIFORNIA WAS HIGH COMPLEXITY AND THEREFORE COULD RUN LDT'S, LAB DEVELOPED TESTS, LIKE THE EDISON DEVICE OR LIKE MODIFIED THIRD PARTY DEVICES. THE LAB IN ARIZONA WAS MODERATE COMPLEXITY, SO IT COULD NOT RUN THE MODIFIED THIRD PARTIES OR THE EDISON. SO THE LAB, THE KIND OF AUTHORIZATION, THE CERTIFICATION THAT THE LAB IN ARIZONA HAD, MODERATE, WOULDN'T HAVE ALLOWED IT TO USE THE EDISON DEVICES. SO NOT ONLY IN ARIZONA, OR THERANOS GENERALLY, THEY WEREN'T DOING THE TESTING BY THE SMALL BOX TO COVER THE MARKET IN 200 SQUARE FEET, BUT IT WASN'T EVEN THAT KIND OF LAB TO USE THE EDISON DEVICE. VALIDATION BY PHARMACEUTICAL COMPANIES.

FIRST, IT'S COMMUNICATED IN THE INVESTOR BINDER THAT THERANOS HAD BEEN COMPREHENSIVELY VALIDATED OVER THE COURSE OF THE LAST SEVEN YEARS BY 10 OF THE 15 LARGEST PHARMACEUTICAL COMPANIES. YOU THEN HEARD FROM SEVERAL PHARMACEUTICAL COMPANIES THAT CAME INTO COURT AND TOLD YOU THAT THEY DID NOT VALIDATE THE THERANOS TECHNOLOGY. YOU'VE SEEN THESE DOCUMENTS. EXHIBIT 291 IS THE VERSION SENT TO WALGREENS. YOU KNOW SOME OF THESE WENT TO INVESTORS, MOSLEY, PETERSON, FOR INSTANCE. BUT THE VERSION THAT WENT TO PFIZER AND SCHERING-PLOUGH HAD THE PFIZER -- I'M SORRY, DID NOT HAVE THE PFIZER OR THE SCHERING-PLOUGH LOGO. THE VERSION THAT WENT TO WALGREENS DID. THE FALSE STATEMENTS MADE IN THE MEDIA.

MR. SCHENK: MS. HOLMES SENT THE RAGO ARTICLE TO SHAREHOLDERS IN THIS EXHIBIT, 1102. THIS IS THE RAGO ARTICLE GOING TO SHAREHOLDERS. HERE'S THE RAGO ARTICLE GOING TO THE BOARD OF DIRECTORS. AND HERE'S THE RAGO ARTICLE. IN IT, IT SAYS THE DEVICE AUTOMATES AND MINIATURIZES MORE THAN A THOUSAND LAB TESTS. REMEMBER THERE WAS DISCUSSION ABOUT DOES A THOUSAND MEAN CPT CODES AND, THEREFORE, NOT REALLY A THOUSAND TESTS? MS. HOLMES IS INTERVIEWED FOR AN ARTICLE IN "THE WALL STREET JOURNAL" AND THAT THAT ARTICLE A THOUSAND TESTS. IT ALSO SAYS, QUOTE, RUNS ANY COMBINATION OF TESTS, INCLUDING SETS OF FOLLOW-ON TESTS, ALL FROM A SINGLE MICRO-SAMPLE, READ OUT IN AS LITTLE AS TWO HOURS, AND THERANOS'S TECHNOLOGY IS AUTOMATED, STANDARDIZED, AND ATTEMPTS TO SUBTRACT HUMAN MORE FROM THE PROCESS. IT CAN THUS ACHIEVE MUCH LOWER VARIANCE RANGES FOR A GIVEN TEST. THIS ARTICLE I'VE SHOWN YOU WAS SENT TO POTENTIAL INVESTORS. THE "FORTUNE" ARTICLE ALSO WAS SHARED WITH POTENTIAL INVESTORS.

THAT IS THE COVER OF THE "FORTUNE" ARTICLE ON THE RIGHT. THE TITLE OF IT IS THE SECOND ONE DOWN, "THIS CEO IS OUT FOR BLOOD." AND THEN THOSE ARE EXHIBIT NUMBERS WHERE THIS WAS SENT IN THE INVESTOR BINDER TO INVESTORS. IN THE PARLOFF ARTICLE THERE ARE MANY INSTANCES OF STATEMENTS THAT THE GOVERNMENT BELIEVES ARE FALSE. HERE'S JUST A COUPLE: THE TESTS CAN BE PERFORMED ON JUST A FEW DROPS OF BLOOD, AND THAT THERANOS DOES NOT BUY ANY ANALYZERS FROM THIRD PARTIES. EVEN IF THERE IS A TRADE SECRET EXCUSE THERE, YOU DON'T HAVE TO MAKE FALSE STATEMENTS TO ROGER PARLOFF TO APPEAR IN THE ARTICLE THAT THEN DECEIVE INVESTORS. SO I TOLD YOU THE CATEGORIES OF FALSE STATEMENTS AND WHAT THOSE CATEGORIES WERE. HERE'S A REPEAT OF THOSE CATEGORIES. NOW WE'RE GOING TO TALK ABOUT MS. HOLMES'S KNOWLEDGE OF THE FALSITY OF THOSE STATEMENTS. HERE'S THE SECOND HALF OF THOSE CATEGORIES. YOU CAN FIND KNOWLEDGE, EVIDENCE PROVING THAT ELIZABETH HOLMES KNEW THAT THESE CATEGORIES WERE FALSE IN THESE LOCATIONS.

I'M GOING TO GO THROUGH SOME OF THEM, BUT I WANT YOU TO UNDERSTAND THAT THERE -- YOU WILL HAVE THE EXHIBITS BACK THERE WITH YOU, AND THERE ARE INSTANCES IN THESE EXHIBIT NUMBERS WHERE ELIZABETH HOLMES HAS KNOWLEDGE THAT THESE CERTAIN FALSE STATEMENTS ARE FALSE. THERE IS ONE HERE I WANT TO MENTION TO YOU, AND I'LL SHOW YOU IN A MOMENT, THE THIRD EXHIBIT NUMBER, 1660, IS ONE OF THOSE INSTANCES WHEN AN EXHIBIT WOULD GET ADMITTED FOR A LIMITED PURPOSE AND THE JUDGE WOULD TURN TO YOU AND SAY, THIS EXHIBIT NOT COMING IN FOR THE TRUTH, BUT IT IS COMING IN FOR, AND THEN THE REASON, KNOWLEDGE IN THIS INSTANCE. SO I'M GOING TO SHOW YOU AN EXHIBIT THAT WAS NOT ADMITTED FOR THE TRUTH. THE CONTENT OF THE EMAIL IS NOT FACTUALLY TRUE FOR YOU, BUT IT'S USED FOR KNOWLEDGE, FOR WHAT WE'RE TALKING ABOUT RIGHT NOW. ERIKA CHEUNG SAID THAT THE DEVICE COULD ONLY DO BETWEEN 4 AND 12 TESTS. ELIZABETH HOLMES KNEW THAT. IN FACT, SHE TESTIFIED TO THAT ALSO.

SO WHEN INVESTORS ARE TOLD A THOUSAND TESTS, OR AS THAT SPECIAL OPERATIONS COMMAND, ALL OF THE TESTS, SHE KNOWS THAT'S FALSE. SHE KNOWS THE LIMITS. IN THIS EMAIL EXCHANGE BETWEEN MS. HOLMES AND SUREKHA GANGADKHEDKAR RIGHT BEFORE THEY ROLL OUT WITH WALGREENS -- SO THIS IS THE END OF AUGUST OF 2013 -- MS. HOLMES IS ASKING, WHAT IS THE TOTAL NUMBER OF IMMUNOCHEMISTRY MICRO SAMPLE ASSAYS? YOU HEARD THAT THERE ARE FOUR DIFFERENT KINDS OF ASSAYS. IMMUNOASSAYS WERE THE ONLY KIND THAT THE 3 SERIES EDISON COULD DO. SO MS. HOLMES IS ASKING, WHAT IS THE NUMBER OF THEM THAT HAVE COMPLETED VALIDATION WITH THE ADVIA OR WITH THERANOS? AND SHE'S TOLD 11. SO, AGAIN, STATEMENTS THAT CLAIM MORE, ALL OF THE TESTS, IS A KNOWINGLY FALSE STATEMENT. MS. HOLMES ASKS SOMEONE ELSE AT THERANOS, ROSE EDMONDS, ABOUT GENERAL CHEMISTRY ASSAYS, A SECOND KIND OF ASSAY, WHAT IS THE NUMBER OF GENERAL CHEMISTRY MICRO SAMPLE ASSAYS THAT HAVE COMPLETED VALIDATION? AND ROSE TELLS HER, AS OF RIGHT NOW, NONE.

IN TEXT MESSAGES, MS. HOLMES IS ALSO ALERTED TO THE MISLEADING NATURE OR THE INCORRECT NATURE OF SOME CONTENT. HERE BALWANI IS SAYING, YOU SHOULD REVISIT THE NEW.COM, THE WEBSITE COPY, IN LIGHT OF US DOING ABOUT 50 PERCENT FINGERSTICKS. ESSENTIALLY THE POINT BEING YOU READ THE CONTENT AND IT SEEMS LIKE WE DO FINGERSTICK. THAT ISN'T THE REALITY. MS. HOLMES IS ASKING MR. BALWANI IF THEY CAN TAKE FINGERSTICK -- I THINK THE WORD SHOULD BE LIVE -- TOMORROW. MR. BALWANI CLARIFIES, GENERAL CHEMISTRY? YOU MEAN GC? VERY RISKY. WE NEED TO DO MORE SOFTWARE TESTING.

MR. SCHENK: THIS IS ALL THE WAY INTO 2015. SO EVEN IN THE SECOND CATEGORY OF ASSAYS THERE'S CONCERNS ABOUT. MR. BALWANI TELLS HER THAT HE'S WORRIED ABOUT YOUR "ALL FINGERSTICKS ON OUR TECHNOLOGY" COMMENT. AGAIN, WHEN MS. HOLMES COMMUNICATES STATEMENTS ABOUT THE CAPABILITIES OF THE TECHNOLOGY, THOSE ARE FALSE STATEMENTS AND THEY ARE KNOWINGLY FALSE STATEMENTS. MS. GANGADKHEDKAR ALSO TESTIFIED THAT SHE HAD MEETINGS WITH ELIZABETH HOLMES WHERE SHE DESCRIBED TO MS. HOLMES RELIABILITY ISSUES WITH THE 3.0 AND THE 3.5 DEVICES, THINGS LIKE THEIR INABILITY TO GIVE CONSISTENT RESULTS, AND THESE WERE ISSUES THAT WERE DISCUSSED WITH ELIZABETH HOLMES. AGAIN, MORE EVIDENCE THAT THESE WERE NOT JUST FALSE STATEMENTS, THEY WERE KNOWINGLY FALSE STATEMENTS. DR. ROSENDORFF SAID THAT IN THE MIDDLE OF 2014, HE HAD CONVERSATIONS WITH MS. HOLMES ABOUT QC, QUALITY CONTROL FAILURES AT THERANOS. AND IT INCLUDED THE HIGH FAILURE RATE ON THE EDISON. AGAIN, MORE KNOWLEDGE EVIDENCE.

THIS IS THE 1660 EMAIL THAT I SAID CAME IN FOR A LIMITED PURPOSE. YOU'VE HEARD THAT TYLER SHULTZ WORKED AT THERANOS AND HE COMMUNICATED WITH MS. HOLMES, AND ALSO SOMEONE NAMED DANIEL YOUNG, SOME OF HIS CONCERNS, THINGS THAT HE WAS SEEING THAT WERE PROBLEMS AT THERANOS. AND, AGAIN, THE CONTENT OF THE EMAIL, THE THINGS THAT HE SAYING THAT HE SEES AS A PROBLEM, THAT IS NOT IN FOR THE TRUTH. WHAT IT IS IN FOR, THOUGH, IS KNOWLEDGE FOR MS. HOLMES. WHEN SHE'S GIVEN THIS EMAIL BY TYLER SHULTZ RAISING THESE PROBLEMS, THEN YOU CAN SORT OF INFER OR UNDERSTAND THAT SHE BECOMES AWARE OF THAT FOR THINGS LIKE HER KNOWLEDGE. MS. YAM TOLD MS. HOLMES ABOUT THE FINANCIAL CONDITION OF THE COMPANY. SO WHEN MS. HOLMES MAKES FALSE STATEMENTS TO OTHER PEOPLE ABOUT THE FINANCIAL HEALTH, IT'S A KNOWINGLY FALSE STATEMENT. MS. YAM ALSO SHOWED YOU THE TRUE REVENUE NUMBERS FOR THERANOS. IN '13, NONE; IN '12, NONE; IN 2011, ABOUT 500,000. YOU'VE SEEN THIS SPREADSHEET FROM MS. YAM.

IT'S THAT WEEK IN SEPTEMBER OF 2013 WHEN THERANOS WAS DOWN TO ABOUT $14 MILLION, BUT YOU HEARD THAT 7 AND A HALF OF IT WAS A LETTER OF CREDIT. SO IT WASN'T FREE MONEY TO SPEND FOR ANY PURPOSE, WHICH BRINGS THE TOTAL DOWN CLOSER TO ABOUT $7 MILLION, THAT THERANOS AT THIS POINT WAS DOWN TO ABOUT $7 MILLION, AND MS. YAM TOLD YOU THAT THINGS AT THERANOS WERE GETTING TIGHT. YOU ALSO SAW MS. YAM'S TRACKING OF THE WORK THAT THERANOS HAD DONE AND THE REVENUE THAT IT RECEIVED FROM THE PHARMACEUTICAL COMPANIES. AND IN HERE YOU SEE THE NAME OF THE PHARMACEUTICAL COMPANY, AND THEN THAT MIDDLE COLUMN IS THE LAST PAYMENT DATE, THE LAST TIME THAT THEY RECEIVED MONEY FROM THAT COMPANY. SO CELGENE, THE LAST TIME WAS IN JUNE OF 2011; PFIZER, IT'S NOVEMBER OF 2008; SCHERING-PLOUGH, MAY OF 2009.

AND THEN THOSE TOTALS, THE TOTAL AMOUNT IF YOU ADD ALL OF THE TIMES THAT THERANOS RECEIVED MONEY FROM THESE PHARMACEUTICAL COMPANIES, AND THEN YOU SEE WHY STATEMENTS LIKE WE'RE GROWING CASH FROM OPERATIONS OR WE HAVE BEEN GROWING CASH FROM OPERATIONS FROM OUR PHARMA WORK ARE NOT JUST FALSE STATEMENTS, THEY'RE KNOWINGLY FALSE STATEMENTS. EDLIN TALKED TO YOU ABOUT THE DEMOS AND WHO WAS INVOLVED IN THE DECISION WHICH DEVICES TO PUT IN THE ROOM, AND THEN TOLD YOU IT WAS HOLMES AND BALWANI. AGAIN, NOT JUST FALSE STATEMENTS, KNOWINGLY FALSE STATEMENTS. MS. HOLMES DIDN'T JUST DECIDE WHAT DEVICE TO PUT IN THE ROOM. SHE ALSO PLAYED A ROLE IN THE REPORTS THAT WERE SENT OUT AFTER THE DEMO, WHAT RESULTS TO PUT INTO THE REPORT, AND MS. HOLMES SAYS, OKAY, LET'S SET IT OUT AFTER THESE CHANGES. SO SHE JUST DOESN'T JUST PICK THE DEVICE, SHE ALSO PLAYS A ROLE IN EVALUATING OR REVIEWING THE RESULTS THAT GO BACK TO THE VIP AFTERWARDS. IN TEXT MESSAGES, MS.

