Everyone into the ‘LifeBoat’! Episode #754 of the long-running (35 seasons!) series ‘The Simpsons’ is a complete send-up of The Theranos Story in 22 minutes. This episode, which aired in the US on 29 October, transmutes Elizabeth Holmes into Persephone Odair, the young college dropout creator of a can-sized device that converts salt water to drinkable fresh water. The retrospective documentary and ‘news stories’ framing the tale trace Persephone’s and LifeBoat’s rise to fame and riches, then their fall. Set in SimpsonsWorld, the chief financier is the owner of the local nuclear plant, the zillionaire Montgomery Burns, whom she marries. There is an endless supply of in-jokes and jabs, such as Persephone at a TEDtalk saying “The doubters call this goal impossible, but I prefer to say, ‘I’m possible.’” (=”First, they think you’re crazy…”) and the blatant coverup of the technology (=Edison Lab, but here, if anyone drank the water, a competitor could steal the aqua-tech from the urine). The ‘can of oats’ converter, Persephone’s backstory, and the water, of course, are complete fails. Lots of celebrities make guest appearances, but not Judge Edward Davila or John Carreyrou, the author of ‘Bad Blood’. The plotline of “Thirst Trap: A Corporate Love Story” is featured on the WikiSimpsons here and here. It can be viewed on various streamers and can be purchased on YouTube. SFGATE, Entertainment Weekly, Photo from SFGATE screenshotted via Fox.
Could DocGo be another Babylon Health or Theranos? CEO resignation may be only the start of their troubles.
Another ‘fake it till you make it’ healthcare enterprise? Only a short month ago, things were fair and warmer for DocGo. They had recently transitioned from a mobile Covid-19 testing company under various contracts back to their original purpose–a telehealth/RPM, mobile urgent care, disease management, and medical transportation provider, with mobile vans covering the NYC metro. Founded in 2015 by Stan Vashovsky, now chairman, new CEO Anthony ‘Al’ Capone had successfully leveraged their mobility into a $425 million no-bid contract with New York City to provide medical services and more for over 19,000 migrants flooding into the city and being housed in the surrounding upstate counties. The company also plumped that they were up for a multibillion-dollar Federal contract with the US Customs and Border Protection agency.
DocGo’s stumbles starting in July continuing into August in both medical and non-medical services to migrants housed upstate put them on the press radar, notably the capital’s paper of record, the Albany Times-Union, in the weeks after their bright Q2 report [TTA 10 Aug, 16 Aug].
On 14 August, some basic checking by the Times-Union uncovered that Mr. Capone’s masters in computer science from Clarkson University not only was never granted but also he never attended Clarkson, according to the university. This degree claim was included in the SEC filing and touted to investors by him as an MS in computational learning theory, a subset of artificial intelligence. His undergraduate degree from SUNY Potsdam was not confirmed by that university or by his spokesperson. Mr. Capone had worked for DocGo since 2017, previously serving as president, chief technology officer, and CPO, becoming CEO only this year. In nearly six years, no one had checked his credentials.
On Friday 15 Sept, Mr. Capone resigned from DocGo, citing typical ‘personal reasons’. His apology and taking ‘full responsibility’ did not save him. He has been replaced by Lee Bienstock, the company president and chief operating officer. Mr. Bienstock came to DocGo from Google in 2022 and holds an MBA from Wharton (University of Pennsylvania). Times-Union 15 Aug, Release
But…there’s more.
- The no-bid NYC contract was contested two weeks ago (6 Sept) by the city comptroller, Brad Lander. Mr. Lander, like a corporate CFO, can send back a contract to a city agency, in this case to Housing Preservation Development (HPD). His review cited insufficient budget detail, possible inadequacy of the vendor to provide services, and a few other important items. Unlike a CFO, Mr. Lander’s office is largely toothless and can’t say no. HPD plans to sign off on it anyway as DocGo is quite tight with Mayor Eric Adams. Mayor Adams spoke at the DocGo in-person Investor Day on Tuesday 20 June about their partnership with the city. Adams has already stated that “We are going to move forward with it.” FierceHealthcare
- According to the New York Post and Fortune, New York State Attorney General Letitia James and Gov. Kathy Hochul have launched investigations into the company, focusing on how DocGo could contract for logistical operations to transport, house, feed, and care for these thousands of migrants in New York State, an outcome of DocGo’s failures reported last month by the Times-Union.
DocGo is a public company traded on Nasdaq under DCGO. Share prices fell 12% on Mr. Capone’s resignation but rebounded to about 7% down off off the recent $10 high after their mid-August reporting. Seeking Alpha DocGo went public through the then-popular SPAC method with Motion Acquisition in November 2021, raising $158 million in cash at that time. Unlike other SPACs, their share price generally hovered around the introductory $10 pricing and recovered fairly quickly from two bad dips to $6 in May and December 2022. NS Medical Device
DocGo’s response to the AG’s office and to the comptroller, the politics of the New York State and City crisis around thousands of migrants flooding housing, the streets, and schools, whether their contracts continue, and their internal financials will determine DocGo’s viability in the future. For those of us with long memories though, DocGo is repeating a pattern: first Peak Hype Altitude, then the Pileup of Problems on their wings, finally crashing to Total Hull Loss. Those are the ominous parallels with Theranos and Babylon Health.
Echoes of Theranos in Babylon Health? And additional information on GP at Hand.
Was Babylon Health all a fraud, and where would it place on the Theranos scale? There is an excellent article in MedCityNews that if true, exposes Babylon’s technology as, at minimum, far less than ever claimed. From the perspectives presented, their crash was inevitable.
