« The Dropout

Crime and Punishment

2021-10-12

This week, two jurors ask to be excused, citing stress around punishment and the responsibilities in deciding the future of Elizabeth Holmes. A young woman, with unusual ties to this case, gives her perspective as a trial observer, and a veteran Silicon Valley investor puts the Theranos saga in larger context. 

This is an unofficial transcript meant for reference. Accuracy is not guaranteed.
Previously on the drop out there. A news, as former lab director spoke of his grave concerns about the company's practices and technology. So you got Elizabeth officer. What did you say to her to perform proficiency, because it's been almost to your sword? Violation in court heat to fight about his warnings to a nervous Elizabeth not to go forward with a war. Greens Lodge before he says the technology was ready. The quest will be. Did she have enough information so that her representations can be deemed to be fraudulent and within intend to defraud this week, the heated cross examination concludes, and we
from a veteran Silicon Valley investor who puts that there are no debacle in larger context from ABC Audio. This is the drop out Elisabeth homes on trial episode, eight crime and punishment. In a trial filled with unexpected disruptions. This week, proof no different. This time it came from the jury pool when journalists or for a woman who originally disclosed that English was her. Second language came forward with some troubling news deterrent when the court she'd been having anxiety about the issue of punishment, specifically number four set her religion? Buddhism breached love forgiveness,
and compassion the notion she could be responsible for Elizabeth homes. Spending years in prison was almost too much to bear, would be so sad if Elizabeth would have to be in there for a long, long time and then I'm out here, you're number for said she said: he feared her boat would impact Elizabeth Future, something she could square with her religious beliefs, Judge dollar reminded juror, for it was not for the jury to set the terms of punishment only to make a determination of guilt, but force and the decision way too heavily. I would think of all the time. Every day in my life she said and would feel like it's my fault and feel guilty for that judge double a faint before for her candour and after she left the courtroom turned to the attorneys to get their assessment prosecutor
Jeffrey Shank asked the judge to excuse her These are sincerely held beliefs that are causing a significant amount of stress and anxiety. He said defence, turning Kevin Downy didn't directly request an excuse all but so said, he wouldn't stand in the way of it. Santa Clara University law, Professor Ellen Crates, Bourgh, says boats its potentially had a lot to lose by keeping this jure. Where she is less concerned about whether Elizabeth HOMES would be incarcerated after this trial, the defence may be thinking she may finding the defendant guilty. She may be finding the evidence of guilt more compelling, but the governments you're gonna be worried while she, find the evidence compelling her religious beliefs may prevent her from ultimately casting their votes for Gill both I said something to gain and something to lose by this particular jure soldier. Number four was dismissed she's. Now this
in order to leave the trial according to Crates Burg, it's something the court will have to keep in mind going forward wearily a few weeks. To the trial, and we ve now lost our second jure. It's not great Rama yeah, but when everyone's gonna be very mindful of the fact that jurors are starting to leave, it seemed everything was ready to move forward, but when german of our forests replacement alternate number two was brought in. Surprisingly, happened to raise similar concerns. Alternate number two began with a reminder that free the beginning she told the court. English wasn't her first language, She said she worried she could make a mistake because of this, and the stakes were simply too high to take that risk. It's her few
church. She said pointing to Elizabeth in the courtroom both used the word, the future of Elizabeth HOMES and just the use of that word. What sort of interesting to me that they both used. It bears the case, became more significant and they became more involved. The enormity of wet there are being asked to do or will be asked to do, starts weighing on then judged on. I told alternate Jura number two. It was normal to feel nervous. He reminded her what she'd sat Injurie selection about the language barrier. I think you told me your following things you're able to understand. He said he told her presentation was vital. This is country created from immigrants and we respect and enjoy our communities that are made up by this rich, rich collection of individuals. He said she'd be serving the community by sitting on the jury. You fell most that music should be playing in the background with the patriotic but heartfelt conversation,
judge implore. The journey, the fact that the Jura hasn't first language, that's not english only bring an additional richness to the trial and is known, The door was able to understand all the testimony which she said. She was that that Europe should willing to unable to participate on the jury. He also told, turn: it Jura number two. As he told the excuse Jura before her, not concerns about punishment as it, her job to decide facts, you may not. I'd punishment and anyway, that's forbidden, he said Does that, give you some more confidence or design Give you some reassurance about your continued service. As a judge, Davos asked yes, sir she responded decide. Her concerns. Everyone agreed alternate. Juror number two would stay. Taking the play, subject. Number four years Ellen cried spoke again. We still have