HOLMES BECOME AWARE ABOUT PROBLEMS WITH WALGREENS. MR. BALWANI TELLS HER IN NOVEMBER OF 2014, "WE CAN'T SCALE WITH WAG." "THEY TOLD OUR TEAM IN WAG MEETING THAT THEY DON'T INTEND TO OPEN MORE PSC'S," PATIENT SERVICE CENTERS, "UNTIL JULY." AGAIN, WHEN MS. HOLMES WAS ON THE STAND, SHE TOLD YOU, I SAW THAT TEXT, BUT MR. BALWANI WAS UNAWARE OF THE FACT THAT I WAS COMMUNICATING WITH SOMEONE ELSE AT WALGREENS AND HIS NAME WAS ALEX GOURLAY AND HE WAS SAYING POSITIVE THINGS TO ME. SO THIS DID NOT PUT ME ON NOTICE THAT WALGREENS WAS COLLAPSING BECAUSE I WAS HEARING DIFFERENT THINGS FROM GOURLAY, AND EVEN MIQUELON BEFORE HIM.

MR. SCHENK: BUT I EXPLAINED TO YOU WHY THAT ARGUMENT FAILS. IT'S ONLY A MATTER OF TIME BEFORE WALGREENS FIGURES OUT THE PROBLEM. SHE DOESN'T NEED TO HEAR WALGREENS TELL HER THAT THE RELATIONSHIP IS FAILING. SHE KNOWS WHAT SHE TOLD WALGREENS TO BAIT THE HOOK. SHE KNOWS THAT WALGREENS THINKS THAT THEY'RE A FINGERSTICK BLOOD TESTING COMPANY THAT CAN ACCURATELY TEST BLOOD. IT'S ONLY A MATTER OF TIME BEFORE WALGREENS REALIZES THAT, AND WALGREENS IS REALIZING THAT. THEY'RE TRACKING THE VENOUS DRAWS NUMBERS. THEY'RE STOPPING FURTHER ROLLOUTS. SO IT ISN'T THAT MS. HOLMES GETS TO SAY, GOURLAY WAS STILL TELLING ME GOOD THINGS AND, THEREFORE, IF I TELL THE INVESTORS THAT THE ROLLOUT WITH WALGREENS WAS GOING WELL, THAT WASN'T A KNOWINGLY FALSE STATEMENT. SHE DOESN'T NEED GOURLAY TO DISCOVER THE FRAUD. SHE KNOWS THAT THEY'RE NOT GOING TO HAVE A NATIONAL ROLLOUT WITH WALGREENS. MR. BALWANI TELLS HER THAT HE'S ABOUT TO GO INTO A WALGREENS MEETING. THIS IS IN APRIL OF 2015.

THEN AFTERWARDS, IT WAS A MOSLEY TERRIBLE MEETING, BUT "THE POINT ABOUT NARROWING DOWN MENU TO HIT HIGH FINGERSTICK PERCENT CAME TO ME LIKE GIFT FROM GOD." THE POINT HERE IS THAT MS. HOLMES KNOWS THAT WALGREENS CARES ABOUT FINGERSTICK NUMBERS. SHE DID NOT GO TO THE MEETINGS BETWEEN JHAVERI AND BALWANI WHERE THEY TRACKED THE FINGERSTICK NUMBER. BUT THAT'S NOT A FACT SHE WAS UNAWARE OF. SHE KNEW WALGREENS TRACKED AND CARED ABOUT THE FINGERSTICK NUMBERS, AND THEY'RE EVEN TALKING ABOUT WAYS THAT THEY CAN IMPROVE THEIR FINGERSTICK NUMBERS OTHER THAN MORE FINGERSTICK TESTING, OTHER THAN ACTUALLY DEVELOPING THE TECHNOLOGY TO TEST BLOOD VIA FINGERSTICK, NARROW THE MENU DOWN SO THE PERCENT BECOMES A HIGHER NUMBER, A SMALLER TOTAL. HERE'S THE DOCUMENT I WAS JUST REFERENCING WHERE WALGREENS IS TRACKING VENOUS DRAWS. THE FIRST IS IN FEBRUARY OF 2014. IT'S AT 43 PERCENT OF THE TIME IT'S A VENOUS DRAW. BY MAY IT'S ONLY DROPPED TO 39 PERCENT.

SO IT IS NOT MOVING SIGNIFICANTLY, AND THIS IS SOMETHING THAT WALGREENS, BALWANI, AND JHAVERI ARE PAYING ATTENTION TO, BUT YOU SEE IT COMMUNICATED IN TEXT MESSAGES TO MS. HOLMES. THIS IS AN EMAIL ALSO I MENTIONED EARLIER WHERE JHAVERI ORIGINALLY SENDS THE EMAIL JUST TO MR. BALWANI SAYING, "PATIENTS PER DAY WITH A 4 PLUS EXPERIENCE AND VENOUS PERCENT IN THE 10 PERCENT RANGE." THEY NEED, WALGREENS AND THERANOS, A DOCUMENTED DETAILED PLAN ON BOTH, THE PATIENT EXPERIENCE AND THE VENOUS DRAW, OR IT WILL BE DIFFICULT FOR ME TO CONVINCE EXPANSION BEYOND ARIZONA. AND THEN YOU SEE MR. BALWANI FORWARDS THIS EMAIL TO MS. HOLMES. SO SHE KNOWS FURTHER EXPANSION WITH WALGREENS IS DEPENDENT ON SOMETHING THAT IS NOT GOING TO HAPPEN, AND THAT IS MORE FINGERSTICK. FOR DOD, MR. EDLIN CONFIRMED FOR YOU THAT THE THERANOS ANALYZER WAS NOT USED BY THE MILITARY FOR CLINICAL TESTING ON SOLDIERS. AND MS. HOLMES ALSO, WHEN SHE WAS ON THE STAND, CONFIRMED THIS FACT FOR YOU.

SO STATEMENTS TO INVESTORS TO THE CONTRARY WERE NOT JUST FALSE, THEY WERE KNOWINGLY FALSE. MR. EDLIN TOLD YOU THAT ELIZABETH HOLMES WAS VERY INVOLVED IN THE COMMUNICATIONS BETWEEN THERANOS AND THE MILITARY. THE USE OF THIRD PARTY DEVICES, THAT ALSO WAS KNOWINGLY FALSE WHEN SHE HIDES THAT FACT BECAUSE SHE KNOWS THAT THEY'RE USING THIRD PARTY DEVICES AND THAT GETS DISCUSSED HERE WHEN THEY'RE TALKING ABOUT A REPORTER FROM "THE WALL STREET JOURNAL" SHOWING UP AND THEY DON'T KNOW WHERE HE'S GOING TO SHOW UP OR WHEN. AND THERE'S A QUESTION ABOUT WHAT KIND OF DRAW HE'S GOING TO GET AND THEY'RE SAYING BETTER A PERFECT VENIPUNCTURE THAN A BAD FINGERSTICK OR MISS A TEST. SO THE USE OF THIRD PARTY DEVICES, THE DEVICES THAT WOULD TEST THE VEIN DRAW BLOOD, WAS SOMETHING THAT MS. HOLMES KNEW. SO WHEN SHE COMMUNICATES STATEMENTS TO INVESTORS TO THE CONTRARY, THOSE ARE KNOWINGLY FALSE STATEMENTS. BRIAN GROSSMAN TOLD YOU THAT WHEN HE TOURED THE CLIA LAB, HE SAW THE THERANOS DEVICES.

HE DIDN'T SEE SIEMENS OR THIRD PARTY DEVICES. THEY'RE HIDING THAT FACT. AND THEN VALIDATION BY PHARMACEUTICAL COMPANIES. MR. WEBER TOLD YOU THAT HE TOLD ELIZABETH HOLMES BACK IN 2009 THAT PFIZER DID NOT HAVE MORE WORK FOR THERANOS IN THE FORESEEABLE FUTURE. AND MS. HOLMES IS COMMUNICATING SOMETHING DIFFERENT TO INVESTORS. SO THAT'S, AGAIN, NOT JUST A FALSE STATEMENT, BUT A KNOWINGLY FALSE STATEMENT. THERE ARE EMAILS BETWEEN MS. HOLMES AND DR. SUNG WHERE CELGENE IS COMMUNICATING THE SAME THING, THIS TIME IN 2012, THAT CELGENE IS NOT INTERESTED IN THE CURRENT GENERATION OF THERANOS TECHNOLOGY.

MR. SCHENK: SAME THING FROM SCHERING-PLOUGH. DR. CULLEN TOLD YOU THAT ESSENTIALLY THIS WORK JUST DIED ON THE VINE, THERE WASN'T, AFTER A CERTAIN DATE, MORE COMMUNICATION, MORE WORK BETWEEN SCHERING-PLOUGH AND THERANOS. THE USE OF THE MEDIA. I TOLD YOU THAT THERE WERE TWO ARTICLES THAT WERE RELEVANT FOR THIS, THE RAGO AND THE PARLOFF ARTICLE. HERE'S AN EXAMPLE. BEFORE RAGO PUBLISHES THE ARTICLE, HE SENDS LANGUAGES, PARAPHRASES AND FACTUAL STATEMENTS, TO ELIZABETH HOLMES TO REVIEW BEFORE PUBLISHING. SO THINGS LIKE THE THOUSAND TESTS, DOCUMENTS, FACTS ABOUT THERANOS WERE PROVIDED TO MS. HOLMES BEFOREHAND, SO WHEN SHE'S USING THE RAGO ARTICLE TO RECRUIT INVESTORS AND IT CONTAINS FALSE STATEMENTS, IT ISN'T JUST THE USE OF THE FALSE STATEMENTS, THEY'RE KNOWINGLY FALSE, AND SHE KNOWS THAT THOSE STATEMENTS ARE IN THE ARTICLE, AND SHE KNEW THAT THEY WERE GOING TO BE IN THE ARTICLE BEFORE IT WAS PUBLISHED. PARLOFF TOLD YOU THAT HE TALKED TO MS.

HOLMES ABOUT THEIR WORK WITH THE MILITARY, AND IN FACT, SHE TOLD HIM THAT HE WASN'T SUPPOSED TO PRINT IT, TO USE IT IN THE PIECE BECAUSE IT WAS SENSITIVE, BUT THAT THERANOS'S TECHNOLOGY HAD BEEN USED BY THE MILITARY IN AFGHANISTAN. HE ALSO ASKED QUESTIONS OF MS. HOLMES ABOUT ITS USE OF PURCHASING TESTS, WHERE IT GOT ITS TESTS FROM. AND SHE SAYS OTHER LABS BUY THEIR TESTS, BUT AT THERANOS WE MAKE ALL OF OUR TESTS. MR. PARLOFF ASKS HER, WHEN AN INDIVIDUAL GOES TO A WALGREENS AND GETS A VEIN DRAW, HELP ME UNDERSTAND WHY THAT HAPPENS. WHY IS IT THE CASE THAT SOMEONE AT A WALGREENS MIGHT GET A VEIN DRAW? YOU, AS THE JURY, NOW KNOW THE ANSWER. THE ANSWER IS BECAUSE THERANOS COULD ONLY RUN ON ITS DEVICE A VERY SMALL NUMBER OF TESTS, AND A LITTLE BIT BIGGER NUMBER ON THE MODIFIED THIRD PARTY. BUT IT COULD NOT RUN ALL OF THE TESTS ON ITS TECHNOLOGY AND NEEDED TO DO VEIN DRAWS. THAT'S THE HONEST ANSWER IS, WE CAN'T RUN ALL OF THE TESTS. BUT LISTEN TO WHAT SHE SAYS.

MR. SCHENK: PARLOFF KEEPS GOING AFTER IT. I DON'T UNDERSTAND. WHEN SOMEONE COMES INTO A WALGREENS, HELP ME UNDERSTAND THE SITUATION WHEN THEY GET A VEIN DRAW, WHEN YOU WOULD HAVE VENIPUNCTURE, IS IT BECAUSE YOU CAN'T DO THE TEST? YOU DON'T YET HAVE THAT TEST? AND SHE SAYS, IT'S A VOLUME QUESTION, SORT OF SUGGESTING WE'RE GETTING SO MANY REQUESTS FOR BLOOD TESTS THAT WE CAN'T HANDLE THAT VOLUME. NOT, WE DON'T HAVE THE ABILITY TO RUN THAT TEST ON OUR TECHNOLOGY, OUR DEVICE DOES 12 TESTS. SHE DOESN'T SAY THAT. SHE MAKES HIM BELIEVE, CONSISTENT WITH WHAT ALL OF THE INVESTORS BELIEVED, WAS THAT THEY HAD THE ABILITY, THEIR TECHNOLOGY RUNS ALL OF THESE BLOOD TESTS, CONSISTENT WITH WHAT WAS SAID IN THAT BULLET POINT TO SPECIAL OPERATIONS COMMAND. AND PARLOFF KEEPS GOING AFTER IT BECAUSE IT DOESN'T MAKE SENSE TO HIM THAT A FINGERSTICK COMPANY IS DOING VEIN DRAWS IN A WALGREENS, AND WHAT HE'S TOLD IS THAT IT'S A QUESTION OF VOLUME.

IT'S, ALL OF THIS BLOOD COMING IN AND WE NEED TO RUN IT ON OTHER KINDS OF DEVICES, ON VOLUME DEVICES, AND YOU KNOW THAT ISN'T WHAT ACTUALLY IS TRUE. THEY COULD DO 12 TESTS. THE NEXT ELEMENT FOR WIRE FRAUD IS MATERIALITY. THE IDEA THAT THE FALSE STATEMENTS, THESE CATEGORIES OF FALSE STATEMENTS WERE THE KIND OF FALSE STATEMENTS THAT WOULD CAUSE AN INVESTOR TO INVEST IN THIS CASE WERE NOT ABOUT SOMETHING IMMATERIAL. WE'RE GOING TO RUN THROUGH SOME OF THE FALSE STATEMENTS THAT EACH INVESTOR SAID MATTERED TO THEM, BUT MATERIALITY DOESN'T REQUIRE ACTUAL RELIANCE. IT IS NOT THAT A PARTICULAR FALSE STATEMENT WAS COMMUNICATED TO AN INVESTOR AND THEN THE INVESTOR CONFIRMS THAT THAT FALSE STATEMENT IS WHAT CAUSED HER OR HIM TO INVEST. IT'S THE KIND OF STATEMENT THAT IS CAPABLE OF INFLUENCING. MR. TOLBERT TOLD YOU ABOUT THE IMPORTANCE OF THE MILITARY, THE WORK THERANOS WAS DOING WITH THE MILITARY WAS IMPORTANT TO MR. TOLBERT AND THE HALL GROUP. MS.

PETERSON TALKED ABOUT THE SAMPLE SIZE, THE SMALL VOLUME OF BLOOD. MR. MOSLEY TALKED ABOUT THE PFIZER REPORT. HERE'S THE MOSLEY OUTLINE WHERE HE SAYS THAT THE PFIZER REPORT WAS THE MOST EXTENSIVE EVIDENCE SUPPLIED REGARDING THE RELIABILITY OF THE THERANOS TECHNOLOGY AND ITS APPLICATION IN A STUDY REPORT PREPARED BY PFIZER BASED ON A CLINICAL CANCER TREATMENT TRIAL. YOU KNOW THAT REPORT WAS NOT PREPARED BY PFIZER. YOU KNOW PFIZER DID NOT AUTHORIZE THE USE OF ITS LOGO. IT WASN'T JUST SENT TO WALGREENS. THE PFIZER REPORT WAS ALSO SENT TO INVESTORS LIKE MR. MOSLEY, AND IT MATTERED TO INVESTORS LIKE MR. MOSLEY. MR. EISENMAN TOLD YOU THAT ACCURACY WAS IMPORTANT, ACCURACY OF THE DEVICE WAS IMPORTANT IN HIS DECISION TO INVEST. MR. LUCAS TALKED ABOUT ACCURACY AND AUTOMATION AS BEING IMPORTANT IN HIS DECISION TO INVEST. MR. GROSSMAN TALKED ABOUT THE REVENUE THAT THERANOS CLAIMED IT HAD AS RECENTLY AS 2013 FROM PHARMACEUTICAL COMPANIES, THAT THAT WAS IMPORTANT IN PFM'S DECISION TO INVEST.