MedCityNews returns to the original debunker, best known to our UK Readers as @DrMurphy11. In February 2020, while Babylon rode a tide of UK hype (not yet in the US), Dr. David Watkins, a consultant oncologist, revealed himself publicly via BBC’s Newsnight [TTA 27 Feb 2020]. He had been documenting Babylon’s chatbot diagnosis problems in GP at Hand to the government’s MHRA (Medicines and Healthcare products Regulatory Agency) and the independent CQC (Care Quality Commission) since 2017. Scenarios offered to the chatbot missed events such as probable heart attack offering instead panic attack (for a female) and gastritis (for a male). According to MedCityNews, Dr. Watkins had earlier debated a Babylon representative in a debate at the Royal Society of Medicine in London, presumably leading to Newsnight host Emily Maitlis interviewing both Babylon’s Dr. Keith Grimes and Dr. Watkins. Dr. Watkins also received emails from past and current Babylon employees confirming that the “AI chatbot”, the Probabilistic Graphical Model (PGM), was not built on any good quality data.
Cardiac activists in the UK and Canada (Carolyn Thomas, the “Heart Sister”, also listed in our sidebar) also criticized how Babylon’s chatbot ‘diagnosed’ possible events at the time. [TTA 9 Jan 2020].
Hugh Harvey, Babylon’s former regulatory affairs head from 2016 to 2017, was also interviewed on Newsnight in 2020. After the Babylon failure, he spoke to MedCityNews about how the AI software was ‘jury-rigged’ to impress the BBC. After he left, Babylon continued to misrepresent the accuracy of its AI system. “To publicize the accuracy of its AI system, the firm set-up a promotional event where it pitted its system against the Royal College of General Practitioners exam used to assess trainee doctors. Babylon conducted this test itself rather than turning to an independent body, and Harvey claims that the company cherry-picked the questions included in the test….Babylon announced that its AI scored 81% on the exam, surpassing the average score of 72% for UK doctors.”
What was at stake? Babylon got where Theranos never did. A year later, it went public via a SPAC in October 2021 at a valuation of $4.2 billion, with the SPAC organizer Alkuri providing $575 million in gross proceeds to Babylon, including $230 million in a private placement from investors such as AMF Pensionsförsäkring and Palantir Technologies. Two years later, its total hull loss was valued at $5,000.
Some of that money, more than $30 million, went to buying Higi, a health kiosk placed in supermarkets and drugstores that is still in operation in 6,000 locations that uses Babylon’s technology. By early 2023, Higi had separated itself in its public releases from Babylon. It’s unknown how the US Chapter 7 will affect the Higi operation.
Now the commentaries by Dr. Watkins and Mr. Harvey are based on their experiences from some years ago. Babylon could have then created a reliable AI system in GP at Hand and their other diagnostic technologies. But generally, it’s very hard to fix the aircraft as it’s being flown. The situation usually winds up in an episode of ‘Air Disasters’ (‘Air Crash Investigation’ in UK). For those who believe that the problems were never fixed, Dr. Watkins’ analogy would apply. “[Babylon founder and CEO Ali Parsa] should spend some time with Elizabeth Holmes”. Ms. Holmes, as we know, is serving her time in Bryan, Texas for about the next 11 years. That would be an interesting albeit improbable conversation indeed.
Interestingly, over one month later, there’s evidently no one left at Babylon Health who can pull down the website. It’s fully operational save for this banner on the home page:
Babylon’s US clinical services and appointments are no longer available. For details about your health plan benefits and to find a new provider, contact your health plan.
The investor page, including the stock ticker symbol and last price, is intact. Will the last person out the door turn out the lights and turn off the website?
Additional information on GP at Hand (UK)
This Editor while away sought clarification from Alvarez & Marsal’s press office on the status of GP at Hand. GP at Hand is not part of the administration. The ownership contracted with Babylon for the app. According to their website, there are three partners: Dr. Stephen Jefferies, Dr. Matt Noble, and Rita Bright. How this arrangement will continue is not disclosed.
This dovetails with their response:
- GP is a completely separate 3rd party partnership that is a GP practice that contracted with the Babylon Group.
- It therefore hasn’t gone through any insolvency process and is still contracting with Babylon Healthcare Services Limited (which has remained outside of an insolvency).
- The GP at Hand practice wasn’t part of the deal because it couldn’t be as it’s not part of the Group.
Previously: Babylon Health in UK administration, assets sold to eMed Healthcare Ltd.
Theranos restitution status: Holmes’ defense claims $250/month repayment *after* release is unfair
Is this thinking ahead or a high-priced legal exercise in futility? The US District Court decisions by Judge Edward Davila pertaining to restitution were clear: $452 million is owed jointly by Elizabeth Holmes and Sunny Balwani to 14 victims, including Safeway and Walgreens [TTA 31 May]. The question is how it will be repaid. The original order by the District Court for Holmes stated only a $25 per month payment while she is at the Bryan FPC. The Justice Department has now requested that the error be amended to now stipulate a $250 per month payment, or at least 10% of her income, after completion of sentence. Holmes’ legal counsel has now filed papers objecting to this assessment, which will take place at least nine years in the future. They cite her “limited financial resources”.
It seems that Holmes will have more trouble paying the $25/month from Bryan, as her financial resources will be even more limited. By some estimations, $25 per quarter is the average earning from prison work. What’s also apparent: her legal counsel is costing her much more than that just for the filing.
Balwani, on the other hand, has been ordered to pay $1,000 per month after his release. The District Court also fined him $25,000 for reasons not disclosed in news sources. Holmes has not been fined.