three alternator laughed and able to serve. If jurors have to me and the judge, be very careful going forward about whether or not jurors are going to be excused you're? Not so this case is a long way from any kind of mistrial undisturbed. Was only gonna become an issue when we start getting to the last twelve years, then we have no more alternate. The jury issues were settled. The defence wrapped up it seemingly endless cross examination of their noses. Former lab director doktor, Adam Rosen Dwarf, which went on for the better part of six days. Defence attorney. Lance Wade tried to downplay Doktor Rosen dwarfs warnings ahead of the Walgreens launch, calling it a soft lauch for friends and family. Those are patients. Doktor rose indoor forcefully responded later telling press Peter John Bosniak. Soft large was
not a term he'd, ever heard, used in reference to medical or laboratory testing wait raised it's about. Why rose endorse left therein house? Was it because Something problematic was going on there or because he got a more lucrative offers. Somewhere else rose. You have said it was question of my integrity as a physician not remain there and continue endorsing results that I essentially didn't have faith in, the redirected. The prosecution, ass doktor rose indoor to compare as experience at six labs and his thirteen years to his time. Therein owes include in places. He'd worked out after their knows where the problem, that you saw their nose in line with what you would expect to see at any laboratory. He was asked. No, he answered they worse than that. Yes, he answered any other laboratory. Did you ever resort to forwarding evidence to your personal email account
because you worried about future investigations into lab practices. No, but it did and fuelled over this line of questioning, saying the government violated or previous ruling, in which both sides agreed not to question rose indoor. If, on his experience at non thereunto slabs, you and on ring the bell with the jury. Wait argued the damage. He said already been done Judge Davos seem to have lost patience to warning, he didn't want to see a many trial the jury, had endured five days of examination already weight, spawned? I think we are Have your honor judge, Davos ultimately defuse the situation by telling the court to strike the prosecutions. Last question and rose endorse reply to it from the record. It was
interesting. The judge dabbler started making comments about the length of his testimony so little bit out of character. For this judge it's always done in a very polite manner, but I think it expresses what everybody else felt of have more than amply explore the issues and attack the credibility of this witness. The whole thing came as a surprise to sixteen year old, Emma Rogers, who sitting in court with her mom watched in all unfold, and I thought I, would be very like hands. Folded? Was the very serious court procedure the common people realize sarcastic, and, like my jokes, I think it was MR wait. He said can you confirm that this email sent in September came after this email that was sent in August Doktor Hanson workers- yes September, does come after I will not allow the other guy
attending the trial as an assignment for her government class at nearby LOS Gauchos high school. We had this thing called political participation where we were supposed to observe. Basically something having to do with the government and that The sum of the english teachers have have actually assigned your podcast, the drop out as like assign listening, and so I just got down brilliant zooming leave my project, but that's not Emma's only connection to this story in the atmosphere. My high school. We ve had, of course, MR our shields as I former biology teacher he retired last year, each on both Algeria and biology honours and he Tyler Shots, his father and, of course, George George sources. Sorry, that's right. Son of their board member George Shawls and the Father of knows: whistleblower Tyler Schulz was about oh gee teacher at Amis School. It's the kind connection you see a lot of in Silicon Valley
such a monumental story unfolding so close to home Emma says she can't help, but imagine the longer term implications for her community you're a year. Per se and living in Silicon Valley right now. What will the take away be for people like you writing? Definitely she gets. People are gonna, be like, while a company can do something that bad biggest experts pretty much accepts ITALY's violence that light but she's guilty. I got some people I am sure that will need some people think that maybe they can start their own fraudulent companies some days without doubt be backing and Egyptians convicted. Then, we'll think like. Ok, there is others its justice. You have like a fraudulent about saving the punishment. This is bride. Milky hosted ABC Daily NEWS, podcast start here, more drop out in a minute, but first a quick reminder if you're looking for a daily recap at today's news Update on the Elizabeth HOMES trial join me over