THE THIRD ELEMENT IS INTENT, THAT THE DEFENDANT HAD THE INTENT TO DEFRAUD. AND WE'LL LOOK THROUGH SOME OF THE INTENT EVIDENCE, BUT MUCH OF THE EVIDENCE THAT WE'VE BEEN DISCUSSING TODAY IS ALSO RELEVANT FOR INTENT. HERE YOU SEE MS. HOLMES ASKING ABOUT THE CONTENT OF CERTAIN BINDERS. ARE THERE ANY MATERIALS IN THE BINDERS YOU THINK SHOULD BE REMOVED FOR MURDOCH? SO WHEN I SHOWED YOU INSTANCES OF THINGS THAT WERE IN THE MURDOCH BINDER, MS. HOLMES IS WONDERING, SHE'S THINKING ABOUT AHEAD OF TIME WHAT IS GOING TO GO TO MURDOCH AND WHAT IS NOT GOING TO GO TO HIM. AND THIS IS ONE OF THE THINGS THAT WENT TO HIM, THAT THERANOS'S PROPRIETARY, PATENTED TECHNOLOGY RUNS COMPREHENSIVE BLOOD TESTS FROM A FINGERSTICK. BUT IT DIDN'T JUST GO TO MR. MURDOCH. IT ALSO WENT TO MOSLEY AND PETERSON AND, IN FACT, THE BOARD. YOU SEE, I'M SHOWING YOU AGAIN BECAUSE THIS IS ALSO INTENT EVIDENCE, THE LAWYER TELLING MS. HOLMES CERTAIN PHRASES ON YOUR WEBSITE SHOULD BE REMOVED, COINCIDENTALLY, PHRASES THAT INVESTORS ALSO HEARD, BUT BECAUSE PEOPLE ARE GOING TO LEAVE WITH THE IMPRESSION THAT THE LAB CAN PERFORM EVERY TEST. THE UBS EMAIL THAT WE TALKED ABOUT EARLIER WHERE EISENMAN SAYS THIS ANALYST IS REACHING SORT OF CONCLUSIONS ABOUT THERANOS. WHAT SAY YOU? AND MR. BALWANI SAYS, SOUNDS LIKE AN UNINFORMED CONSULTANT. THAT'S FORWARDED TO MS. HOLMES. THAT'S ALSO INTENT EVIDENCE.

MR. SCHENK: THE AMOUNT OF REVENUE THAT THERANOS AND, IN THIS INSTANCE, MS. HOLMES COMMUNICATES TO SAFEWAY HERE, THE REVENUE FOR '11 IS $220 MILLION; '12 IS 460 MILLION; AND 2013 IS AGAIN GETTING CLOSE TO A BILLION DOLLARS. IT'S NOT JUST BALWANI WHO IS COMMUNICATING THESE KNOWINGLY FALSE REVENUE NUMBERS. THE PETERSON NUMBER, AND THEN YOU SEE IN THE LOWER LEFT CORNER, MOSLEY RECEIVED THIS DOCUMENT, NOT WITH THE PETERSON HANDWRITING ON IT, BUT THE SAME INCORRECT, KNOWINGLY FALSE REVENUE NUMBERS WERE SENT BOTH TO PETERSON AND MOSLEY. THERE ARE THESE TEXT MESSAGES WHERE THEY TALK ABOUT FINANCIAL STABILITY, THE NEED TO BREAK EVEN. THIS IS IN JULY OF 2015 WHERE MR. BALWANI IS TALKING ABOUT BREAKING EVEN. "WE NEED TO GET THE BUSINESS TO BREAK EVEN AND THEN I WILL LEAVE. "BUT I CAN'T LEAVE. I WILL TRY TO FIX THIS. "I KNOW BUT UR SAYING EVEN IF WE FIX DON'T WANT TO BE HERE. "CORRECT. ONLY FIX IS CASH AND BREAK EVEN." I KNOW ABOUT THE FINANCIAL PROBLEMS BEFORE 2009 AND 2010, 2013 AND STILL IN 2015.

THE DEMOS AS WELL. YOU'VE SEEN EMAILS AND YOU'VE HEARD TESTIMONY ABOUT MS. HOLMES'S INVOLVEMENT IN THE DEMOS AND IN THE SELECTION OF THE DEVICES, THE USE OF THAT APP, THE DEMO APP TO SHIELD FAILURES FROM THE VIP'S, HOW THE APP SHIELDS THOSE FROM THE CLIENT AND TO MAKE THE PROCESS LOOK EFFORTLESS. THIS IS THE JHAVERI EMAIL THAT GETS FORWARDED TO HOLMES SAYING THAT WALGREENS, IN ORDER TO CONVINCE EXPANSION BEYOND ARIZONA, NEEDS TO GET THE VENOUS DRAW IN THE 10 PERCENT RANGE. THAT IS SHARED WITH MS. HOLMES. MORE INTENT EVIDENCE. SO WHEN INVESTORS HEAR SOMETHING TO THE CONTRARY, IT'S BECAUSE IT IS SENT, IT IS SHARED WITH AN INTENT TO DEFRAUD THE INVESTORS. LUCAS TOLD YOU THAT WHEN HE WAS SPEAKING WITH THERANOS IN DECEMBER OF 2013, HIS UNDERSTANDING WAS THAT THE PARTNERSHIP WITH WALGREENS WAS GOING WELL, WAS EXPANDING. AGAIN, CONTRARY TO WHAT MS. HOLMES AND MR. BALWANI KNEW, IN FACT, TO BE THE TRUTH. THIS IS THE SPECIAL OPERATIONS COMMAND EMAIL. I WANTED TO -- I'M SORRY. EMAIL.

I WANTED TO SHOW YOU IT AGAIN BECAUSE IT APPLIES TO BOTH KNOWLEDGE AND TO INTENT. WHEN THEY'RE SHARING THESE KIND OF FALSE STATEMENTS, IT'S BECAUSE THESE ARE THE TYPE OF FALSE STATEMENTS THAT INVESTORS ARE HEARING WITH THE INTENT TO DEFRAUD THOSE INVESTORS. GENERAL MATTIS CONFIRMED FOR YOU THE LACK OF USE BY THE MILITARY OF CERTAIN DEVICES. WHEN GENERAL MATTIS TESTIFIED, THAT WAS BEFORE EDLIN AND BEFORE MS. HOLMES HERSELF TESTIFIED, SO YOU WERE STILL LEARNING THESE FACTS, WHETHER, IN FACT, THE DEVICE HAD BEEN USED THAT WAY, AND NOW YOU'VE HEARD NOT JUST FROM GENERAL MATTIS, YOU'VE HEARD THAT FROM EDLIN AND FROM THE DEFENDANT HERSELF. BUT CHRIS LUCAS TOLD YOU THAT HE UNDERSTOOD FROM MS. HOLMES THAT THE ANALYZER WAS ACTIVELY BEING USED BY MILITARY TO TREAT SOLDIERS IN THE FIELD.

HE ALSO SAID THAT HE WOULD HAVE BEEN SURPRISED TO LEARN THAT IT WASN'T -- AND HIS UNDERSTANDING WAS THAT THEY HAD SENT AN ANALYZER TO THE MIDDLE EAST, AND HE WOULD HAVE BEEN SURPRISED TO HEAR THAT THEY, IN FACT, HAD NOT. LISA PETERSON TOLD YOU THAT SHE UNDERSTOOD THAT THE DEVICE WAS USED ON MILITARY HELICOPTERS. AND IN THE "FORTUNE" ARTICLE, INVESTORS, WHEN THEY RECEIVED THE ARTICLE, ARE TOLD THAT THERANOS DOES NOT BUY ANALYZERS FROM THIRD PARTIES. AGAIN, A FALSE STATEMENT THAT WAS KNOWINGLY FALSE AND COMMUNICATED WITH THE INTENT TO DEFRAUD BECAUSE THAT PLAYED A ROLE IN THE INVESTORS' DECISIONS. THEY THOUGHT THEY WERE INVESTING IN A FINGERSTICK BLOOD TESTING TECHNOLOGY THAT USED ITS OWN TECHNOLOGY TO TEST BLOOD. MS. PETERSON CONFIRMED THAT FOR YOU, THAT HER UNDERSTANDING WAS THAT THERANOS USED ITS OWN ANALYZER EQUIPMENT. SHE GOT THAT FROM ELIZABETH HOLMES. IT'S IN THE ARTICLE, BUT MS. PETERSON ALSO LEARNED THAT FROM CONVERSATIONS WITH ELIZABETH HOLMES.

THE USE OF THE PFIZER LOGO, LET'S TALK ABOUT THAT FOR A MOMENT. THE DOCUMENT ON THE LEFT IS THE DOCUMENT THAT WAS SENT TO PFIZER. THE DOCUMENT ON THE RIGHT IS THE DOCUMENT THAT WAS SENT TO WALGREENS. THE DOCUMENT ON THE LEFT IS THE DOCUMENT THAT WAS SENT TO SCHERING-PLOUGH. THE DOCUMENT ON THE RIGHT IS THE DOCUMENT THAT WAS SENT TO WALGREENS. THE CONCLUSIONS IN THE SCHERING-PLOUGH DOCUMENT WERE ENHANCED. THE VERSION THAT WAS SENT TO SCHERING-PLOUGH IS THE ONE ON TOP. THE VERSION THAT WAS SENT TO WALGREENS HAD ADDITIONAL LANGUAGE IN IT, THAT THE THERANOS TESTS WERE MORE ACCURATE THAN THE CURRENT GOLD STANDARD REFERENCE. SO IT WASN'T JUST ADDING THE LOGO, IT WAS ACTUALLY ALSO DOCTORING OR ENHANCING THE CONCLUSIONS IN THE REPORT.

MR. SCHENK: AND NOW LOOK AT WHAT MS. HOLMES SAID TO WALGREENS ABOUT THESE REPORTS. MS. HOLMES TOLD YOU ON THE STAND THAT SHE APPLIED THE LOGOS TO THOSE DOCUMENTS, I THINK FROM THAT TO SUGGEST I NEVER WOULD HAVE INTENDED -- THOUGHT I WAS DEFRAUDING ANYBODY IF I HAD GIVEN IT BACK TO THE PHARMA COMPANIES. FIRST, IT CERTAINLY ISN'T ON THE PHARMA COMPANIES TO DISCOVER THAT, TO REPORT IT BACK TO THERANOS, BUT IT ALSO MISSES THE POINT. LOOK AT WHAT USE MS. HOLMES IS MAKING OF THESE DOCUMENTS. SHE WRITES IN AN EMAIL TO WALGREENS, "ATTACHED PER OUR DISCUSSION PLEASE FIND THREE INDEPENDENT DUE DILIGENCE REPORTS ON THERANOS SYSTEMS ATTACHED TO THIS EMAIL. THESE REPORTS ARE FROM GLAXOSMITHKLINE, PFIZER, AND SCHERING-PLOUGH AFTER THEIR OWN TECHNICAL VALIDATION AND EXPERIENCE WITH THERANOS SYSTEMS IN THE FIELD."

SHE WANTS WALGREENS, AND THEN THESE WERE ALSO SENT TO PETERSON AND MOSLEY, TO CONCLUDE THAT THEY ARE INDEPENDENT DUE DILIGENCE REPORTS, THAT THE PHARMA COMPANIES PREPARED THE REPORTS AFTER THEIR OWN TECHNICAL VALIDATION. DR. CULLEN TOLD YOU THAT FOR THE SCHERING-PLOUGH WORK, THE DEVICE WAS AT THERANOS; THAT THAT'S WHERE THE TESTING WAS DONE. SO NOT ONLY WERE THE CONCLUSIONS IN THE SCHERING-PLOUGH DOCUMENTS THERANOS'S, THEY COULD NOT HAVE BEEN SCHERING-PLOUGH'S, BECAUSE SCHERING-PLOUGH WASN'T THE ONE WHO DID THE WORK. PETERSON RECEIVED THE PFIZER DOCUMENT. AND YOU KNOW MOSLEY RECEIVED THE PFIZER DOCUMENT ALSO. THE USE OF THE MILITARY. THIS CHART -- I'M SORRY, USE OF THE MEDIA. THIS CHART SHOWS YOU SORT OF THE THREE RELEVANT FACTS ABOUT EACH OF THE ARTICLES, "THE WALL STREET JOURNAL" AND THE PARLOFF.

AT THE TOP YOU SEE THERANOS EMAILING THE RAGO ARTICLE TO SHAREHOLDERS, AND THEN YOU SEE THE LOCATIONS AND EXHIBITS WHERE YOU CAN FIND THE RAGO ARTICLE, AND THEN YOU SEE THERANOS SENDING THE RAGO ARTICLE OR INCLUDING THE RAGO ARTICLE IN PRESENTATIONS TO THE BOARD. AND THEN EQUALLY TRUE FOR THE "FORTUNE" ARTICLE. YOU SEE LOCATIONS IN THE EVIDENCE IN THE EXHIBITS WHERE YOU CAN FIND THE "FORTUNE" ARTICLE, YOU SEE WHERE THE "FORTUNE" ARTICLE IS SENT TO SHAREHOLDERS, AND YOU SEE WHERE THE "FORTUNE" ARTICLE IS REFERENCED OR INCLUDED IN THE INVESTOR BINDERS. RAGO SHARES THE ARTICLE OR THE CONTENT BEFORE IT'S PUBLISHED WITH MS. HOLMES. IT'S NOT JUST KNOWLEDGE EVIDENCE, I SHOWED YOU THIS A MOMENT AGO FOR KNOWLEDGE. IT'S ALSO THE CONTENT. SHE KNOWS THE CONTENT OF THE ARTICLE, SHE KNOWS THERE ARE FALSE STATEMENTS IN THE ARTICLE, AND AS YOU SAW A MOMENT AGO, IT GETS SENT TO SHAREHOLDERS. INTENT. GENERAL MATTIS WAS GOING TO TALK TO A REPORTER FROM "THE NEW YORKER," AND HE WANTED TO PREP WITH MS.

HOLMES TO COMMUNICATE WITH HER BEFOREHAND WHAT HE CAN SAY AND WHAT HE CAN'T SAY, AND SOME OF THAT PREP HAPPENS OVER EMAIL. AND MS. HOLMES TELLS HIM ANY QUESTIONS HE ASKS YOU ABOUT HOW OUR TECHNOLOGY WORKS, I.E., THAT THERE IS A SINGLE DEVICE THAT DOES ALL TESTS, YOU CAN LET HIM KNOW WE DON'T TALK ABOUT THESE ON THE RECORD. YOU KNOW THAT AN HONEST STATEMENT WOULD HAVE BEEN THAT OUR DEVICE CAN'T DO THAT. WE DON'T HAVE A SINGLE DEVICE THAT DOES ALL OF THE TESTS. THAT'S NOT WHAT SHE'S COMMUNICATING TO GENERAL MATTIS AND WHAT THEN, PRESUMABLY THE GOAL IS, WHAT APPEAR NOW IN ANOTHER ARTICLE, "A NEW YORKER" ARTICLE. SO THE CONTENT OF THESE ARTICLES IN THE MEDIA CONTAINING FALSE STATEMENTS WAS INTENTIONAL. SHE WANTED THEM TO CONTAIN FALSE STATEMENTS. AND THEN SENDING THE ARTICLE TO INVESTORS TO USE TO HELP THEM IN THEIR EVALUATION OF WHETHER OR NOT TO INVEST WAS ALSO DONE WITH AN INTENT TO DEFRAUD.