One wonders how the lenders will be repaid–proportional checks for pennies? Monthly or quarterly? This Editor is sure that the Murdoch family interests will be waiting eagerly for the payment, while the investments for Murdoch and most others were written off years ago. The small investors whose investment advisors bought shares on the secondary (resale) market get not even that penny.
Much has been made of her net worth circa 2015 when her Theranos stock was valued on the bubble at $4.5 billion, but that was then and this is now. The Feds continue to search for hidden assets held by both Holmes and Balwani. CBSNews, NY Post
Mid-week roundup: Holmes turns herself in, ChatGPT as good ER explainer, VA Spokane to cut staff to pay for Oracle Cerner EHR problems?, former Cerner campus conversion
Holmes’ time at Bryan begins. Today (30 May) in a Texas morning, Elizabeth Holmes self-surrendered to the Federal Prison Camp (FPC) at Bryan to begin her 135-month sentence (11 years+). With good behavior and enrollment in certain programs, she may serve about 85% or about 9.5 years as No. 24965-111. The ‘shakycam’ video link here from Sky News (scroll to 3:18) initially from across the street then at the fence shows her delivery in a NY state-plated Ford Expedition to the facility parking lot. Her parents give her paperwork to the officers, then she with the officers walk into the camp facility, with a goodbye wave by partner Billy Evans (ballcap by the car). After all the drama, the denouement is bog-standard save for the paparazzi. She is wearing glasses, a tan sweater and blue jeans, the latter two which will be exchanged for a uniform. Many might be surprised that the prison camp has green grass lawns and trees, without towers or impenetrable fences. This is a low security facility for 650 women on 37 acres, but it remains a prison with all the schedules and restrictions that entails.
Her appeals to the Ninth Circuit Court on her conviction and sentencing, with now the restitution, continue as does the puzzle of how to compensate the victims identified by the US District Court as being owed $452 million payable jointly by her and Sunny Balwani. The order of restitution is here (PDF) There are a dozen identified financial victims from the relatively small (the Eisenmans’ $150,000) to the $125 million of Keith Rupert Murdoch. Both Safeway ($14.5 million) and Walgreens ($40 million) are identified separately. At this point at Bryan, she will be earning between $0.12 and $1.15, earning perhaps $25 every four months based on older data. According to the BBC article today, half of that will go to her victims, said Randy Zelin, a professor at Cornell Law School. The Feds will continue to scrutinize for hidden assets. Mercury News
Our Theranos Saga that started in October 2015 now endeth here, except for news on appeals or changes in circumstances.
On a somewhat lighter note, this non-paywalled Insider article charts the up and downsides of using ChatGPT as an explainer to patients in the ER/ED. Joshua Tamayo-Sarver, MD, has been an ER doctor for almost 14 years as well as a VP of innovation for two healthcare tech companies, Vituity and Inflect Health. He recently started using ChatGPT4 as an adjunct to treatment, to explain difficult emergency situations to patients and family in simple non-medical language. Dr. Tamayo-Sarver’s article in Fast Company provides a solid narrative of how the simplicity and empathy of ChatGPT’s explaining treatment (in this case of a 96 year old woman with lung edema and dementia) works and helps the staff de-escalate the situation developing with her children and give them a chance to start her correct treatment determined by the doctor, not ChatGPT. (What was her outcome?) As the doctor explains, working with ChatGPT is inadequate for diagnostics, but adequate for ‘hungover intern’ level actions: taking patient history, creating long-form communication for patients and staff, and explaining highly technical information with empathy and compassion.
Will the Spokane VA location which proved to be The Last Straw for the VA with Oracle Cerner from October 2022 pay for it with cuts in staff? This year, Mann-Grandstaff VA Medical Center is projected to run a budget deficit of about $35 million. In a March email, the Mann-Grandstaff director Robert Fischer stated that the Northwest VA VISN (regional) director said this will require Mann-Grandstaff to cut about 15% of staff. Yet the VA chief of VA health care, Shereef Elnahal, has denied this. The controversy around this has prompted VA’s secretary, Denis McDonough, to issue a statement that he will look into these reports but stopped short of confirming that no staff would be cut. Spokesman-Review (Spokane) Hat tip to HISTalk 31 May
Cerner’s Continuous Campus in Kansas City, Kansas, apparently will be redeveloped. Two local developers are in contract with Oracle to buy the empty 63.5 acre property with twin nine-story office towers. Last week, local authorities approved rezoning with an amended master plan. Developer plans are to convert the north tower to 224 to 232 market-rate apartments above ground-floor commercial space. While the plan for the south tower is to stay as 660,000 square feet of office space plus parking, no interest has come from lessees. According to reports, Oracle’s purchase of Cerner and shutdown of many operations in the area dumped 4.1 million square feet of real estate in the area. Fox4KC
Breaking & updated–Time’s Up! Ninth Circuit Court to Elizabeth Holmes: proceed to Federal prison. District Court: surrender 30 May, pay $452M in restitution with Sunny.
Breaking/Updated. With the bail pending appeal denied, it was back to Judge Davila and the US District Court to determine a new surrender date to a Federal penitentiary. That date is now 30 May. The Ninth Circuit Court of Appeals ruled Tuesday that Elizabeth Holmes’ appeal did not meet the standard for a further delay of her sentence–that it raised a substantial question of law or fact–and that her motion for bail pending appeal was denied. The ruling by the three-judge panel was brief and is here (PDF) with the pertinent text below:
Appellant’s motion for bail pending appeal (Docket Entry Nos. 36-38) is
denied. Appellant has not shown that: (1) the appeal raises a “substantial question”
of law or fact that is “fairly debatable,” and (2) if that question is decided in
appellant’s favor, the likely outcome is reversal, an order for a new trial on all
counts resulting in imprisonment, a sentence that includes no term of
imprisonment, or a sentence with a term of imprisonment less than time served
plus the expected duration of the appeal process. {USC and Hardy references snipped}
The existing briefing schedule remains in effect.