start here, the daily podcast from ABC News again that start here available, where ever you listen The story of their nose and Elizabeth HOMES has been unfolding in Emma's backyard. It's been hard. Look away this week from the other big tack and start up stories unfolding in our collective backyard from the Facebook. So blower coming forward. I'm here today because I believe facebooks products harm children, stoked division. And weaken our democracy too allegations that start up. Ozzy media faked its numbers, while soliciting investors as new, times, media columnist, Ben Psmith reported accordingly, times the company's chief operating officer, impersonated a Youtube executive on a call with Goldman Sachs, while opting to raise money from the investment Bank, Carlos Watson in OZ, ease cofounder appearing in an interview on CNBC drew compared,
hence to Elizabeth HOMES and therein ATLAS. Were there any other occasions where investors were given misleading information, or was that a one off event beggar I hope, and I believe that that was a one off event. I think it's completely inappropriate and not thoughtful these kind of comparisons that there are those unite, but ass? He did some of the allegations, but some of them like the sea. Oh, oh impersonating, a Youtube ploy are undisputed. Much like fair knows: Ozzy seem to thrive in a culture of pr and height until it didn't and it not a stretch to wonder how Elizabeth HOMES fits into the larger story, weather he's an anomaly or an index. Or of something bigger. I think that the people who would like to position Sarah knows, as a unique exception will fall. Evidence to make that case, Roger Magnum spent thirty four years, investing in companies
the notion that you could raise hundreds of millions of dollars for a medical testing up and run by The person under the age of thirty was something that would have been vanishingly unlikely prior to two thousand. I didn't seem out of place in environment of the first decade of this century. Acme was an early investor and facebook and adviser remarks October A co founder of prayer equity, firm elevation partners, and he was ouch early on to invest in their knows today, back he calls himself an activist he stepped away, the firm he cofounded and he's the author absolved waking up to the facebook catastrophe. I realise that the successful investments coming up the valley. We're all gonna. Have these predatory business miles with ridiculous amounts of capital against income. Statements that might never generate a profit and that cause me to tell my partners
I've pass Mysel biting. This is not a culture. I'm comfortable and me, you guys, hang around! God bless, I mean good luck enjoy it. I works out. Well and obviously it worked out fantastically, but it was not something I was comfortable with. He says to really understand the culture of Silicon Valley today and how therein spit said you need to look at history, I think Silicon Valley is having had three sociological errors, so that first era, which really ran from nineteen fifty six until the late seven's was dominated by the government, is the primary customer service, military and space for the most part or going to the man counting on Nepal. Thirteen is go on in the seventies, we saw the beginnings of a hippie value system.
Coming into Silicon Valley, began with Atari. Beyond your wound, streams discover authority was then fall by January. Twenty four apple computer will introduce Mcintosh and it was really interesting- was a detour surprisingly compatible straight lays. Does the space programme for for their idealism, their desire to make the world better with technology meshed perfectly with the counterculture folks. They built a Torreon, an app heading into the late Ninetys? It was also expensive to start a tech company and there were lost of barriers to entry, the companies had to spend between two hundred and two hundred and fifty million dollars on infrastructure just to launch a website and cause of that the average age. The entrepreneurs is pretty old because you were not gonna trust, a hundred and fifty million dollars to a kid. But after the
internet bubble burst in the early two thousands magnum. He says everything changed: the limitations that engineers had been under for the prior fifty years, which were limitations of processing power memory, storage and ban, began to evaporate. So, instead of requiring a hundred fifty million dollars to launch a product it was an American Express Carter. These anybody could do and it turned out everybody did every He did polluting Elizabeth Hounds and another drop out from across the country named Mark Zuckerberg, just as Mark was founding Facebook in two thousand for Elizabeth was Getting there are no soft ground not only were the barriers coming down, but the culture, was also changing according to MAC to me, and suddenly these young innovators were exactly what investors wanted. The people make
the investment they were attracted to a certain kind of person who really focused on size, speed and efficiency. The notion was moving fast, you possibly can guess biggest passport cap and don't let any obstacle get anyway. That became prevailing culture of entrepreneurship in Silicon Valley. This culture of bold and disruptive entrepreneurship, very much present according to magna me when he says a friend on their noses board. Approached him to invest in the blood testing start up explained why when I was likely to do because I really didn't do healthcare say now. This is so great. You gotta look at mega. Ok, great gimme, the pitch ass. We walked me through the sliding and the idea was that good and take a drop of blood.