MOSLEY SPECIFICALLY TOLD YOU THAT THE "FORTUNE" ARTICLE WAS IN HIS BINDER, AND HE THOUGHT THAT IF THERANOS WAS INCLUDING IT IN HIS BINDER, THAT MEANT THAT EITHER THEY AGREED WITH IT OR THEY THOUGHT IT WAS SORT OF VALUABLE, ACCURATE REPRESENTATIONS OF THE THERANOS TECHNOLOGY, AND THAT'S WHY THEY WOULD INCLUDE IT. HERE'S THE EMAIL TO SHAREHOLDERS, POTENTIAL INVESTORS WITH THE "FORTUNE" ARTICLE. YOU'VE SEEN THE ONE WITH THE RAGO ARTICLE. HERE'S THE "FORTUNE" EMAIL AND THE RAGO ARTICLE AS WELL. THE LAST ELEMENT FOR WIRE FRAUD FOR INVESTORS IS THE INTERSTATE NEXUS, THE FEDWIRE, THAT THE INVESTORS WIRED MONEY TO THERANOS, AND THAT WIRE CROSSED STATE LINES. YOU'VE SEEN THIS ALL WITHIN EXHIBIT 4845. YOU'VE SEEN THE DOCUMENTS THAT SHOW THE USE OF THE FEDWIRE. SO EVEN IF IN THEORY THE INVESTOR'S BANK WAS IN CALIFORNIA AND IT WENT TO -- EVEN IF THE THERANOS BANK WAS IN CALIFORNIA, THE USE OF FEDWIRE STILL CAUSES AN INTERSTATE WIRE.

MR. SCHENK: YES. THANK YOU. WHEN WE LEFT OFF, WE WERE ABOUT TO TRANSITION TO SPEAKING ABOUT THE WIRE FRAUD COUNTS RELATED TO PATIENTS. LET ME REVISIT AND JUST SAY ONE ADDITIONAL THING. ON THE INVESTOR SIDE, WE SAW EVIDENCE ABOUT WALGREENS AND SAFEWAY, AND I TALKED TO YOU A LITTLE BIT ABOUT THE WAYS THAT YOU CAN USE THAT EVIDENCE, AND I MENTIONED THAT WALGREENS WAS ALSO AN INVESTOR. I THINK THERE MAY BE EVIDENCE IN THE RECORD AS WELL WITH REGARD TO SAFEWAY, THAT SAFEWAY ALSO MAY HAVE BEEN AN INVESTOR. SO THEY'RE INVESTOR VICTIMS OF THE SCHEME. YOU JUST AREN'T DELIBERATING ABOUT COUNTS RELATING TO WALGREENS AND SAFEWAY. I SUGGESTED TO YOU THAT WALGREENS WAS AN INVESTOR. I THINK THERE MAY BE SOME EVIDENCE IN THE RECORD AS WELL ABOUT SAFEWAY. LET'S MOVE ON NOW TO THE WIRE FRAUD COUNTS AS THEY RELATE TO PATIENTS. THE SAME COUNTS -- I'M SORRY, THE SAME ELEMENTS APPLY FOR THE WIRE FRAUD TO PATIENTS AS THEY DID WIRE FRAUD TO INVESTORS, THE SAME FOUR ELEMENTS. HERE ARE THE PATIENT COUNTS.

THE FIRST COUNT, COUNT TEN, IS ERIN TOMPKINS. YOU RECALL THAT SHE RECEIVED THE HIV TEST. ON THE VERDICT FORM IT HAS HER INITIALS E.T. COUNT ELEVEN IS ELLSWORTH, MEHRL ELLSWORTH'S PSA TEST. IT'S M.E. ON THE VERDICT FORM. AND THEN COUNT TWELVE IS AN ELECTRONIC FUNDS TRANSFER FOR THE PURCHASE OF A MEDIA BUY IN THE ARIZONA MARKET. AND THE WIRES FOR TEN AND ELEVEN ARE ACTUALLY FAXES, A FAX OF LAB REPORTS FROM CALIFORNIA TO THE DOCTOR'S OFFICES IN ARIZONA. SO THE FIRST ELEMENT IS THAT A SCHEME OR PLAN EXISTED.

AND WE'VE ACTUALLY COVERED A FAIR AMOUNT OF THIS ALREADY, BUT THE SCHEME VIS-A-VIS PATIENTS INVOLVE BOTH ELECTRONIC WIRES TO PURCHASE ADVERTISEMENTS TO INDUCE OR ENCOURAGE PATIENTS TO USE THE SERVICE, THAT'S SOMETHING LIKE COUNT 12 IN THE INDICTMENT, AND ALSO THE USE OF THE THERANOS WEBSITE OR ARTICLES IN THE MEDIA THAT SAID ACCURATE TESTING, LOW COST TESTING, FINGERSTICK TESTING, THE KINDS OF THINGS THAT WOULD INDUCE A PATIENT TO GO TO THE THERANOS PATIENT SERVICE CENTER INSIDE OF A WALGREENS STORES. AND THEN FINALLY, TO SEND THE LAB RESULTS. THEY USED ELECTRONIC WIRES. THERANOS USED ELECTRONIC WIRES TO SEND THE LAB RESULTS FROM THEIR LAB TO THE DOCTOR'S OFFICE KNOWING THAT THOSE LAB RESULTS WERE LIKELY TO CONTAIN INACCURATE OR UNRELIABLE RESULTS. SO THE ADVERTISEMENT LOOKED LIKE THIS.

DAN EDLIN SAID THAT THIS EXHIBIT, EXHIBIT 3696, WAS IN AN INVESTOR BINDER, BUT THIS WAS ALSO THE KIND OF THIS THING THAT APPEARED ON THE THERANOS WEBSITE, AND IT ADVERTISES THE HIGHEST LEVELS OF ACCURACY, THERANOS OFFERS TESTS WITH THE HIGHEST LEVELS OF ACCURACY. YOU EVEN HEARD BRITTANY GOULD TOLD YOU THAT THEY WENT TO THERANOS BECAUSE THEY THOUGHT THEY WOULD PROVIDE HIGH LEVELS OF ACCURACY. RESULTS IN HOURS, NOT DAYS. THAT TESTS ARE PERFORMED AT AMAZING SPEED. FASTER THAN PREVIOUSLY POSSIBLE. AGAIN, EDLIN SUGGESTED WHILE THIS SLIDE WAS SENT TO INVESTORS, IT WAS ALSO DISPLAYED ON THE WEBSITE. IN ARTICLES. THIS IS THE RAGO ARTICLE. IT TALKS ABOUT THERANOS PROCESSES BEING FASTER, CHEAPER, MORE ACCURATE THAN CONVENTIONAL METHODS, REQUIRING ONLY A MICROSCOPIC BLOOD VOLUME, NOT VIAL AFTER VIAL OF THE STUFF LIKE A TRADITIONAL LAB WOULD REQUIRE. MS. HOLMES ESTIMATES THAT PATIENTS AND DOCTORS WILL RECEIVE READOUTS IN AS LITTLE AS TWO HOURS.

AND THEN THE TECHNOLOGY IS AUTOMATED, STANDARDIZED, ATTEMPTING TO SUBTRACT HUMAN ERROR FROM THE PROCESS TO ACHIEVE LOWER VARIANCE IN THE RANGES FOR A GIVEN TEST. AND THEN YOU ALSO SEE STATEMENTS IN THE PARLOFF ARTICLE, THINGS LIKE THE TESTS CAN BE PERFORMED ON JUST A FEW DROPS OF BLOOD, A FRACTION OF THE AMOUNT ORDINARILY REQUIRED. AND THEY TALK ABOUT THE DRAW FROM A FINGERSTICK AND THE RESULTS WITHIN HOURS. SO, AGAIN, THE SAME KIND OF STATEMENTS THAT ARE ON THE WEBSITE ARE ALSO IN ARTICLES IN THE MEDIA. THE FALSE CLAIMS REGARDING ACCURACY. MS. HOLMES KNEW THAT THAT WAS LIKELY TO OCCUR, AND THE WAY SHE KNEW IT IS FROM SEVERAL PLACES. NOW WE'RE LOOKING AT TEXT MESSAGES. AND IN THIS INSTANCE WE'RE SEEING A TEXT MESSAGE WHERE MR. BALWANI SAYS, "WE CAN MARKET OUR LAB AND EVERYTHING AND PEOPLE WILL TALK ABOUT OUR FINGERSTICK WITHOUT US TALKING ABOUT IT." SO THERE'S AN UNDERSTANDING ON THEIR PART THAT FIRST PEOPLE READ WHAT IS MARKETED AND ALSO THAT THE STORY OF THERANOS BEING FINGERSTICK IS ALREADY OUT THERE. THE MEDIA HAS DONE AND THE DEFENDANTS THEMSELVES HAVE DONE THE WORK.

MR. SCHENK: SO NOW THAT THE PUBLIC IS SEEING LOW OR HIGH VENOUS DRAW NUMBERS, LOW FINGERSTICK NUMBERS, WE CAN CHANGE THE THINGS WE SAY. WE DON'T HAVE TO SAY FINGERSTICK, AND THAT'S ALREADY THE NARRATIVE. THE STORY OF THERANOS HAS BEEN TOLD. PEOPLE GET IT. WE DON'T NEED TO SAY IT. IN ADVERTISING MS. HOLMES WRITES THEN TEXT MESSAGE, "I THINK WE SHOULD SHOW THEM THE FIRST AD THAT'S GOING TO RUN IN ARIZONA. IT DOESN'T MENTION NANOTAINERS OR FINGERSTICK. JUST LESS BLOOD WHICH I WILL MAKE A BIG DEAL ABOUT BEING ABOUT BUTTERFLY AND SMALLER NEEDLES. BETTER FOR US TO SHOW THAN NOT." ACTUALLY, YOU'VE SEEN IN THIS COURTROOM AN ARGUMENT SORT OF SIMILAR TO THAT, THE IDEA THAT WHEN WE SAID "SMALL VOLUMES" OR "SMALL NEEDLES," WE ALSO MEANT BUTTERFLY NEEDLES, A VERY SMALL PEDIATRIC NEEDLE THAT CAN GO IN THE ARM. BACK IN 2015 THEY ALREADY WERE INCLUDING THIS IN PART OF THE SCHEME.

THEY APPRECIATED THAT THE NARRATIVE OUT THERE WAS SMALL BLOOD DRAWS, VERY SMALL VIALS, COMPARED TO VIAL AFTER VIAL OF THE STUFF, AND THEN TRY TO RATIONALIZE AWAY WHERE WHAT THEY'RE ACTUALLY DOING CAN ATTEMPT TO STILL BE CONSISTENT WITH THE NARRATIVE. THEY KNOW WHAT PEOPLE THINK, AND THEY'RE TRYING TO COME UP WITH A WAY OF TRYING TO MAKE THE CURRENT STATE OF THE OFFERING CONSISTENT WITH THE FALSE NARRATIVE THAT HAS BEEN TOLD. THE ACCURACY AND INACCURACY AND RELIABILITY AND UNRELIABILITY OF THE ASSAYS ON THE DEVICE. THE FIRST DOCUMENT I'M SHOWING YOU CAME IN I BELIEVE THROUGH DR. DAS. AFTER THE CMS INSPECTION, THERANOS WAS GOING THROUGH, YOU'VE HEARD THE PROCESS OF, VOIDING TESTS AND TAKING OTHER ACTIONS, INTERACTING WITH CMS.

AND IN THIS DOCUMENT ABOUT THE IMPACT ON PATIENTS THEY WRITE, THIS IS THERANOS YOU SEE, "THE QC FAILURES IDENTIFIED BY THIS COMPREHENSIVE RETROSPECTIVE ANALYSIS REFLECT A GLOBAL AND LONG-TERM FAILURE OF THE QUALITY CONTROL PROGRAM FOR THIS INSTRUMENTALITY, AS WELL AS FAILURES OF RELATED QUALITY ASSURANCE PROCEDURES THAT SHOULD HAVE ALERTED THE LABORATORY TO CORRECT SUCH AN UNSTABLE PROCESS. THEREFORE, THE LABORATORY HAS CONCLUDED THAT THERE IS A POSSIBLE PATIENT IMPACT FOR EVERY TEST REPORTED FROM THE LABORATORIES PTS," THERANOS PROCESSING SYSTEM, "3.5 INSTRUMENTS." SO THIS DOES NOT PROVE KNOWLEDGE EARLIER ON. THIS DOCUMENT CAME IN 2015. BUT IT HELPS IDENTIFY THE INACCURACY, THE PROBLEMS WITH THE TESTS THAT OCCURRED WHEN THEY WERE TESTING PATIENTS USING THE THERANOS DEVICES. DR. DAS TOLD YOU THAT 50- TO 60,000 TESTS WERE VOIDED AND THAT THAT WAS THE TOTAL UNIVERSE OF TESTS RUN ON THE EDISON DEVICE IN THE CLIA LAB.

HE TOLD YOU THERE WERE INSTANCES WHEN THEY WERE REPORTING PATIENT RESULTS FROM THE EDISON DEVICE EVEN AFTER QUALITY CONTROL FAILURE. YOU HEARD THROUGH SOME OF THE INFORMATION OF DR. ROSENDORFF THAT QC WAS THE CHECK ON INACCURATE RESULTS GOING OUT. AND DR. DAS SAID THAT ACTUALLY DIDN'T HAPPEN. THERE WERE INSTANCES WHEN RESULTS WENT OUT EVEN AFTER QC FAILURES. DR. DAS ALSO TALKED TO YOU ABOUT A CONVERSATION THAT HE HAD WITH MS. HOLMES WHEN THEY WERE MAKING THE DECISION TO VOID THE TESTS, SORT OF WHAT THEY WOULD SAY, WHAT THE REASON WAS THAT THEY WERE VOIDING. AND DR. DAS SAID THERE WAS SORT OF A DISCUSSION ABOUT WHETHER IT WAS BECAUSE OF QUALITY CONTROL OR QUALITY ASSURANCE FAILURES, MORE SYSTEMIC THINGS IN THE LAB, OR IF THERE WAS A FUNDAMENTAL PROBLEM WITH THE DEVICE. AND DR. DAS SAID THAT MS. HOLMES DID NOT WANT TO SAY THAT THERE WAS A FUNDAMENTAL PROBLEM WITH A DEVICE, AND THIS IS A CONCEPT THAT I'LL COME BACK TO A LITTLE BIT LATER, BUT DR. DAS REACHED A DIFFERENT CONCLUSION.

DR. DAS TOLD YOU THAT THERE WERE INSTANCES WHEN THE DEVICES WERE REPORTING PSA RESULTS FOR FEMALES. DR. DAS TOLD YOU THERE WERE INSTANCES WHEN THE DEVICE WAS FUNDAMENTALLY FLAWED. IT WASN'T A QC OR A QA PROBLEM, IT WAS A MORE BROAD PROBLEM. I WANT TO WALK THROUGH A COUPLE OF TIMELINES. THE FIRST IS WITH THE ASSAY HCG, THAT'S THE PREGNANCY TEST THAT BRITTANY GOULD GOT. THE VALIDATION FOR HCG OCCURRED IN MARCH OF 2014, AND YOU'VE SEEN THE VALIDATION DOCUMENTS. TESTING BEGAN ON THE EDISON A MONTH AND A HALF LATER, THE BEGINNING OF MAY. YOU'VE SEEN THE DOCUMENT THAT HAS SHOWED YOU THAT DATE, MAY 9TH, 2014. DR. ROSENDORFF THEN HALTED TESTING OF HCG ON THE EDISON DEVICE IN THIS EMAIL 4147. DR. ROSENDORFF SENDS OUT AN EMAIL STOPPING FURTHER TESTING.

