Today, we learned more about Theranos’ penchant for corporate cosplay. The company liked to dress its own reports with the logos of pharmaceutical companies, use the present when the future was more appropriate, and reiterate their favorite buzzwords in PowerPoint slide after PowerPoint slide.
Elizabeth Holmes’ attorneys, defending her against government wire fraud charges, resumed cross-examination of Lisa Peterson, who worked for DeVos family offices and was involved in approving their investment in the business. (Family offices are the affair of the rich – an investment arm for all that sweet, sweet money.) The defense tried to discredit Peterson’s testimony last week about a key Pfizer memo, which, according to her, was essential to think that the company was on to something big.
The only problem? Pfizer did not write it down. A former company scientist said Theranos amended a report from the blood testing startup to include unauthorized use of the Pfizer logo. Pfizer’s actual conclusions were that Theranos’ conclusions in this report were “not credible,” the former Pfizer scientist testified. But Peterson didn’t know and had relied on the memo as real validation.
Homes defense attorney Lance Wade pointed out that Theranos’ physical address and website was at the bottom of that Pfizer memo, in the footer. The footer text was considerably smaller than the Pfizer logo at the top of the page, suggesting the relative importance of each piece of information.
When the prosecution had the opportunity to speak with Peterson again, they asked him if the information in the footer would have convinced them that the note was not from Pfizer. No, she said – the logo on the top was great. When she and her colleagues were considering an investment, “we really relied on the fact that they had worked for pharmaceutical companies and the government for years,” she said.
This is how we ended up talking about the tenses of verbs. After establishing that Peterson knows what the future is, the prosecution reviewed a few Theranos slides. “Theranos’ proprietary technology performs comprehensive blood tests from a finger,” it read. “Runs” is in the present tense and indicates that the tests are currently event.
In fact, we went through several slides to discuss verbal tenses – which were all present or past, not future. During cross-examination, Wade had reconsidered an idea he had launched earlier in the lawsuit: that the investors in Theranos were sophisticated and that they had even signed documents saying that Theranos was a speculative investment. The implication seemed to be that Theranos wasn’t sneaky – Peterson was just careless, and Theranos was promising what he would do in the future.
But the language of the presentation undermined that idea. Somewhere a grammarian was rejoicing.
After Peterson left the booth, we were treated to more testimonials from Big Pharma, this time from Constance Cullen, who worked at Schering-Plow, which was later acquired by Merck. In 2009, Cullen’s boss asked him to assess Theranos’ technology. During this, Cullen ran into Holmes and others at Theranos, but it looks like Holmes made the whole conversation. “On a couple of occasions I attempted to ask questions of other Theranos staff during the meeting and the response was interrupted by Ms. Holmes,” Cullen said.
During the meeting, Cullen said she found Holmes’ answers to the “cuddly” technical questions. Originally, there was supposed to be validation data at this meeting, but it wasn’t actually provided by Theranos until December 2009 – and since Theranos was the party conducting the validation studies, only the logo de Theranos was on the report. Neither she nor anyone else in Schering-Plow said her findings were correct, she said.
Things were hectic for Cullen, as Merck had just bought her business and was now leading a larger team. She postponed discussion of the report and did not come back to it.
Still, Theranos approached Walgreens in 2010 with a version of this validation report. This version had the Schering-Plow logo above it. In an email accompanying the report, Holmes wrote: “Based on our discussion, please find three independent due diligence reports on Theranos systems attached to this email. These reports come from GlaxoSmithKlein, Pfizer and Schering-Plow after their own technical validation and experience with Theranos Systems in the field.
The new version of the report had a new conclusion. While the original version said that Theranos devices “give exact and precise results”, the new logo report says that Theranos devices “give more precise and precise results … than current gold standard” reference methods . » Schering-Plow had not approved of the old language; he certainly had not approved of the new language – Theranos had written both versions of the report. Schering-Plow hadn’t responded to the original in any way and was probably unaware of … let’s say improved version.
Memos and slideshows resurfaced in the testimony of Daniel Mosley, who invested “just under $ 6 million” in Theranos, after his pal Henry Kissinger, a member of the board of directors of Theranos, asked him to ” evaluate the company.
Like Peterson, Mosley was won over by the work Theranos said he did with the government and the big drug companies. In the memo Mosley wrote to Kissinger, he seemed very impressed with the non-Pfizer memo, even devoting an entire section of his own memo to his findings. It wasn’t just the logo that made him think Pfizer was behind the report; the findings appeared to come from a third party, he said.
Mosley also believed that all Theranos tests were done on the finger, largely because of the materials Theranos provided him with. We saw a Theranos generated slide of a child titled “Goodbye, Big Bad Needle” and another that said “Our certified labs do accurate testing on a sample 1/1000 the size of a typical blood draw. . No big vials to fill. no need to search for a vein anymore.
At times Mosley’s testimony resembled a live reading of the social register. He had worked at a famous and sophisticated law firm, Cravath, where his job was to advise the rich on how to stay rich. Some of his clients invested in Theranos – the DeVos family was there for $ 100 million; Walmart’s heirs, the Waltons, were worth $ 150 million; the Cox family invested $ 10 million of their fortune in cable; and Kissinger’s trust was $ 3 million. Andreas Dracopolous of the Stavros Niarchos Foundation invested $ 25 million and John Elkann, of the Ferrari owner family, invested $ 5 million.
The testimony put Mosley at the center of a group of extremely wealthy and influential people, but as if to get the point across, we saw an email from him to Holmes. The day after his first conversation with her, he offered to introduce her to the Walton family. Then he continued, “Rob Walton met one of your board members this weekend at The Grove. “
I don’t know which board member it was – the testimony did not specify – but by “The Grove” Mosley meant the ultra-exclusive boy’s club The Bohemian Grove. Unfortunately, he did not participate in the weird nude rituals or anything else that interests us plebeians.
With Mosley, as with Peterson, the defense seemed to suggest that Theranos investors were just dumb – rich, boring, and unable to verify the things they had invested their money in. But between the language used by Theranos in his presentations, his modified memos that were not Actually pharmaceutical companies, and his constant insistence that his tests were faster and better than anything else, it seems obvious that Theranos wanted to its investors to believe the hype. Just because someone is careless doesn’t mean it’s okay to try to cheat on them.