It was gonna, revolutionise medical testing cause you're, going to be able to identify all these incredibly terrifying diseases, and because it is just a drop of blood you're, going to get people tested way more often and therefore was gonna radically transformed public health. Now I am not, invest your medical devices, but I had worked a long part of my career, any firm that was huge in it, and so I bad at least been exposed to these companies. And the thing I know is that when you get a blood test they take files of blood these guys we're going to go from that down to a pinprick without any intervening steps there just can do this all one shot and I went ha. I can't speak for medical devices, but I know that in my world technology that's not possible that you have to Make incremental approaches. Can you get there in serious steps?
you're in a room stretch the anonymous port straight. There were broken the code I set my friend. Well, that's something that in my world I would look at with graces. Should I be out we're on top of that go. Well, God bless below I can do, but others dead and Magnum. He says there knows played right into the group. Think of the moment. I mean it would have been great if it worked, but people started leave this notion than if you raised enough money and you improved. Fasted success would be Self, fulfilling prophecy that you would be able overwhelm any challenge. This is Zack principle that went into goober its Zack principle that one, two we work. There is An argument from Elizabeth legal team that she couldn't have deceived investors, because these were highly sophisticated people. They I've known they were taking a risk. What do you say to that
I would say, she's correct that these people pretend to be highly sophisticated. I think those people allowed themselves to be done. And that in no way absolves her of responsibility for the thing she said, or things did block your page money invitation chance. That's the investment costs. People lose money all the time, but you not allowed delight people, You're not allowed to pretend you're doing one thing. When your ass, and doing something quite different there very clear laws on that and foreigners appears the way of that line nosed received some of the biggest checks from the likes of Rupert Murdoch and the Walton family, heir to the Walmart fortune, not sophisticated vent. Her capital, biotech investors, Agnes believes another fundamental shift: work to Elizabeth advantage, interest rates that is cost of borrowing crash. After
dot com bubble burst and again after the fact actual crisis. This MT investors had access to free flowing, cheap capital, and it end finding a home in what were promising to be high growth companies like Farragos, back philosophy, Entire did not exist until, the late nineties before that people really careful, but when they put their money special than she got will feel. May they may mistakes but being lay nineties enough when you start to put the phrase dot, com and the tail end of any decision. The word for an industry and so passed. I comment on that. You know that was the beginning of fantasy land. In fact, the amount of money flowing into companies from the venture capital community went from roughly thirty billion dollars in nineteen. Ninety, according to the National Venture Capital Association to a staggering two hundred
twenty billion by two thousand, and today those numbers continue decline to more than four hundred seventy billion dollars and with it trial of Elizabeth HOMES under way ahead? full of note. Adventure investors have recently said, Baroness, is not indicative of the overall culture of Silicon Valley. I ask magna me what he thought about this position, He says Elizabeth is unique for some reasons but he also see similarities between their noses business model, raise a lot of money to do the impossible that isn't that far from the rest of Silicon Valley, Magda me does it see any of this ending? While so and values in incredibly. Male dominated culture, and if I were they I'd, say the same thing right. Your truck. To make their nose appeared be an exception, and in some ways it is an exception, but
In many ways it's just the prototype for a lot of businesses that followed it. Now it had the miss of not getting to a large enough scale before the ship, Read was exposed the thing about Elizabeth Humped, then I look, and that gives me great open. For he met me, you wouldn't have had to go back more than five years when it would have been impossible for a woman to raise that kind of money, even for a really great idea, but and had been raising money for bad ideas for a really long time, and I thought well There is definitely of language, because I'm really happy to see that women are getting a chance to do this. I feel the same way about it. If it turns out it was a scam, biofuels in way about, which is that that actually represents a form of social progress. What Do you see the media playing in all of this? There is a cold of the found that has developed in Silicon Valley, aided and abetted by