MR. SCHENK: THEY STILL ARE RECEIVING EMAILS FROM CUSTOMER COMPLAINING. THOSE GO TO MS. HOLMES. IN FACT, THIS ONE, CHRISTIAN HOLMES, HER BROTHER, IS TALKING TO HER ABOUT, "JUST FYI -- HCG RIGHT NOW CAUSING SOME SERIOUS ISSUES AND PATIENT COMPLAINTS. BEEN SPENDING ALL MORNING TALKING TO DOCS ABOUT JUST HCG AND WILL CONTINUE TO DO SO...IT'S A SENSITIVE ONE OBVIOUSLY BECAUSE OF PEOPLE FINDING OUT IF PREGNANT." JUNE OF 2014 MS. HOLMES IS INFORMED BY HER BROTHER ABOUT PROBLEMS WITH THE HCG TEST. THE HCG -- I'M SORRY, THE EDISON DEVICE IS FAILING QC. FOR HCG YOU SEE THIS EMAIL HERE, EXHIBIT 5421, THAT TALKS ABOUT THE NUMBERS, THE NUMBER OF EDISONS RUN AND THEN THE NUMBER OF QC FAILURES, AND IT LISTS ASSAYS AND THE THIRD ASSAY LISTED IS HCG. MORE EMAILS OF CUSTOMER COMPLAINTS TO ELIZABETH HOLMES AND SHE'S LEFT WITH ASKING "HOW DID THAT HAPPEN?" BRITTANY GOULD THEN RECEIVED HER INACCURATE TEST. YOU HEARD HER TESTIMONY, AND SHE TALKED ABOUT THAT PROCESS.

AND THEN LATER, THE BEGINNING OF THE NEXT YEAR, IN JANUARY, TESTING OF HCG ON THE EDISON IS TERMINATED. HER DOCTOR, BRITTANY GOULD'S DOCTOR, DR. ZACHMAN, TALKED TO YOU ABOUT ACCURACY OR INACCURACY OF BRITTANY GOULD'S SPECIFIC TESTS IN LIGHT OF THE OTHER FACTS THAT WERE KNOWN. LET'S DO THAT FOR PSA. PSA TESTING IS HELPFUL IN DETERMINING PROSTATE CANCER. THE VALIDATION REPORT FOR PSA ON THE EDISON WAS IN SEPTEMBER OF 2013. YOU'VE SEEN THAT DOCUMENT. THERE WAS AN INTERNAL RESULTS COMPARISON. YOU'VE HEARD SOME TESTIMONY THERE WAS A DISAGREEMENT AT THERANOS ABOUT WHETHER THIS WAS REAL PT, WHETHER THIS WAS REAL PROFICIENCY TESTING, AND THERE WAS DISAGREEMENT OR DISCUSSION ABOUT WHETHER IT ACTUALLY WAS PROFICIENCY TESTING. NEVERTHELESS, IT STILL WAS A RESULTS COMPARISON. THEY HAD A KNOWN PSA SAMPLE AND TESTED IT ON A PREDICATE DEVICE, A THIRD PARTY DEVICE, AND ALSO THE THERANOS DEVICE.

AND NOTICE, THE PREDICATE DEVICE IS RUN THE FIRST TIME AND IT SCORES A 3.1, AND IT'S RERUN AND GETS A 3.1. THEN THEY TEST ANOTHER SAMPLE ON THE PREDICATE DEVICE, 7.5. THEY RERUN IT AND THEY GET A 7.5. WHEN THEY ARE USING THE THERANOS DEVICE, THEY GET A 1.9 THE FIRST TIME AND THEN A 2.6. WHEN THEY TEST THE NEXT SAMPLE THEY GET A 4.9 AND THEN A 7.2. THERE'S EARLY INDICATIONS ABOUT THE PROBLEM OF TESTING PSA ON THERANOS DEVICES. THEN DR. ELLSWORTH GETS HIS PSA TESTS IN MAY, IN JUNE OF 2015. THE FIRST ONE IS FAXED ON MAY 16TH. THAT'S A COUNT IN THE INDICTMENT. THEN THEY CEASE TESTING OF PSA ON THE EDISON DEVICE JUNE OF 2015. AFTER THAT DR. ELLSWORTH GETS HIS FINAL RESULT. THIS WAS FROM THERANOS WAS RUN ON A PREDICATE DEVICE, ON A THIRD PARTY DEVICE. HERE IS THAT -- THE VERY LAST TEST THAT DR. ELLSWORTH GETS, IT'S THE ONE THAT IS BELOW A 1. AND THEN DR. DAS TOLD YOU THAT ONE OF THE EXAMPLES THAT HE USED WHEN HE WAS COMMUNICATING WITH MS.

HOLMES ABOUT THE PROBLEMS WITH THE TECHNOLOGY, THE PROPENSITY TO RETURN ERRONEOUS RESULTS WAS PSA, BECAUSE PSA SHOULD BE DETECTABLE IN MALES, NOT FEMALES, AND IT WAS OFTEN DETECTED -- OR "OFTEN" MIGHT NOT BE A FAIR WORD -- IT WAS DETECTED IN FEMALES, AND THAT WAS NOTIFIABLE TO DR. DAS. AND HE USED THAT AS AN EXAMPLE WHEN HE WAS INTERACTING WITH MS. HOLMES ON THIS SUBJECT. THERE ARE OTHER TEXT MESSAGES AND THERE ARE OTHER WAYS THAT MS. HOLMES HAD KNOWLEDGE OF THESE PROBLEMS THAT IS GENERATING ACCURATE AND RELIABLE RESULTS. IN TEXT MESSAGES MR. BALWANI TELLS HER, "WE NEED THE LAB AND CALL CENTER FIXED." THIS IS BACK IN 2014. "WE NEED PROFESSIONALS ACROSS THE BOARD." MR. BALWANI TELLS HER "WE NEED THE CTN," THE CAPILLARY TUBE AND NANOTAINER, "FIXED. OUR ROOT CAUSE OF ISSUES." THE EXPLETIVE TEXT, THE ONE YOU'VE SEEN BEFORE, WHERE MR.

BALWANI TELLS HER THAT THE NORMANDY LAB, WHERE THEY USE THE EDISON DEVICE TO TEST PATIENTS, IS A DISASTER ZONE, AND HE SEES, INSTEAD OF REMOVING HUMAN JUDGMENT, PEOPLE IN THE LAB MAKING THEIR -- MAKING DECISIONS AND SORT OF BEING THE OPPOSITE OF WHAT THE DEVICE WAS PITCHED AT BEING ABLE TO DO. IT'S ALSO KNOWLEDGE OF THESE PROBLEMS IS ALSO FOUND IN EMAILS. THIS IS BEFORE THE LAUNCH. THIS IS IN AUGUST OF 2013. MS. HOLMES IS TALKING TO THE VARIOUS TEAMS ABOUT DEVELOPING THE ELISA, THE IMMUNOASSAYS, AND IT'S THE ONLY PRIORITY OF THE ENTIRE ELISA TEAM MOVING FORWARD. WE HAVE 61 ASSAYS TO VALIDATE ON THE 3.X AND 27 ON THE SIEMENS. THIS IS AUGUST 21ST, 2013. THEY GO LIVE WITH PATIENT TESTING AT WALGREENS AROUND SEPTEMBER 9TH, 2013, A COUPLE WEEKS LATER.

MR. SCHENK: MS. GANGAKHEDKAR IS COMMUNICATING WITH ELIZABETH HOLMES IN THE SAME TIMEFRAME, AUGUST OF 2013, AND SHE IS TELLING MS. HOLMES, "WE HAD ISSUES WITH ALL RUNS ON THE 3.5 YESTERDAY AS NONE OF THE RUNS COMPLETED DUE TO TEMPERATURE NOT BEING REACHED AND PIPETTE INITIALIZATION ERRORS." THESE RUNS WERE FOR VITAMIN D. BEFORE THEY EVEN LAUNCH WITH WALGREENS, THEY ARE RUSHING TO VALIDATE THE ELISA ASSAYS, AND THEY'RE HAVING PROBLEMS. MS. GANGAKHEDKAR ALSO SAID THAT SHE COMMUNICATED WITH MS. HOLMES ABOUT RELIABILITY ISSUES WITH THE 3 AND THE 3.5. THEY HAD PROBLEMS GIVING CONSISTENT RESULTS. AND THESE WERE DISCUSSED WITH MS. HOLMES. AGAIN, IN 2013 MS. HOLMES KNEW ABOUT PROBLEMS ON THE 3 AND THE 3.5, THE DEVICES USED FOR PATIENT TESTING. MS. GANGAKHEDKAR WENT FURTHER AND SAID THAT SHE DIDN'T BELIEVE THAT THERE WAS MUCH IN THE WAY OF A MARKED IMPROVEMENT BETWEEN THE 3 AND THE 3.5.

SO LEST YOU THINK THAT THE 3.5 WAS SOME SIGNIFICANT ADVANCEMENT OVER THE 3, EVEN BEFORE THEY GO LIVE WITH WALGREENS, MS. GANGAKHEDKAR BELIEVES THAT BOTH OF THEM HAVE PROBLEMS, AND SHE EXPRESSED THESE CONCERNS TO MS. HOLMES. IN FACT, SHE EXPRESSED CONCERNS TO MS. HOLMES, YOU SEE AT THE BOTTOM HERE, ABOUT EVEN THE COLLECTION DEVICE, THE NANOTAINER, THE BLOOD COLLECTION DEVICE, ALSO HAVING PROBLEMS PRETTY MUCH EACH DAY. IT'S NOT JUST THE DEVICE THAT TESTS THE BLOOD BUT ALSO THE DEVICE THAT IS COLLECTING THE BLOOD. DR. ROSENDORFF RIGHT BEFORE THE LAUNCH SAYS TO MS. HOLMES, "I HAVE SOME MEDICAL AND OPERATIONAL CONCERNS ABOUT OUR READINESS FOR 9/9," THE WALGREENS LAUNCH. "I WOULD LIKE US TO BE THE BEST THAT WE CAN BE. A FEW MORE WEEKS TO SORT THROUGH THESE MEDICAL AND LOGISTICAL ISSUES, AND GETTING THE PROPER LEVEL OF TRAINING AND STAFFING WOULD HELP US TREMENDOUSLY." EVEN BEFORE THEY LAUNCH, HER LAB DIRECTOR IS SAYING LET'S PAUSE, LET'S WAIT. DR.

ROSENDORFF SAID THAT -- THE EMAIL THAT YOU JUST SAW WAS IN AUGUST OF '13. NOW WE MOVE TO THE MIDDLE OF 2014, HE'S SAYING I HAD DISCUSSIONS ABOUT QC FAILURES WITH MS. HOLMES AT THAT POINT ABOUT THE HIGH FAILURE RATE OF THE EDISONS. SO IT ISN'T AS THOUGH THEY DELAYED THE LAUNCH. THEY LAUNCHED AROUND 9/9. THEY LAUNCHED, AND THEY STILL HAD QC PROBLEMS AND OTHER FAILURES WITH THE EDISON. DR. ROSENDORFF DESCRIBED ONE PARTICULAR OCCASION TO YOU THAT MIGHT BE MEMORABLE. HE SAID ELIZABETH HOLMES CAME TO HIM AND SAID HOW IT GOING? AND DR. ROSENDORFF SAID I WAS FREAKED OUT. AND MS. HOLMES SAYS WHY? AND DR. ROSENDORFF TOLD HER ABOUT THE HCG ISSUE THAT HE AND MS. HOLMES WERE DISCUSSING. MS. HOLMES SAID DON'T BE FREAKED OUT OR -- YOU KNOW, SHE DIDN'T SEEM ALARMED BY IT. SHE KNEW ABOUT PROBLEMS IN THE LAB BEFORE THE LAUNCH AND ALL THROUGH '14 AND '15. THERE WERE EMAILS ON SPECIFIC ISSUES THAT WERE SENT TO HER. THIS ONE IS ABOUT A LAB SAYING THERE'S A PATIENT WHOSE TEST CAME BACK NEGATIVE.

WE HAD HER DISCONTINUE HER CURRENT MEDICATIONS AND BEGAN GETTING HER READY FOR HER NEXT CYCLE. OUR CONCERN IS THAT YOUR LAB TOLD US THAT SHE HAD A NEGATIVE PREGNANCY. WE RELAYED THAT TO OUR PATIENT AND CONTINUED OUR PROTOCOL AS SHE WASN'T PREGNANT. AND MS. HOLMES IS LEFT TO SAY "HOW DID THAT HAPPEN?" IN THIS INSTANCE AN HCG RESULT GETS FORWARDED UP. DANIEL YOUNG SAYS THE RESULT WAS RUN ON EDISON, THAT HCG PATIENT FOR THE VALUE WAS HIGH ON MAY 21ST INDICATING A PREGNANCY, AND THEN DROPPED VERY, VERY LOW ON MAY 23RD, POSSIBLY INDICATING A MISCARRIAGE OR ABORTION. SO WE WANT TO BE CAREFUL WITH THIS ONE. AND MS. HOLMES IS LEFT TO SAY I'VE DONE MANY MEETINGS ON THIS TODAY. IT WASN'T JUST HCG. YOU'VE HEARD ABOUT ISE'S, ANOTHER GROUP OF ASSAYS. SHE'S TOLD IN THIS ONE THAT THERE ARE A LOT OF ISSUES THAT ARE CAUSING US A LOT OF PAIN NOW WITH REGARD TO THE ISE. IN THIS INSTANCE THE LIST OF ASSAYS WITH PROBLEMS IS COMMUNICATED JUST TO MR. BALWANI. THIS PARTICULAR LIST DOESN'T GO TO MS.

HOLMES. THIS ONE IS PT INR, HCG, TESTOSTERONE, VITAMIN B12, OTHERS. BUT YOU'VE SEEN INSTANCES WHERE MR. BALWANI IS COMMUNICATING PROBLEMS IN THE LAB TO MS. HOLMES, AND YOU CAN SEE FROM THE KIND OF INFORMATION THAT MR. BALWANI GETS THE SORT OF BASKET OF INFORMATION HE IS DRAWING UPON WHEN HE COMMUNICATES INFORMATION TO MS. HOLMES. THE KINDS OF PROBLEMS IN THE LAB THAT SHE WOULD HEAR ABOUT FROM MR. BALWANI WOULD COME FROM SOURCES LIKE THIS WE CAN TRACE BACK WHERE MR. BALWANI LEARNED AND FOUND OUT ABOUT PROBLEMS. IN THIS INSTANCE THEY'RE TALKING ABOUT VOIDED C02 RESULTS.

MR. SCHENK: DR. ROSENDORFF SAYS, "I AM THINKING THAT SINCE WE VOID ALL ABNORMAL BICARBONATE RESULTS, THE TEST HAS LOST ANY DIAGNOSTIC VALUE, AND PROBABLY ALSO RELIABILITY WHEN RESULTS ARE REPORTED IN THE NORMAL RANGE. FOR INSTANCE THE CORRECT BICARB VALUE IN THE PATIENT MAY IN FACT BE HIGH, AND DUE TO OUTGASSING, THE BICARB MIGHT NORMALIZE, AND WE WOULD BE REPORTING A FALSELY NORMAL BICARB WHEN IN FACT IT SHOULD BE HIGH. "PROBABLY SHOULD DISCONTINUE THIS METHOD UNTIL WE HAVE WORKED IT OUT BETTER." MR. BALWANI FORWARDS THIS EMAIL TO ELIZABETH HOLMES. THE PROBLEMS ARE NOT LIMITED TO ONE ASSAY, AND THE PROBLEMS ARE NOT HIDDEN FROM MS. HOLMES. IN THIS INSTANCE THEY ARE TALKING ABOUT AN ISSUE WITH PT INR, AND MR. BALWANI IS LEFT SAYING TO MS. HOLMES, "ALWAYS ANOTHER STUDY AFTER THE FACT." THEY CAN'T STOP THE PROBLEMS ON THE FRONT END. THEY DISCOVERY THE PROBLEMS WHEN THE TESTS GO OUT, AND THEN THEY'RE LEFT DOING THE STUDIES AFTER THE FACT. IN THIS CASE DR.