The appeal remains ongoing. The Ninth Circuit could require a new trial or a fresh sentence, but Holmes will be in prison serving time while the appeals court reviews it. Her chances of receiving any changes as a result of this appeal can be characterized as slim to none.
The defense requested self-surrender on 30 May (2 weeks) and Judge Davila granted it two hours later today (Wednesday). That motion is here with Judge Davila’s order is here. The judge had recommended the Federal Prison Camp (FPC) at Bryan, Texas, but a final assignment confirmation is to be confirmed by the Bureau of Prisons (BOP). Mercury News
Also Tuesday, Judge Davila set the full amount of restitution to those defrauded by Theranos as $452 million. Both she and Sunny Balwani will be jointly liable for the restitution amount. It is higher than the $381 million the judge used for sentencing purposes [TTA 9 March] but this Editor notes that the AP stated that it is joint. There is an additional $25 million in promissory notes signed by Holmes which are part of a civil action [TTA 25 March]. How this restitution breaks out will require an examination of that restitution decision.
One wonders if Liz or Elizabeth (pictured above) will be the woman serving and paying off this amount, if one believes the incredible tale by Holmes in the New York Times two weeks ago. It’s a lot of bag lunches. Mercury News
Breaking: Elizabeth Holmes’ surrender stayed by 9th Circuit Court of Appeals
This just in. As expected, Elizabeth Holmes will not be surrendering to Federal prison tomorrow, 27 April. Her defense filed yesterday for an emergency stay in the Ninth Circuit Court of Appeals. The court granted it on 25 April, yesterday. Since she was free on bail at the time of the filing, this emergency stay keeps it in effect until her motion for continued bail pending appeal is ruled on.
The PDF of the two-page notice is here.
While the surrender will be stayed based on the court’s rules, if the court follows the similar circumstances of Sunny Balwani’s stay and appeal, Holmes will have perhaps a month more freedom on bail before a further extension of bail is rejected. The main 100+ page appeal based on prosecutorial misrepresentations and actions by Judge Edward Davila in the presentation of evidence, plus oversentencing. will be reviewed by the court [TTA 19 April], which may take about a year. Neither the extension of bail or the appeal are given much chance of success.
Now what happens? The Daily Mail revealed that she and Billy Evans are living in an oceanfront San Diego rental, with their two children William and newborn Invicta, born on 9 February in San Diego. The residence is supposedly priced at $9 million. They have departed the rental in Silicon Valley and moved to Mr. Evans’ sunnier home town where the family will remain. Evans and his parents are readying a $3 million townhouse. They will be caring for the two children while the inevitable long trip to Bryan, TX–if Bryan will be the Federal facility–happens. To be updated.
Theranos’ Sunny Balwani reports to Federal prison
Ramesh ‘Sunny’ Balwani started serving his sentence at a Federal penitentiary in California. He surrended Thursday afternoon and will begin serving his 12 year and 9 month sentence at the Terminal Island Federal Correctional Institution (FCI) near San Pedro. Last December, he was convicted on all 12 counts of fraud and patient fraud.
His defense is continuing to appeal his conviction but lost on 6 April in the 9th Circuit Court of Appeals which ruled that Balwani would not remain free while appeals are pursued. Additionally, he is appealing his assignment to the Atlanta federal prison (USP). Both Terminal Island and the facility he would be sent to in Atlanta are classified as low-security facilities. However, Atlanta has a history of corruption, inmate suicides, and abuse, which may come from the fact that it also has a high-security facility. Atlanta was investigated by Congress in 2021 and 2022. It is also a very old facility dating back 120 years, hardly a country club or ‘Club Fed’.
Terminal Island FCI dates back to 1938 and is located near the ports of Los Angeles and Long Beach, situated on Federal land that includes a Coast Guard base. The island was a farming, fishing, and shipbuilding center and once housed Howard Hughes’ monster Hercules H-4 seaplane, a/k/a The Spruce Goose. Commercial businesses include canneries, docks, and SpaceX. Because of the prison’s location, it’s held more than its share of famous/infamous prisoners: mobsters Al Capone, Mickey Cohen, and ‘Goodfella’ Henry Hill; Watergate’s G. Gordon Liddy, LSD advocate Timothy Leary, murderer Charles Manson, and car executive John Z. DeLorean. During World War II, it was used to hold court-martialed Navy prisoners. It is relatively small as Federal prisons go and holds about 1,000 inmates.
The coverage from CNN to local media tends to be light on details and heavy on a rerun of Theranos and Balwani’s involvement with Holmes. Holmes is due to surrender next week on 27 April, unless the Circuit Court of Appeals stays the start of sentence. KRON4, CNN, KTVU2
The Theranos Two lose their fight for freedom on appeal as Federal prison surrender dates near
It was not a happy Easter weekend for either Elizabeth Holmes or Sunny Balwani.