the media and that's relatively recent. It was axiomatic that most big venture firms brought in for national management when they investment, because the assumption was that they would be putting in the big capital investment they would need somebody that they knew trusted and who had the experience to finish the large amounts of capital no longer the case not to me Does it see any of this ending while entire saga reminds him of an old joke. He heard during the dot com bubble but from the niceties of the little boy who comes along and says mom, just sold the dog for a million dollars. A mom says why diesel Sparky the kid yeah for a million dollars. A mom goes mainly on the union, A bank account where you can put it is. Oh, I dont the bank account. I treated
Barkie for two half million dollar cats, that is the world of subcontracting. The price is fantasy, In the end, what you I was dogs and cats. Eventually we're gonna price. These things as dogs, cats, when I have an idea No, I'm I'm old enough time. I've given up trying to prognosticate and ice spectre, was with homes, will be very fortunate in that shit. Still be relatively young and people of forgotten who she was begun. Her story will be, Subsumed by much bigger, much crazier stories so I asked Magda me: is there any one change to the current ecosystem that could prevent a similar situation from coming up again in the future, a market collapse as the only thing you have to punish? Everybody is playing the game today we have punished them all at once. The ass
he dropped his plan money after this guy genuine their market. That last swine and after a wipeout, townspeople meeting, The people were investing silk and I did a no no other culture, the one therein, so whenever it is, has to go on long enough that it. Creates a window for a different culture to develop and what does not Let me think will happen if Elizabeth found not guilty let's send other company is a signal they can act. Similarly, that their nose think that signals long. I mean that horse is out of the bar people. In doing that- and you know I don't fall the case close enough to know whether she's gonna be convicted or not. But I will Do I believe that she's guilty absolutely and do I believe that, the people who gave her money did poor diligence absolutely too. I believe the corporate partners work with her behaved in a way that might from its own legal scrutiny? Definitely
guilty or not magnum. He believes the emperor has no clothes business model that created there- and I was- is here to stay until the market fully implodes some day will see how true that really is coming up on the drop out Elizabeth homes on trial. Through the course of this trial, we ve heard a lot about their noses relationship with pharmacy chain Walgreens. Next week we hear about its go faded deal with another major client, Safeway ubiquitous supermarket chains with two hundred seventy six locations in California alone. Mister bird is a business girl, retail legit and healthcare visionary speech
Bird Safeway CEO of twenty years, once one of Elizabeth biggest supporters and highest profile potential partners takes the stand with damning results. I've had a very close relationship with still further Safeway dead. Fairness ever end up rolling added services, unsafe waste eyes. No Elizabeth homes did not respond to multiple requests for interviews. Comment. Dropout Elizabeth homes on trial has written and reported by Victoria Thompson. Taylor done victorious the executive producer dealer and I are the producers for a busy audio Susie Lou is producer and Madeline would ease, associate producer are feel, producer is dear, Athens bravely sees business unit are associate, producer is Victor, are donors and our production assistant is laying win mixing in scoring is by Rockaway and Evan Viola. Evan also compose the music for the drop out are aren't working is by teddy flags at chips, and why and Cedric HANS dad for ABC Audio was Alessi is executive producer special thanks, Josh cohesion, Elizabeth Rousseau, Dan Rosenberg irrecoverable and station Sheesh go hey if you're into the drop out. If you like great investigative journalism,
taking a headline when getting the real story then check out start here. It's a daily news, podcast from ABC News breaking down a shameful are the biggest stories of the day on about twenty. That's from politics: what's your mindset walking into a meeting with a former KGB agent tell you all that monitor over to our biggest investigations, someone was being sought every twelve minutes to Rebecca Jarvis, yes Rebecca from this podcast explaining the business world in a way that actually makes sense, lumber went up in the pandemic, because everybody collectively got the same idea. I'm bride milky from ABC Muse, and my mission is simple: to get your smart fast, so start here, listen on Apple podcast, revenue. Listening now,.
Transcript generated on 2021-10-17.