ROSENDORFF SAYS "I EXPECT OUR HDL ASSAY HAS FAILED AND I DO NOT WANT TO REPORT OUT THIS RESULT UNTIL WE FIX IT." IN THIS EMAIL THAT IS SENT TO MS. HOLMES, DANIEL YOUNG TALKS ABOUT HOW THE HDL QC DATA HAS BEEN RUNNING CONSISTENTLY LOW, ROUGHLY 10 PERCENT. THESE QC DATA SHOULD HAVE RAISED AN ALARM FLAG SEVERAL WEEKS AGO. THE QC RESULTS SEEM SIMILAR FOR BOTH THE DEFAULT SIEMENS PROTOCOL, AS WELL AS FOR THE THERANOS DILUTED PROTOCOL. IN THIS INSTANCE MS. HOLMES IS INFORMED ABOUT PROBLEMS WITH THE HDL TESTING. DR. ROSENDORFF WANTS TO DISCONTINUE HDL TESTING. MR. BALWANI RESPONDS, WE CAN'T NOT -- I THINK IT MIGHT BE WE CANNOT REVERT BACK TO VENIPUNCTURE FOR HDL. WHICH WAY ARE THEY GOING TO DO THE TESTING? THEY'RE DISCOURAGING USING THE TRADITIONAL METHOD, THE VEIN DRAW. IN THIS INSTANCE THEY'RE SEEING MORE PROBLEMS WITH THE ISE'S AND THE NEED FOR RERUNS. THERE'S A DISCUSSION HERE ABOUT IMPLEMENTING A BIAS CORRECTION TO HELP FIX IT. AND MS. HOLMES WRITES, "I'LL TAKE A LOOK.

IF THE BIAS CORRECTION IS ROBUST, WE SHOULD IMPLEMENT IT." NOT ONLY IS SHE NOT HANDS OFF IN THE LAB, YOU HAVE HEARD THAT SHE WAS INVOLVED IN THE R&D SIDE AND YOU'VE NOW SEEN EMAILS EARLIER THIS MORNING AND NOW WHERE THERE'S INVOLVED IN THE CLIA SIDE WHERE SHE KNOWS THAT THERE ARE PROBLEMS AND SHE'S WEIGHING IN ON HOW THEY'RE GOING TO FIX THOSE PROBLEMS. IN THIS INSTANCE DR. ROSENDORFF IS RAISING A CONCERN ABOUT THE POTASSIUM ASSAY THAT WAS OPTIMIZED ON MAY 24TH. HE SENDS THIS EMAIL A MONTH LATER, JUNE 25TH, "TOO MANY POTASSIUMS ARE FLAGGING HIGH, TOO FEW ARE FLAGGING LOW, OUR TEST IS CURRENTLY NOT CAPABLE OF DIFFERENTIATING TRUE CRITICAL POTASSIUM." AND THIS IS FORWARDED TO MS. HOLMES. IN THIS INSTANCE MS. HOLMES IS ASKING MEMBERS OF HER EMPLOYEES AT THERANOS ABOUT THIS PARTICULAR PROBLEM WITH AN INR TEST WHERE SOMEBODY GETS A RESULT AT THERANOS AND IMMEDIATELY GOES TO LABCORP AND GETS A DIFFERENT RESULT. AND MR. FOSQUE IS SAYING HE'LL WORK WITH ELIZABETH HOLMES ON SCRIPTING.

SO SHE WAS INVOLVED IN MAKING DECISIONS ABOUT THE BIAS CORRECTION AND WHETHER THAT SHOULD BE IMPLEMENTED AND ALSO ON THE BACK END WHEN A PHYSICIAN HAS A CONCERN ABOUT WHETHER A RESULT IS PROBLEMATIC, WHAT THERANOS WAS GOING TO COMMUNICATE TO THAT PHYSICIAN. ELIZABETH HOLMES IS INVOLVED IN THAT SCRIPTING AS WELL. THE SECOND ELEMENT FOR THE WIRE FRAUD FOR PATIENTS IS MATERIALITY, THAT IS, THAT THE FALSE STATEMENTS WERE CAPABLE OF INFLUENCING A DECISION TO SPEND MONEY, TO BUY A TEST. YOU DON'T NEED ACTUAL RELIANCE IN THIS INSTANCE, JUST THAT THEY WERE THE KIND OF STATEMENTS THAT WOULD BE CAPABLE OF INFLUENCING. MS. TOMPKINS TOLD YOU THAT SHE WENT TO THERANOS. SHE COUNTS ON A LAB'S ABILITY TO RETURN ACCURATE RESULTS, RELIABLE RESULTS. AGAIN, I APPRECIATE IT'S OBVIOUS THAT PATIENTS WOULD SAY I ASSUMED I WOULD GET AN ACCURATE RESULT IF I HAD MY BLOOD TESTED HERE AND THIS IS THE MATERIALITY CONCEPT. DR. ELLSWORTH, THE SAME THING, HE SAID HE EXPECTED THE RESULTS THAT HE RECEIVED FROM TESTS AT THERANOS TO BE ACCURATE AND ACCURACY WITH LAB RESULTS OBVIOUSLY IS IMPORTANT. BRITTANY GOULD ALSO TALKED ABOUT SORT OF WHAT SHE SAW IN MARKETING MATERIALS FOR THERANOS, WHY THOSE -- THAT INFORMATION WAS IMPORTANT TO HER AND AFFECTED HER DECISION TO GO GET TESTING AT THERANOS, THINGS LIKE ACCURACY. THE NEXT AND THE THIRD ELEMENT IS AN INTENT TO DEFRAUD, THAT THE FALSE STATEMENTS, THAT THE KNOWINGLY FALSE STATEMENTS WERE COMMUNICATED WITH THE INTENT TO DEFRAUD.

MR. SCHENK: MUCH OF THE EVIDENCE WE LOOKED AT HERE APPLIES HERE. WE SEE INSTANCES WHERE MS. HOLMES KNOWS THAT THERE ARE PROBLEMS IN THE LAB WITH REGARD TO GENERATING ACCURATE AND RELIABLE TESTS, AND YET THE COMMUNICATION CONTINUES. INDIVIDUALS, PATIENTS ARE STILL LED TO BELIEVE THAT THERANOS CAN TEST BLOOD ACCURATELY AND RELIABLY. SHE'S TOLD IN THIS INSTANCE IN 2014 BY MR. BALWANI ABOUT PROBLEMS WITH THE COLLECTION DEVICE, THAT THAT'S THE ROOT CAUSE OF ISSUES. THE EXPLETIVE TEXT ALSO IS IMPORTANT IN THIS IDEA AND THIS CONCEPT. SHE KNOWS THERE ARE PROBLEMS AND PATIENTS CONTINUE TO GO TO THERANOS. SHE'S TOLD THAT THEIR VALIDATION REPORTS ARE TERRIBLE. DR. ROSENDORFF TOLD YOU ABOUT AN INSTANCE WHEN HE WENT INTO HER OFFICE AND SHE HAD TAPED TO THE WALL NUMBERS SORT OF COUNTING DOWN THE DATES UNTIL THE LAUNCH. AND THEN HE SAYS I TOLD HER THAT THE POTASSIUM WAS UNRELIABLE, THE SODIUM WAS UNRELIABLE, THE GLUCOSE WAS UNRELIABLE. EXPLAIN WHY. SHE WAS VERY NERVOUS.

SHE WAS NOT HER USUAL COMPOSED SELF. SHE WAS TREMBLING A LITTLE BIT. HER KNEE WAS TAPPING. HER VOICE WAS BREAKING UP. SHE WAS CLEARLY UPSET. SHE DIDN'T SEEM SURPRISED TO ME. SHE JUST SEEMED NERVOUS AND UPSET BEFORE THE LAUNCH. SUREKHA GANGADKHEDKAR TOLD YOU THAT SHE RAISED CONCERNS ALSO BEFORE THE LAUNCH ABOUT THE 3 SERIES GIVING -- HAVING PROBLEMS, EVEN IN THOSE LAST FEW DAYS BEFORE THE LAUNCH, AND THAT MS. HOLMES'S RESPONSE WAS THAT SHE HAD MADE A PROMISE TO DELIVER TO THE CUSTOMER, AND SHE DIDN'T HAVE MUCH CHOICE BUT TO GO AHEAD WITH THE LAUNCH. DR. ROSENDORFF BEFORE THE LAUNCH SAYS LET'S DELAY IT. I HAVE MEDICAL AND OPERATIONAL CONCERNS FOR OUR READINESS FOR 9/9, AND HE SENT THIS BEFORE THE LAUNCH. IN 2014 MS. HOLMES'S BROTHER WRITES HER THIS EMAIL: "HEY -- WANTED TO HAVE JUST A MORE CANDID CONVERSATION ABOUT THIS WITH YOU. I AM ALWAYS CONFIDENT IN OUR TECHNOLOGY, BUT IT'S PRETTY OBVIOUS THAT WE HAVE ISSUES WITH CALCIUM, POTASSIUM, AND SODIUM SPECIFICALLY.

"I'M 1,000 PERCENT CONFIDENT THIS IS AN EASILY SOLVABLE ISSUE AND ONE THAT WE WILL FIX, BUT JUST MORE A QUESTION AROUND THE COST/BENEFIT OF CONTINUING TO SEND THESE RESULTS TO DOCS WHEN THERE SEEM TO BE ISSUES WITH THEIR ACCURACY. "I AM ALSO BRINGING THIS UP BECAUSE I HAVEN'T HEARD ANY REASON OR ROOT CAUSE FOR WHY THESE TESTS ARE OFF. I JUST GET A RESPONSE FROM DANIEL THAT WE 'ARE AWARE OF THE ISSUES AND ARE CONDUCTING A STUDY.' LEAVES ME A BIT HANDS TIED WITH THE DOCS -- OBVIOUSLY I CAN'T TELL THEM WE ARE WRONG, BUT THEY CONTINUE TO SEND PATIENTS TO QUEST AFTER WE REPORT HIGH, AND THE PATIENTS RESULTS COME BACK NORMAL." SHE HEARD IT NOT FROM MR. BALWANI, BUT SHE HEARD IT FROM HER BROTHER WHO ASKED TO HAVE A CANDID CONVERSATION ABOUT THE ACCURACY PROBLEMS OF THEIR TESTING IN 2014. DR.

ROSENDORFF SAID THAT HE HAD CONCERNS ABOUT WHETHER THE PARTICULAR MESSAGE HERE, THE SCRIPTING, WAS ACCURATE; THAT WHAT WAS APPROVED TO SAY WAS IN THE SHORT TERM DON'T PUT ANY COMMENT OR NOTE ON THE RESULT IF C02 VALUES ARE VOIDED. BUT IF DOCTORS CALL, YOU SHOULD SAY THE SCRIPT, AND THE SCRIPT IS C02 RESULTS WERE NOT REPORTED DUE TO TEMPORARY UNAVAILABILITY OF THIS TEST FOR THIS SAMPLE. WE ARE GROWING AS FAST AS WE CAN AND ARE WORKING TO ENSURE THIS DOES NOT HAPPEN GOING FORWARD. WE APOLOGIZE FOR THE TEMPORARY INCONVENIENCE. DR. ROSENDORFF TOLD YOU I DIDN'T THINK THAT SCRIPTING WAS ACCURATE BECAUSE HE FIRMLY BELIEVED THAT THIS WOULD BE A PERMANENT PROBLEM, THAT THIS WAS NOT A TEMPORARY PROBLEM, AND HE DID NOT THINK THAT THIS SCRIPTING APPROVED BY MS. HOLMES WAS APPROPRIATE. THERE'S A QUESTION HERE. THIS IS ACTUALLY A VIP VISIT WHERE THEY WERE NOT ABLE TO GENERATE RESULTS, AND THERE'S A DISCUSSION ABOUT WHY THAT WAS, WHY THEY WEREN'T ABLE TO GENERATE RESULTS. AND MS.

HOLMES IS TOLD HERE BY CHRISTIAN HOLMES THE ROOT CAUSE FROM TINA, THE CONTAMINATION OF THE CTN IS NOT DUE TO ANY HUMAN ERROR. MS. HOLMES RESPONDS, YOU CAN SAY WE DO RUN THOSE ASSAYS, BUT WE'RE NOT ABLE TO RUN THEM ON THIS SAMPLE, APPARENTLY DUE TO HUMAN ERROR IN SAMPLE HANDLING. SHE'S SPECIFICALLY TOLD THAT THE ISSUE WAS NOT HUMAN ERROR AND THEN SHE SPECIFICALLY SAYS TO SAY IT WAS. IN THIS EXCHANGE DR. ROSENDORFF IS TELLING HOLMES AND BALWANI, WE ARE STILL VOIDING CRITICAL ISE RESULTS AND ASKING FOR REDRAW. THIS MEANS WE WOULD MISS A TRULY CRITICAL ISE RESULT. BY THE SAME TOKEN, IT CALLS INTO QUESTION THE ACCURACY OF EVEN THE NORMAL ISE RESULTS. ARE YOU BOTH COMFORTABLE WITH THIS?

MR. SCHENK: AND MR. BALWANI WRITES TO MS. HOLMES, "WE NEED TO RESPOND TO HIM NOW AND CUT HIM MONDAY." THEY'RE GOING TO GET RID OF THE LAB DIRECTOR WHO ACTUALLY RAISES QUESTIONS, WHO HAS CONCERNS, WHO PUSHES FOR PT TESTING. AND WHO DO THEY REPLACE HIM WITH? THEY REPLACE HIM WITH MR. BALWANI'S DERMATOLOGIST, WHO WORKS FIVE HOURS OVER THE COURSE OF SEVEN MONTHS, AND DR. SAWYER WHO WORKS EVEN LESS. DR. DHAWAN DURING CROSS, THE CROSS-EXAMINATION OF DR. DHAWAN -- YOU MAY RECALL THIS LINE OF QUESTIONING -- MR. WADE WAS ASKING DR. DHAWAN IF HE EVER MET SOMEONE OR IF HE KNEW SOMEONE NAMED DR. SAWYER. "YOU NEVER MET HER, SO IT MAY HAVE BEEN SHE WAS DOING SEPARATE FUNCTIONS FROM THE FUNCTIONS YOU PERFORMED AT THERANOS; IS THAT FAIR?" AND THEN THE DISCUSSION CONTINUES SUGGESTING TO DR. DHAWAN THAT HE DIDN'T WORK THAT MUCH AT THERANOS, BUT THERE WAS A CO-LAB DIRECTOR, DR. SAWYER, AND YOU DON'T KNOW, DR. DHAWAN, WHETHER SHE WAS THE ONE WHO WAS MINDING THE STORE WHILE YOU WEREN'T? THEN DR.