Late on Monday, Judge Edward Davila of the Federal Court, Northern District of California, ruled that Elizabeth Holmes would not be able to remain free on bail while appealing her trial and sentence. In his 11-page ruling, he dismissed the defense claims that evidence around Theranos’ technology was not presented to the jury and affirmed that the key charges were related to financial fraud, the company’s financial status, and the false claim that the technology was validated by pharmaceutical companies. “Whether the jury heard more or less evidence that tended to show the accuracy and reliability of Theranos technology does not diminish the evidence the jury heard of other misrepresentations Ms. Holmes had made to investors.” He also noted that her defense had not introduced anything to make a reversal of the decision or a new trial likely, such as new evidence.
It’s anticipated that Holmes’ defense will quickly file an appeal of Judge Davila’s decision to the 9th Circuit Court of Appeals. However, this is the same court that denied Sunny Balwani’s same appeal last Friday. Holmes’ surrender to Federal prison is scheduled for 2pm on 27 April, a little over two weeks from now. She will be serving her 11+ year sentence at the Federal prison in Bryan, Texas unless the Bureau of Prisons changes this recommendation to another Federal prison.
Her defense has filed multiple appeals of Judge Davila’s rulings and the jury’s guilty verdict on four counts of fraud of 11 on various grounds, including errors made during the trial [TTA 15 Dec 22], with the goal of securing a new trial. Those appeals are with the 9th Circuit and could go on for years. What it now looks like is that Holmes will be serving her time in Texas while these appeals go through, not free or under house arrest. Serving time will not be easy for her in a cell with three other women and duties such as stuffing bag lunches. Mercury News (paywalled), CBS Bay Area, The Hill, TechCrunch
Sunny Balwani had a long Good Friday, receiving the bad news late Thursday that the 9th Circuit Court of Appeals denied his bid to remain free while on appeal. The court denied the appeal on the basis that Balwani had not raised any substantial questions of law or new evidence resulting in a reversal on some of the charges that would shorten his sentence. He was found guilty on all 12 counts and was sentenced to 12 years and nine months. Balwani’s lawyers now have requested from Judge Davila a new surrender date of 20 April, stating that their client needs time to get his “affairs in order”. His original surrender date was 16 March, delayed by the appeal. Where Balwani will serve his sentence is still up in the air. Judge Davila had recommended the Federal facility at Lompoc in Santa Barbara County, but the Bureau of Prisons recommended the Atlanta penitentiary which has been dogged by years of scandals, security lapses, and prisoner abuse allegations. His defense is appealing this assignment. As of now, Balwani will surrender to Terminal Island near San Pedro in Southern California in a little over a week. Mercury News (paywalled), CBS News Bay Area
Some reports have indicated that Judge Davila has finished with all his rulings, but what is still not finalized is the restitution both Holmes and Balwani must make to investors. Those rulings are scheduled for this month. The amounts being debated are largely theoretical as neither Holmes nor Balwani has much in the way of assets left. TTA 22 March
Week-end update: Breaking–Theranos lab director suing Hulu, Disney for defamation; ‘green shoots’ for SonderMind, Cognito, Vital, MedArrive; 3 in Asia; Telstra Australia’s new CTO
Key Theranos prosecution witness suing Disney and Hulu for misrepresentation and defamation. It’s not only the FTC but also Adam Rosendorff, MD, the former lab director for Theranos who quit in late 2014, who is fighting against misrepresentation, in this case a fictionalized portrayal of the lab director character. l’affaire Theranos was lightly fictionalized in the docudrama ‘The Dropout” that ran on Hulu in 2022. Dr. Rosendorff is suing both Hulu, its corporate parent, Disney, plus other listed producers, in a New York State Supreme Court lawsuit (link and PDF) for defamation. The summons was filed in New York County (Manhattan) Thursday.
While his name was not used, the lab director named ‘Mark Roessler’ in “The Dropout” was portrayed, according to the summons, as unethical and unfit. He was “shown as covering up Theranos’ fraudulent scheme, thereby endangering patients’ lives … and as otherwise unfit to practice medicine,” “falsely portrayed as a perjurer, a criminal, and of being completely unfit to practice his profession.” In the docudrama, Roessler orders the destruction of damaging lab results, falsifies records, and engages in dishonest behavior. The reality was that Dr. Rosendorff testified against both Elizabeth Holmes and Sunny Balwani in their trials as an invaluable prosecution witness, detailing the failures of the lab tests in his testimony and affidavits [TTA 1 Oct and 6 Oct 2021]. He quit Theranos on these issues and more after 18 months when Holmes and Balwani refused to correct them. “Both the media and defendants’ reckless disregard is sufficient evidence of the malice which a public figure must show to establish claims for defamation.”