SAWYER CAME AND TESTIFIED AND SHE TOLD YOU, IF YOU CAN BELIEVE IT, I DID LESS. SHE NEVER WENT TO THE LAB, SHE DIDN'T SEE THE THERANOS DEVICE, SHE NEVER SPOKE TO A PATIENT, SHE NEVER SPOKE TO A DOCTOR. SHE WAS NEVER ASKED ABOUT CRITICAL VALUES. IF IT'S POSSIBLE, SHE WAS LESS INVOLVED THAN DR. DHAWAN. THERE ARE OTHER EXAMPLES. THERE ARE EMAILS WHERE MS. HOLMES IS INCLUDED ON THE EMAIL AND ISSUES WITH CERTAIN ASSAYS WERE SENT TO HER. A GROUP INVOLVING THE HCG ASSAYS, A GROUP INVOLVING THE ISE ASSAYS, PT INR, HDL, POTASSIUM, AND BICARB. THERE ARE MORE EMAILS THAT TALK ABOUT THIS. THE NEXT IS THE INTERSTATE NEXUS, THAT THE WIRES THAT ARE THE SUBJECT OF THESE COUNTS CROSSED STATE LINES. THIS IS THE LAB REPORT THAT WENT TO MS. TOMPKINS, THE HIV TESTING. AND YOU SEE THE FAX WENT FROM THERANOS, THE 650, TO ACTUALLY DR. ASIN, THE PHYSICIAN FOR ERIN TOMPKINS, HIS OFFICE IN ARIZONA ON INTERSTATE WIRE. DR. ELLSWORTH, THE SAME THING. HIS REPORT WENT FROM THERANOS TO DR.

ELLSWORTH'S PHYSICIAN, DR. BURNES. DR. BURNES HAD AN OFFICE IN ARIZONA. AND, IN FACT, YOU HAVE AN EMAIL WHERE IT TELLS YOU THE SPECIFIC DEVICE THAT DR. ELLSWORTH'S TEST WAS RUN ON. YOU KNOW FROM THIS EMAIL THAT THE PSA TEST WAS RUN ON A THERANOS EDISON DEVICE FROM EXHIBIT 4415. AND THEN DR. BURNES DURING HIS TESTIMONY TOLD YOU WHERE HIS OFFICE WAS LOCATED AND THAT HE WOULD HAVE LAB RESULTS FAXED TO HIS OFFICE, TO COMPLETE THE CIRCLE OF THAT INTERSTATE WIRE. THE LAST COUNT INVOLVES THE PURCHASE OF AD TIME IN ARIZONA. MR. AMENTA ALSO PROVIDED TESTIMONY TO YOU ON THIS SUBJECT, THAT THE WIRE -- IT WAS CALLED HORIZON MEDIA -- THAT THERANOS SENT ABOUT A MILLION DOLLARS TO, THAT THAT USED FEDWIRE AND CROSSED STATE LINES AS WELL. AND THEN MS. YAM CAME BACK AND TESTIFIED AT THE END OF THE GOVERNMENT'S CASE AND TALKED ABOUT THIS EMAIL, 5454, WHERE THIS PARTICULAR WIRE WAS FOR THE PHOENIX MEDIA PLAN.

AND THEN IT TALKED ABOUT WHAT SOME OF THE FUNDS WERE USED FOR: CINEMA, IT TALKS ABOUT OUTDOOR, STATIC, AND DIGITAL, AND "PEOPLE" MAGAZINE AND COVER WRAP, AND THEN ARIZONA REPUBLIC. I WANT TO TAKE A BREAK, AS I TOLD YOU, FROM THE SLIDES AND COVER A FEW ADDITIONAL TOPICS, AND THEN WE'LL RETURN TO THE SLIDES VERY BRIEFLY AT THE END. THE DEFENSE HAS MADE SOME COMMENTS TO YOU DURING THE COURSE OF THE TRIAL THAT I WANT TO SPEND A MOMENT DISCUSSING. NO, THEY DON'T HAVE TO SPEAK. THE DEFENSE DOESN'T HAVE TO GIVE AN OPENING. THEY DON'T HAVE TO CROSS-EXAMINE ANY WITNESSES OR CALL ANY WITNESSES ON THEIR OWN. THE BURDEN IS ON THE GOVERNMENT. THAT NEVER CHANGES. THE DEFENSE HAS MADE SOME ARGUMENTS, AND I WANT TO RESPOND TO A COUPLE OF THEM. THE FIRST ARGUMENT THAT YOU'VE HEARD IS THAT BUSINESS FAILURE IS NOT FRAUD. BUSINESSES FAIL AND THAT DOESN'T PROVE THAT FRAUD HAPPENED. TO THE EXTENT THAT YOU MIGHT BE DISAPPOINTED IN SOME OF THE ACTIONS THAT OCCURRED AT THERANOS, YOU SHOULD ATTRIBUTE IT TO MS. HOLMES'S INEXPERIENCE. FIRST, IT IS CERTAINLY TRUE THAT BUSINESSES FAIL, AND THAT IS NOT PROOF OF FRAUD. THE GOVERNMENT HAS NO QUARREL WITH THAT IDEA. JUST BECAUSE IT'S A TRUE STATEMENT DOESN'T MEAN IT APPLIES TO THIS CASE. I STARTED THIS MORNING BY TELLING YOU THAT THERE WERE INSTANCES WHEN THERANOS WAS RUNNING OUT OF MONEY, WHEN THEY WERE ON THE PHONE WITH BANKERS ABOUT CLEARING CHECKS EARLY.

MR. SCHENK: IF MS. HOLMES HAD JUST ALLOWED THERANOS TO FAIL, IF SHE HAD NOT CHOSEN TO GO DOWN THE PATH OF FRAUD, THEN I THINK THAT STATEMENT WOULD APPLY THAT BUSINESSES FAIL AND THAT DOESN'T MEAN THAT THERE IS FRAUD. THAT'S NOT PROOF OF FRAUD BY ITSELF. BUT WHAT HAPPENED HERE IS SORT OF WHEN FACED WITH THE POTENTIAL OF BUSINESS FAILURE, MS. HOLMES CHOSE A DIFFERENT PATH, AND THAT'S WHERE THE FRAUD COMES IN. THE DEFENSE ALSO, I THINK, WOULD LIKE TO FREEZE TIME, HAVE YOU THINK OF MS. HOLMES AS THE 19-YEAR-OLD-COLLEGE DROPOUT THAT STARTED THERANOS THE ENTIRE TIME SHE WAS AT THERANOS. BUT THE TRUTH IS BY THE TIME THE INVESTORS WHO INVESTED IN 2013 OR 2014 WERE INTERACTING WITH HER, SHE WAS NEARLY 30 AND HAD BEEN CEO FOR A DECADE AT THAT POINT. THEY WERE NOT INTERACTING WITH SOMEONE WHO HAD INEXPERIENCE RUNNING HER COMPANY. THERANOS DIDN'T NEED MORE EXPERIENCE TO AVOID FRAUD HERE. THEY DIDN'T NEED ONE MORE M.D. OR ONE MORE PH.D. TO AVOID THE FRAUD. IT WASN'T A QUESTION OF EXPERIENCE.

THEY NEEDED A CEO AND A COO WHO INTERACTED WITH PEOPLE HONESTLY, WHO TOLD THEM THE TRUTH ABOUT WHAT THERANOS COULD AND WHAT IT COULDN'T DO. IT WASN'T A QUESTION OF EXPERIENCE OR A LACK OF PH.D.'S OR M.D.'S AT THERANOS. THE DEFENSE HAS ARGUED TO YOU THAT ELIZABETH HOLMES NEVER SOLD HER STOCK. I THINK FROM THAT THEY WOULD SUGGEST THAT IF THIS WAS A FRAUD AND IF SHE KNEW IT WAS A FRAUD, THEN WHY DIDN'T SHE SELL STOCK? AND I'M NOT SURE WHAT THE NEXT ACTION AFTER THAT IS, SELL STOCK AND -- THE EVIDENCE IS STILL THERE. SO EVEN IF SHE HAD SOLD HER STOCK, THE EVIDENCE THAT YOU HAVE HEARD ABOUT IN THE CASE IS HERE. THERE ARE AS MANY DIFFERENT REACTIONS TO FRAUD AS THERE ARE FRAUDSTERS. BECAUSE SHE DIDN'T PICK A PARTICULAR RESPONSE WHEN FACED WITH FRAUD I DON'T THINK SUGGESTS THAT FRAUD DID NOT HAPPEN HERE. BUT DAN MOSLEY ALSO PROVIDED YOU SOME INSIGHT INTO THIS PARTICULAR QUESTION. RECALL DAN MOSLEY TOLD YOU THAT THERE WERE DIFFERENT KINDS OF STOCK, THERE WAS COMMON AND THERE WAS PREFERRED.

MR. MOSLEY TOLD YOU THAT INVESTORS LIKE HIMSELF BOUGHT PREFERRED SHARES. AND THAT MEANT THAT IF THERE WAS A BANKRUPTCY OR LIQUIDATION EVENT OF SOME KIND, THE PREFERRED SHAREHOLDERS GOT TO GO TO THE FRONT OF THE LINE TO RECOVER ASSETS. AND HE TOLD THAT YOU MS. HOLMES DID NOT HAVE THAT KIND OF STOCK. SHE HAD COMMON STOCK. AND WHAT SHE GAVE UP IN THOSE PREFERENCE RIGHTS, SHE GAINED IN VOTING RIGHTS. THE COMMON STOCK HAD 100 VOTES FOR EVERY SHARE. THE PREFERRED HAD ONE VOTE FOR EVERY SHARE. SO IF MS. HOLMES SOLD HER STOCK, SHE WASN'T JUST SELLING IT FOR MONEY, SHE WAS SELLING ACCESS TO INFORMATION. AND WHEN THERANOS WAS A HOUSE OF CARDS, WHEN IT WAS FRAUD, SHE COULD NOT GIVE SOMEONE ELSE THE POWER THAT CAME WITH THOSE VOTING RIGHTS, THE POWER TO ASK QUESTIONS TO GET REAL ANSWERS. MS. HOLMES COULDN'T SELL HER STOCK.

THE DEFENSE HAS ARGUED TO YOU AND MADE THIS ARGUMENT IN OPENING THAT THE GOVERNMENT WAS LOOKING AT THE CASE THROUGH A DIRTY LENS; THAT JUST WAIT AND YOU'LL SEE THE EVIDENCE IN THE CASE, AND YOU'LL SEE THAT THERE'S A LOT OF JUST INNOCENT EVENTS; AND ONLY WHEN YOU PUT ON THE GOVERNMENT'S LENS AND LOOK THROUGH THE GOVERNMENT'S EYES WILL YOU SEE SOME NEFARIOUS INTENT OR BAD CONDUCT. HERE THAT ARGUMENT -- IT MIGHT WORK IN A CASE WHERE WITNESS AFTER WITNESS IS A GOVERNMENT EMPLOYEE, LAW ENFORCEMENT OR A GOVERNMENT REGULATOR WHO IS DESCRIBING FACTS TO YOU AND WANTS YOU TO APPRECIATE THOSE FACTS THROUGH THEIR EYES. BUT THINK FOR A MOMENT ABOUT THE WITNESSES THAT TESTIFIED IN THIS CASE. YOU HEARD FROM FORMER EMPLOYEES THAT ELIZABETH HOLMES HIRED. YOU HEARD FROM INVESTORS THAT ELIZABETH HOLMES RECRUITED. YOU HEARD FROM PATIENTS THAT ELIZABETH HOLMES ADVERTISED TO. YOU HEARD FROM STRATEGIC PARTNERS, THE WALGREENS AND SAFEWAYS OF THE WORLD THAT ELIZABETH HOLMES NEGOTIATED WITH. YOU'RE NOT BEING ASKED TO LOOK AT THE FACTS OF THIS CASE THROUGH THE GOVERNMENT'S EYES, THROUGH THE LENS THAT THE GOVERNMENT PUTS ON. YOU'RE BEING ASKED TO HEAR AND EVALUATE THE TESTIMONY OF WITNESSES THAT AT LEAST AT ONE POINT IN TIME THE DEFENDANT HERSELF SELECTED. I WANT TO SAY A FEW WORDS ABOUT THE WITNESSES THAT THE DEFENSE CALLED. THEY CALLED THREE WITNESSES.

MR. SCHENK: THE FIRST WITNESS WAS TRENT MIDDLETON. YOU MAY RECALL THAT MR. MIDDLETON WORKS FOR THE LAW FIRM THAT IS REPRESENTING THE DEFENDANT HERE IN COURT. AND HE TESTIFIED ABOUT SOME SUMMARY CHARTS THAT HE HAD CREATED, AND HE TOLD YOU THAT THE DATA FOR THE CHARTS WAS GATHERED, BUT I DON'T KNOW THAT HE KNEW WHO GATHERED THAT DATA. THAT WASN'T SOMETHING THAT HE WAS FAMILIAR WITH. HE DIDN'T KNOW ANY OF THE FACTS ABOUT THERANOS. HE WASN'T WORKING ON THE THERANOS CASE. HE DIDN'T HAVE ANYTHING TO ADD TO THAT. AND ALSO THE STRUCTURE, THE WORDS THAT WERE ON THE SUMMARY CHART, WERE NOT CHOSEN BY MR. MIDDLETON. I THINK HE SAID IT WAS CHOSEN BY THE LAWYERS HERE. AND IF THEY SHOW THEM TO YOU, NOTICE THAT WHEN THEY TALK ABOUT INVESTORS, THEY CALLED THEM ENTITIES. HOPEFULLY YOU WILL REMEMBER THAT THE CASE IS ABOUT REAL PEOPLE WHO LOST REAL MONEY. AND WHEN THEY TALK ABOUT PATIENTS, THEY DON'T CALL THEM PATIENTS. THEY CALL THEM CUSTOMERS. THESE ARE REAL PEOPLE WHO PAID REAL MONEY FOR REAL BLOOD TESTS HERE.

THE NEXT PERSON THE DEFENSE CALLED WAS DR. BONANNI. YOU RECALL THAT DR. BONANNI JOINED THE THERANOS BOARD IN 2014. SO AFTER "THE WALL STREET JOURNAL" IN 2015, AFTER CMS INSPECTION AND THEN REPORT IN 2016. DR. BONANNI JOINED THERANOS AT A TIME WHEN THEY ARE FIGURATIVELY POURING BLEACH ON ALL OF THE SURFACES TO CLEAN THINGS UP, AND DR. BONANNI TOLD YOU THAT HIS TESTIMONY WAS EXCLUSIVELY FOCUSSED ON THE 4 SERIES DEVICE, NOT A DEVICE USED AT WALGREENS OR FOR PATIENT TESTING. HE WAS TALKING TO YOU ABOUT THE 4 SERIES DEVICE. HE WORKED THERE ABOUT A DAY A WEEK, I THINK HE SAID. AND STILL IN ONLY A COUPLE OF MONTHS, DR. BONANNI FOUND PROBLEMS WITH THE DATA FOR A ZIKA VIRUS ASSAY. HE TOLD YOU THAT WHEN HE WAS AT THERANOS, THEY WERE WORKING ON DEVELOPING AN ASSAY TO TEST FOR THE ZIKA VIRUS, AND HE TALKED TO MS. HOLMES ABOUT THAT DATA.

SO HE WASN'T TALKING TO YOU ABOUT THE DEVICE USED FOR PATIENT TESTING, AND EVEN THIS NEXT GENERATION DEVICE, THE 4 SERIES DEVICE, ONLY WORKING ONE DAY A WEEK, IT TOOK HIM A COUPLE OF MONTHS TO FIND PROBLEMS WITH THAT DEVICE. THE NEXT WITNESS AND THE LAST WITNESS IN THE CASE WAS THE DEFENDANT HERSELF. A FEW THINGS ON THAT. THE JUDGE WILL READ YOU JURY INSTRUCTIONS AND THEY WILL COVER THINGS LIKE BIAS AND CREDIBILITY OF WITNESSES, AND YOU CAN CONCLUDE THAT THERE IS NO WITNESS THAT TESTIFIED IN THIS CASE THAT HAS MORE BIAS, MORE INTEREST IN THE OUTCOME OF THE PROCEEDINGS THAN THE DEFENDANT HERSELF. THAT MEANS THAT YOU SHOULD LOOK SKEPTICALLY AT ANYTHING THAT SHE TESTIFIED ABOUT THAT WAS SELF-SERVING. WHEN SHE WAS ON THE STAND, MR. DOWNEY SHOWED HER A NUMBER OF EMAILS FROM PEOPLE LIKE IAN GIBBONS OR DANIEL YOUNG THAT WERE COMMUNICATING POSITIVE OR FAVORABLE DEVELOPMENTS AT THERANOS. AND I THINK THE CONCLUSION THAT IS HOPED THAT YOU WOULD DRAW IS MS.