Being a whistleblower ain’t for sissies. Being tagged as part of Theranos’ demise and years in endless legal proceedings broke him professionally and fractured him mentally, as revealed after Holmes’ conviction. It became grist for yet more defense appeals that failed [TTA 20 Oct, 26 Oct 2022]. Reuters, New York Post
A (remainder) sale, partnership, and funding roundup–a few green shoots of spring
SonderMind buys out the remains of Mindstrong. The deal is for the remainder of Mindstrong’s tech assets and about 20 related staff. Price was not disclosed. Mindstrong ceased operations as of 10 March and announced they would lay off 100+ employees including the CEO and CFO no later than 15 April according to their filed WARN notice. It raised over $160 million since 2014 including a $100 million Series C in 2020. SonderMind is also in virtual mental health, assessing potential patients, matching them with a therapist in their state, who will see the patient virtually or in-person. According to SonderMind, Mindstrong’s tech will add to personalized care journeys, clinical notes templates, and improved measurement-based services. SonderMind has had its own series of layoffs, with a 15% cut late in 2022. The deflation of telemental health continues. Mobihealthnews, Digital Health Business & Technology
Neurotech company Cognito Therapeutics raised $73 million in a Series B. It was led by FoundersX Ventures, adding new investors Starbloom Capital, Alzheimer’s Drug Discovery Foundation, WS Investment Company, and IAG Capital. Total funding is now $93 million. Cognito has developed an external neuromodulation device for neurologically degenerative diseases. It uses sensory stimulation to evoke gamma oscillations, which are believed to play a part in memory operations. It is concentrating on improving cognition and memory in Alzheimer’s Disease early-to-mid-stage patients. Cognito is being investigated as part of the HOPE study for Alzheimer’s Disease. It received FDA Breakthrough Device Designation in 2021 and has completed a Phase 2 trial. Mobihealthnews, Business Wire release
Vital, a patient experience software developer, raised $24.7 million in a Series B. The funding was led by Transformation Capital, with support from Threshold Ventures, strategic health system investors and Vital CEO/Mint.com creator Aaron Patzer. Total funding is now over $40 million. Vital provides real-time patient updates and messaging services for patients and families admitted to hospitals and EDs, as well as follow-ups such as appointments. Business Wire release
MedArrive, an in-home care provider, is partnering with Ouma Health, for maternal-fetal care of women on Medicaid coverage. MedArrive deploys a field provider network for in-home care including testing, assessments, SDOH, and extension of provider services. The technology includes a fully integrated care management platform. Ouma Health is a maternal-fetal telehealth service including behavioral health. Release
And some Asia-Pacific updates…
In Vietnam, online pharmacy Medigo received $2 million in Series A funding, led by East Ventures, with participation from Pavilion Capital and Touchstone Partners. Intellect, a telemental health startup based out of Singapore, received undisclosed funding from global healthcare provider IHH Healthcare for its regional expansion. In India, EHR startup DocPlix raised Rs 5 crore ($600,000) in a pre-series A funding round led by Eris Lifesciences. Mobihealthnews
In Australia, Telstra Health’s new CTO is Farhoud Salimi. He joins in April from eHealth NSW where he held the position of Executive Director, Service Delivery (CTO) among others in a 15-year tenure. Mr. Salimi replaces Russel Duncan, who retired at the end of last year. Telstra release, Mobihealthnews
Theranos update: Holmes, Balwani reprieved on surrender–for now–and Theranos’ creditors try to claw back $25M
Both Elizabeth Holmes and Sunny Balwani enter the final stages of legal actions before their respective trips to Club Fed and what used to be called the ‘rock pile’. Between late last week and today, one of Theranos’ late leaders got some additional days, weeks, perhaps a month of freedom, while the other is left hanging until April. Surprisingly, Theranos, the late company, is not actually dead as the proverbial doornail, at least as creditors are concerned–it’s as simple as ABC.
- Sunny Balwani’s surrender date, set for 2 pm PT Thursday 16 March, was delayed hours before his surrender when lawyers filed an appeal of Judge Davila’s 9 March ruling denying his request to remain free while appealing his conviction. It automatically triggered the stay while the Ninth Circuit Court of Appeals considers the appeal. Timing on this is not known.
- Balwani’s defense also appealed to change the Bureau of Prisons’ ruling sending him to the Atlanta Federal penitentiary. This prison has been dogged by scandals, security lapses, and prisoner abuse allegations. As of now, Balwani’s Federal prison will be Terminal Island near San Pedro, about 30 miles from Los Angeles. Judge Davila’s recommendation was Lompoc in Santa Barbara county, about 250 miles from San Jose. It is not known why the BOP declined the judge’s recommendation, nor why the reassignment to Terminal Island, which once hosted Al Capone. CBS News
- On Friday, Holmes was in court to delay her 27 April surrender to the Bryan, Texas Federal prison, pending her appeals. Legal observers believe this is unlikely now based on Judge Davila’s decision on Sunny Balwani.
- Before the court session, a man in the gallery attempted to serve her with a paper demanding repayment of two overdue promissory notes she signed while CEO. The now-disclosed December suit by Theranos ABC, an entity set up by creditors, was filed in Superior Court of California in Santa Clara County. It tagged her with repayment of three notes totaling over $25 million, the first two overdue:
August 2011 in the amount of $9,159,333.65, originally due 2016 and extended by the board for five years, now overdue
December 2011 in the amount of $7,578,575.52, originally due 2016 and extended by the board for five years, now overdue
December 2013 in the amount of $9,129,991.10, due 2018, extended for five years and due in December
According to the complaint, “Theranos ABC has demanded payment of Promissory Note #1 and Promissory Note #2 from Holmes, but Holmes has failed to pay any amounts on account of Promissory Note.” CNBC, Guardian
- This would be in addition to whatever is decided on restitution. As we noted on 9 March, “the prosecution is trying to establish that Holmes’ restitution should be in the vicinity of $878 million, up from an earlier estimate of $804 million. This contrasts with the $381 million that Judge Davila used for sentencing purposes, but under Federal law the guidelines for the latter differ. The prosecution is calculating the full loss of the investors “directly harmed” by Holmes’ criminal conduct.” However, Holmes’ defense is arguing that she actually owes nothing because 1) her crimes didn’t cause the collapse of Theranos and 2) that the prosecution had not shown that the investors “relied on the offense conduct when deciding to invest.” Both this and the appeal will be decided by Judge Davila in early April. Fox News
Whether Holmes or Balwani will be able to pay even small amounts to the creditors or those who suffered losses due to the Theranos fraud remains doubtful. Holmes is not married to her fiance, Billy Evans, and apparently is being supported by him and her family. Balwani may have some funds, but not $900 million.