HOLMES RECEIVED POSITIVE NEWS, GOOD THINGS HAPPENING AT THERANOS, SO WHEN SHE COMMUNICATED GOOD THINGS OR POSITIVE NEWS TO INVESTORS, SHE WASN'T INTENDING TO DEFRAUD THEM, SHE WAS MERELY A FUNNEL OR CONDUIT OF INFORMATION. SHE HEARD IT FROM PEOPLE WHO WORKED FOR HER AND SHE PASSED IT ON AND SHARED IT WITH INVESTORS. NO INTENT TO DEFRAUD. THE PROBLEM IS THAT'S INCONSISTENT WITH THE FACTS AND THE EVIDENCE THAT YOU HAVE SEEN. YOU HAVE ALSO SEEN EMAIL AFTER EMAIL, EXAMPLE AFTER EXAMPLE WHERE SHE IS TOLD NEGATIVE THINGS, POOR DEVELOPMENTS, UNFORTUNATE THINGS THAT ARE HAPPENING AT THERANOS, AND THOSE THINGS ARE NOT BEING COMMUNICATED TO INVESTORS. SHE IS DECIDING WHAT IS THE KIND OF INFORMATION TO OR SHOULD BE COMMUNICATED AND WHAT ISN'T. THINK ABOUT IT ANOTHER WAY.

IF YOU WENT AFTER THE FACT AND SORT OF GATHERED UP ALL OF THE STATEMENTS THAT THE INVESTORS HEARD, IF THERE WAS NO INTENT HERE, IF THEY WERE JUST TOLD WHATEVER SHE KNEW, YOU WOULD EXPECT THERE TO BE A RANDOM DISTRIBUTION OF SOME STATEMENTS SAYING POSITIVE THINGS THAT SHE HEARD AND SOME SAYING NEGATIVE THINGS THAT SHE HEARD. BUT WHEN THE WITNESSES, THE VICTIM INVESTORS TESTIFIED, YOU HEARD FAVORABLE AND FALSE OVER AND OVER, A FAVORABLE THING ABOUT THERANOS THAT WASN'T TRUE, BUT NOT THE, WE'RE HAVING PROBLEMS TESTING PATIENTS OR THIS -- WE SHOULDN'T LAUNCH. MY LAB DIRECTOR IS TELLING ME WE SHOULDN'T LAUNCH AND WE SHOULD DELAY THE LAUNCH. THERE'S ANOTHER WORD FOR THAT, AND THAT'S INTENT. SHE'S CHOOSING WHICH ARE THE KIND OF FACTS TO COMMUNICATE AND WHICH ARE THE KIND OF FACTS THAT SHOULD NOT BE COMMUNICATED.

MR. SCHENK: I WANT TO READ TO YOU JUST VERY BRIEFLY ONE PORTION OF HER DIRECT TESTIMONY. WHEN SHE WAS ON THE STAND, AND MR. DOWNEY ASKED HER: "NOW, YOU MENTIONED THAT WHEN YOU MET HIM WHEN YOU WERE AN 18 YEAR OLD, YOU THOUGHT THAT HE WAS AN IMPRESSIVE EXECUTIVE. DURING THE TIME PERIOD THAT WE'RE CONCERNED WITH, THE PERIOD FROM 2010 TO 2016, HOW DID YOU PERCEIVE MR. BALWANI'S CAPABILITIES AS A BUSINESS PERSON AND WHAT EFFECT DID YOUR RELATIONSHIP HAVE ON THAT?" MS. HOLMES RESPONDS: "HE HAD TAUGHT ME EVERYTHING THAT I THOUGHT I KNEW ABOUT BUSINESS, AND I THOUGHT HE WAS THE BEST BUSINESS PERSON THAT I KNEW. "AND I THINK THAT I DIDN'T QUESTION HIM IN THE WAY THAT I OTHERWISE WOULD HAVE. "DID THAT REMAIN YOUR VIEW UNTIL 2006? "IT DID. "DID THAT VIEW CHANGE IN 2016? "IT DID. "WHAT HAPPENED TO CHANGE THAT VIEW? " THE CMS INSPECTION.

I HAD GONE INTO THAT INSPECTION THINKING THAT WE HAD ONE OF THE BEST LABS IN THE WORLD, AND THE FINDINGS FROM THOSE INSPECTIONS WERE SO FUNDAMENTALLY DIFFERENT FROM WHAT I BELIEVED THAT IT COULDN'T BE THE CASE THAT OUR OPERATIONS WERE RUNNING LIKE ONE OF THE BEST COMPANIES IN THE WORLD." THAT'S FROM PAGE 7875. MS. HOLMES GOT ON THE STAND AND TOLD YOU WHEN CMS DID THEIR INSPECTION AND ISSUED A REPORT, THAT REPORT WAS A LIGHT BULB MOMENT. THAT'S WHEN SHE DISCOVERED THERE WERE PROBLEMS IN THE LAB. THERE'S A FUNDAMENTAL PROBLEM WITH THAT TESTIMONY. THAT TESTIMONY IS NOT TRUE. YOU HAVE SEEN EXAMPLE AFTER EXAMPLE OF MS. HOLMES BEING TOLD BY MR. BALWANI, SOMETIMES IN TEXT MESSAGES, BUT ALSO THROUGH REQUESTS FOR CANDID CONVERSATIONS BY HER OWN BROTHER ABOUT PROBLEMS IN THE LAB. MS. HOLMES TOLD YOU THAT IN 2016 SHE DISCOVERED THERE WERE PROBLEMS, BECAUSE IF SHE KNEW ABOUT THEM EARLIER, THEN THE FALSE STATEMENTS TO INVESTORS AND TO PATIENTS WERE NOT JUST FALSE, THEY WERE KNOWINGLY FALSE.

MS. HOLMES ALSO TALKED TO YOU ABOUT HER RELATIONSHIP WITH MR. BALWANI AND SHE TOLD YOU THAT THERE WAS VIOLENCE IN THAT RELATIONSHIP. SHE TOLD YOU THAT THERE WERE TWO PEOPLE WHO KNEW ABOUT THAT, WHO WOULD KNOW ABOUT IT AND WHO WERE PRESENT FOR THAT. I CERTAINLY AM NOT ONE OF THEM. IF YOU RETURN A VERDICT OF GUILTY, YOU'RE NOT SAYING THAT WE, THE JURY, DO NOT BELIEVE MS. HOLMES'S CLAIMS OF ABUSE. IF YOU RETURN A VERDICT OF NOT GUILTY, YOU ARE NOT SAYING WE, THE JURY, BELIEVE MS. HOLMES'S CLAIMS OF ABUSE. YOUR VERDICT DOES NOT VALIDATE HER CLAIMS OF ABUSE. YOU DO NOT NEED TO DECIDE WHETHER THAT ABUSE HAPPENED IN ORDER TO REACH A VERDICT. THE CASE IS ABOUT FALSE STATEMENTS MADE TO INVESTORS AND FALSE STATEMENTS MADE TO PATIENTS. YOU DO NOT NEED TO DECIDE THE QUESTION ABOUT WHETHER THAT ABUSE HAPPENED. I WANT TO SAY A COUPLE OF WORDS ABOUT THE JURY INSTRUCTIONS. THE JUDGE WILL READ YOU INSTRUCTIONS TO GUIDE YOUR DELIBERATIONS.

THEY WILL COVER TOPICS LIKE REASONABLE DOUBT, A PHRASE THAT YOU PROBABLY HAVE HEARD BEFORE, THE STANDARD USED IN CRIMINAL CASES THROUGHOUT THE COUNTRY. THE JUDGE WILL INFORM YOU THAT IT'S A DOUBT BASED ON REASON AND COMMON SENSE, NOT PURELY ON SPECULATION. THAT MEANS WHEN YOU LEAVE THIS ROOM AND GO BACK TO DELIBERATE, YOU BRING YOUR COMMON SENSE WITH YOU. YOU USE THAT TO LOOK AT AND EVALUATE THE EVIDENCE. THE JUDGE WILL READ YOU AN INSTRUCTION ABOUT PUNISHMENT. I THINK WE -- THE JUDGE HAS SPOKEN TO YOU ABOUT THAT BEFORE. THE JUDGE WILL TELL YOU IT SHOULD PLAY NO ROLE IN YOUR DELIBERATIONS. IT IS EXCLUSIVELY THE PROVINCE OF THE COURT SHOULD IT EVER GET THERE. YOU ARE READ THE LAW ON THINGS LIKE THE CRIME OF CONSPIRACY OR WIRE FRAUD. YOU ARE NOT GIVEN THE RULES OR THE GUIDELINES FOR PUNISHMENT, AND THAT MAKES SENSE BECAUSE IT SHOULD PLAY NO ROLE IN YOUR DELIBERATIONS.

THERE ARE ALSO INSTRUCTIONS ON THINGS LIKE AIDING AND ABETTING, OR INSTANCES WHEN MORE THAN ONE PERSON COMMITS A CRIME, THE CRIME OF CONSPIRACY OR THE CRIME OF WIRE FRAUD, AND IN THOSE INSTRUCTIONS THERE ARE ELEMENTS AS WELL AND WE ASK THAT YOU PAY ATTENTION TO THOSE AS WELL. THE STORY OF THERANOS IS IN SOME WAYS A TRAGEDY. WHAT HAPPENED TO THE INVESTORS AND TO THE PATIENTS SHOULD NOT HAVE HAPPENED. THEY SHOULD HAVE BEEN ENGAGED WITH HONESTLY. BUT IT'S ALSO THE STORY OF INDIVIDUALS ACTING WITH REMARKABLE INTEGRITY. ERIKA CHEUNG TOLD YOU THAT THIS WAS HER FIRST JOB OUT OF COLLEGE. SHE SAID DURING THE INTERVIEW WITH MS. HOLMES SHE WAS STAR STRUCK. ERIKA DEEPLY HOPED THAT THIS COMBINATION OF TECHNOLOGY AND HEALTH CARE WOULD WORK. IT WAS VERY INTERESTING TO HER.

MR. SCHENK: BUT AFTER NOT WORKING THERE VERY LONG, SHE BEGAN TO SEE PROBLEMS WITH THE DEVICE, WITH THE TESTING, AND SHE RAISED THOSE CONCERNS FIRST TO HER IMMEDIATE SUPERVISORS, AND THEN DIRECTLY TO MR. BALWANI. I THINK SHE TOLD YOU THAT SHE WAS FRIENDS WITH TYLER SHULTZ AND SHE KNEW THAT TYLER HAD SPOKEN TO MS. HOLMES, TO ELIZABETH HOLMES, AND SO SHE, ERIKA, DECIDED TO GO TO MR. BALWANI, AND ERIKA DESCRIBED HOW SHE ASSUMED THAT MANAGEMENT WOULD WANT TO HEAR THESE THINGS, THAT THEY WOULD WANT TO KNOW ABOUT THE PROBLEMS AND FIX THEM. BUT SURPRISINGLY, THAT WAS NOT ERIKA'S EXPERIENCE. MR. BALWANI DID NOT SEEM SURPRISED BY HER COMPLAINTS, BUT INSTEAD A LITTLE FRUSTRATED THAT SHE WAS RAISING THEM. AND ERIKA DECIDED TO QUIT. SHE DIDN'T HAVE ANOTHER JOB TO GO TO. ERIKA SAID, I DON'T WANT TO BE A PART OF THIS COMPANY'S FUTURE AND I'M GOING TO QUIT, AND SHE LEFT. SUREKHA GANGADKHEDKAR. SHE WAS PROUD OF THE WORK THAT SHE HAD DONE OVER THE YEARS DEVELOPING ASSAYS AT THERANOS.

BUT WHEN SHE RETURNED FROM VACATION IN AROUND AUGUST OF 2013 AND DISCOVERED THAT THERANOS WAS ABOUT TO BEGIN TESTING PATIENTS' BLOOD USING ITS DEVICES, ITS COLLECTION, SHE WENT TO MS. HOLMES AND SAID THERE ARE PROBLEMS, THERE'S PROBLEMS WITH THE DEVICE, WE CAN'T TEST ACCURATELY. AND WHEN MS. HOLMES ESSENTIALLY SAID THE TRAIN IS ON THE TRACKS, I CAN'T STOP IT, SUREKHA QUIT. SHE ALSO DID NOT WANT TO BE A PART OF THERANOS'S FUTURE. DR. ROSENDORFF. HE WAS THE LAB DIRECTOR DURING THAT FIRST YEAR AT THERANOS. HE -- YOU SAW IN EMAILS WHERE HE WARNS ABOUT THEIR READINESS TO LAUNCH, AND THEN DURING THAT YEAR WHEN HE IS LAB DIRECTOR, HE IS SENDING EMAILS ABOUT TESTS THAT NO LONGER CAN ACCURATELY EVALUATE THE ASSAY, THE THING THAT THEY'RE TESTING FOR. HE ENCOURAGES MORE PROFICIENCY TESTING. AND THEN HE SAYS THERE CAME A POINT IN TIME WHEN I REALIZED THAT MANAGEMENT CARED MORE ABOUT PR AND FUNDRAISING THAN IT DID PATIENT CARE, AND HE LEFT. DR.

ROSENDORFF DID NOT WANT TO BE A PART OF THERANOS'S FUTURE. IT IS THE STORY OF A TRAGEDY, BUT IT IS ALSO THE STORY OF SOME PEOPLE ACTING WITH REALLY REMARKABLE INTEGRITY. FRAUD IS SORT OF LIKE A HEAD START ON THE TRUTH. FOR A LONG TIME, HOLMES AND BALWANI KNEW THE TRUTH. THEY KNEW WHAT THERANOS COULD DO AND WHAT IT COULDN'T DO, AND THE PEOPLE THAT THEY INTERACTED WITH, THE INVESTORS AND THE PATIENTS, DID NOT. AND THEY TOOK ADVANTAGE OF THAT SORT OF GAP IN INFORMATION. AND FOR THAT, THEY WERE ABLE TO COMMIT FRAUD, AND BECAUSE OF THAT, YOU SHOULD FIND ELIZABETH HOLMES GUILTY OF THE CHARGED OFFENSES. BUT YOU SHOULDN'T FIND HER GUILTY BECAUSE OF MY WORDS. YOU SHOULD FIND HER GUILTY BECAUSE OF HER WORDS. DECEMBER 27TH, 2014, JUST A FEW DAYS BEFORE -- NEW YEAR'S IS A TIME FOR REFLECTION AND MAYBE A NEW YEAR'S RESOLUTION OR TWO. HOLMES AND BALWANI ARE TEXTING EACH EITHER SAYING THAT THIS YEAR, 2015, WILL BE OUR YEAR; THAT THIS YEAR, WE WILL EXECUTE. THE PROBLEM IS THAT BY DECEMBER 27TH, 2014, EVERY INVESTOR THAT YOU HAD HEARD FROM HAD ALREADY INVESTED. BY DECEMBER 27TH, 2014, THERANOS WAS TESTING PATIENTS' BLOOD THROUGH WALGREENS FOR MORE THAN A YEAR AT THAT POINT, AND THOSE INDIVIDUALS, PATIENTS, INVESTORS, THEY ALL THOUGHT THAT THEY WERE ENGAGING WITH A COMPANY THAT HAD BEEN EXECUTING, THAT DIDN'T NEED TO HOPE THAT THEY WOULD FINALLY EXECUTE. AND BECAUSE OF THAT, THERE REALLY IS ONLY ONE VERDICT SUPPORTED BY THE EVIDENCE, AND THAT'S GUILTY ON ALL COUNTS. THANK YOU.