Did Theranos collapse because of Holmes’ criminal conduct? Holmes says no–and no to investors’ claims
Restitution–and Holmes’ ability to pay–may be similar to squeezing blood out of the rock at left. In the latest filing from Elizabeth Holmes’ defense, they claim that 1) her crimes didn’t cause the collapse of Theranos and 2) that the prosecution had not shown that the investors “relied on the offense conduct when deciding to invest.” Even Judge Edward Davila of the US District Court had said in a January ruling that 1) was not established by the prosecution.
What the prosecution is trying to establish is that Holmes’ restitution should be in the vicinity of $878 million, up from an earlier estimate of $804 million. This contrasts with the $381 million that Judge Davila used for sentencing purposes, but under Federal law the guidelines for the latter differ. The prosecution is calculating the full loss of the investors “directly harmed” by Holmes’ criminal conduct, which is why (2) is important to the defense.
The next date to watch for is 17 March, where Judge Davila will rule on the restitution. He will evaluate submissions by those defrauded of their investment, with an order then specifying how much goes to which investors in proportion to their loss, covered by whatever she owns and from future earnings. The number on what’s owed may be academic. The defense has already stated that Holmes is, to put it bluntly, broke. In a court filing last month, Holmes said she “has essentially no assets of meaningful value” though she continues to work on patents.
Holmes and her defense continue to fight to prevent her surrender and remain free until her appeals are exhausted. The second date of note is 27 April–her surrender date to the Federal prison in Bryan, Texas. Sunny Balwani’s surrender date is a month earlier on 15 March to the Federal prison in Lompoc, California. Like Holmes, his defense has filed motions for his freedom through his appeals. Balwani also has prosecutors pressing for restitution around $900 million and likely he has not much left in the way of assets either. [TTA 22 Feb] Havasu News (from paywalled Mercury News)
Theranos’ Balwani seeks to remain free during appeal, argues he owes nothing in restitution (updated for Holmes appeal)
12.9 year Federal sentence set to begin 15 March. On Friday 17 February, Ramesh ‘Sunny’ Balwani, former Theranos president/COO, his defense attorneys, and the prosecution were in Judge Edward Davila’s Federal District courtroom to argue that Balwani should remain free during appeal, and–surprisingly–should owe nothing in restitution to investors.
Balwani is scheduled to report is scheduled to report to the minimum security Federal prison at Lompoc, California to begin his 155-month sentence on 15 March. During the hearing, Judge Davila did not issue a decision on Balwani’s freedom through appeal, nor about restitution. In play are the parallel sentences and appeals of Balwani’s boss and lover, Elizabeth Holmes, with her delay of surrender based on appeals being filed and restitution being decided in the same court.
Balwani’s defense is taking a different tack than Holmes’ defense regarding restitution. His attorney, Amy Walsh, presented that the company was still valuable at the time of Balwani’s dismissal in May 2016. Theranos still had $350 million in cash and intellectual property worth $100 million. Judge Davila seemed skeptical of that: “Are you saying his conduct was completely divorced from Theranos’ demise?” The prosecution is seeking a far higher restitution–$900 million–than the $120 million Judge Davila estimated at the time of Balwani’s sentencing.
Elizabeth Holmes is also seeking to remain free while appealing her 11.25 year sentence in the Ninth Circuit Court of Appeals, with filings in December and January [TTA 24 Jan, 10 Jan] with Balwani’s filings on a similar timetable. Her defense team also filed for a new trial [TTA 15 Jan] based on purported errors by Judge Davila during her trial. Her restitution hearing on the $121 million Judge Davila has estimated during her sentencing is now scheduled for 17 March. As with Balwani, the prosecution is seeking a far higher restitution–$804 million.
Holmes’ surrender date is scheduled for 27 April to the Federal prison in Bryan, Texas–a change by the Federal Bureau of Prisons from Dublin, California, as rumored in November [TTA 30 Nov]. The women-only minimum security Bryan facility is considered in the Federal system to be ‘heaven’ compared to the Dublin satellite camp, though the latter is only about an hour from her home, partner Billy Evans, and her soon-to-be two children. The selection is important because Federal inmates serve in general 85% of their sentence.
Updated Holmes’ second child has been born, according to a court filing on Thursday. Her defense continues to press for postponing her surrender during the appeals process. Defense and prosecution continue to wrangle on Holmes’ flight risk, based on the never-taken January 2022 Mexico trip and one-way ticket, now on the basis that she has never directly denied that she intended to flee nor explained her lack of a return ticket [TTA 24 Jan]. Mercury News
Balwani’s defense also maintains that government misconduct during the trial makes success for appeal likely, that he is not a flight risk based on his behavior since 2018, and has no history of violence. The clock is ticking down on both Balwani and Holmes. AP
Theranos Holmes trial updates: did she book a one-way flight to Mexico last year, or were the prosecutors reckless and wrong?
The latest skirmish between prosecution and defense. Did Elizabeth Holmes book a flight to Mexico with the intent to flee–or not? According to the prosecution last week, Holmes in December 2021 had booked a one-way ticket to Mexico that was scheduled for the end of January 2022. The departure date was after her conviction in early January that year [TTA 4 Jan 22]. Moreover, the prosecution claims that now revealed fiancé Billy Evans flew not only to Mexico but also to South Africa, and was out of the country for weeks.
The defense in its filing countered that Evans booked the flight in late December 2021 under her name. She had hoped to be acquitted and then free to attend a wedding of close friends in Puerto Vallarta in late January 2022. In the defense filing, “Once the verdict was issued, Ms. Holmes did not intend to make the trip.” She would also be unable, as any trip would require court approval, her passport was expired, and as is customary, in the possession of the District Court.
According to the defense, Evans visited Mexico for four days, returning to California across the Tijuana toll bridge with a credit card receipt. The Cape Town, South Africa flight was weeks later–20 February 2022 departing San Francisco via Newark, returning 4 March via United and in economy class.
Why are the travel plans being made public by the prosecution now? Why is Evans being pulled into it? Holmes has been convicted for a year, sentenced, and is currently appealing. The prosecution knew much earlier about Holmes’ booked-but-untaken flight to Mexico and asked the defense about them via email. When told, prosecutor Jeff Schenk thanked defense lawyer Lance Wade. “I suspected there was an explanation, and I look forward to receiving additional information tomorrow.” The next day from Schenk, “Thank you again for the background information, confirmation, and for addressing this situation quickly. I do not believe there is need for us to discuss this further.”
The timing is interesting because the prosecution filing objecting to Holmes’ freedom on bail while on appeal had to be filed by 19 January for a hearing by Judge Edward Davila on 17 March [TTA 10 Jan]. Was this one ‘see, see?’ objection? Will there be more? Mercury News
Note: New York Air (737-300 above) is remembered fondly by your Editor as she was this airline’s ad manager for 3 1/2 years in her Life Before Telehealth. It ceased operations in early 1987, merged into Continental Airlines in an ill-starred event called ‘The Big Bang’. (No, we didn’t fly to Mexico — neither will Elizabeth Holmes for the next decade.)
Weekend short takes: Theranos’ Holmes post-prison mental health + more on Shultz and Balwani; global M&A, funding roundup
It’s been a bumpy road this second week of the New Year, with the passing away of genius guitarist Jeff Beck, Lisa Marie Presley, and historian Paul Johnson, the unrelenting Harry Hullabaloo, a rain-soaked downer of a JP Morgan healthcare conference, plus a certain 1967 Chevrolet Corvette convertible (Goodwood Green, 327 ci/350 hp) keeping garage company with…classified files.
Elizabeth Holmes’ post-prison future already being planned–and it’s all about her. But not as before. After her 11 years and three months (pending appeal) in (whatever) Federal prison she will be assigned to, her three years of supervised release are being planned for her. In an ‘exclusive’, celebrity website TMZ reports that Holmes will be required to complete a mental health program that she will pay for (details undisclosed). If her probation officer has any reasonable suspicion that she’s violating the terms of her release, her home, office, vehicle, and property will be subject to police search, including DNA collection. No details in the article beyond that. At this point, Holmes should be working with prison consultants (yes, there are such people, and they are not your legal team) in setting her expectations for Club Fed Life, planning her day-to-day in prison, and readying a reentry plan draft that can make her probation a bit easier on all.
In related Theranos news, a soon-to-be published biography of George Shultz, a government supremo during the Nixon and Reagan Administrations, claims that by then aged 90+ emeritus supported Holmes to the point of fixation. In a nearly 20-year tenure at Stanford’s Hoover Institution, respected and honored by all but with no medical expertise, he suddenly became a huge backer of Holmes, helped her get financing through his network of contacts, joined the board, and invited her to family gatherings. Grandson Tyler Shultz, who joined Theranos with his grandfather’s encouragement, became one of several whistleblowers, leading to a family rift never quite mended at the elder’s death at 100. More in the Guardian
Sunny Balwani also filed a motion this week to stay out of prison during his appeal process, arguing he presents no flight or public safety risk. The Law360 article on the 10 January 25-page filing is unfortunately paywalled.
London-based Huma is buying Frankfurt-based Alcedis, a data specialist for clinical trials. Huma will form an advanced clinical trials division with digital solutions across the entire development pipeline, from early stage through to Phase IV hybrid and fully decentralized trials. Terms were not disclosed. Formerly the mysterious Medopad [TTA 28 May 21], Huma seems to have settled into decentralized clinical trials and disease management using wearable tech and apps. Last March, AstraZeneca took a $33 million [£25 million] share in the company, with Huma acquiring their asthma and heart failure patient platform. Release, Crunchbase, Mobihealthnews
In Singapore, Amplify Health is acquiring AiDA Technologies. AiDA has developed machine learning tech to automate underwriting, claims processing, and detect fraud, waste, and abuse. Amplify has similar lines of business plus digital health programs for chronic disease management. Terms were not disclosed. Fintech Singapore. Also covered in the same Mobihealthnews article are:
- India’s Dozee receiving funding from the UK government’s British International Investment (BII) for India’s MillionICU initiative. The BII investment will be used to convert 6,000 conventional hospital beds in about 140 public hospitals’ ICUs to stepdown beds. The MillionICU initiative’s goal is to convert one million ICU beds. Express Healthcare (India)
- Taiwan’s largest hospital, Chang Gung Memorial, has adopted TPIsoftware’s SysTalk.Chat for AI-powered text and smart voice-enabled customer service. The Apo voice and text agent assists 80,000 ‘person-times’ per month in patient intake and setting appointments, admissions, and medical information. This saves 50% of time in appointment scheduling via texts or calls that happen within 2~3 minutes. AsiaOne (PRNewswire release)
Theranos trial updates: Holmes’ freedom on appeal bid opposed; Balwani files appeal to conviction
Lost between the holiday and Happy New Year merriment were two year-end court filings by legal teams for Theranos’ Elizabeth Holmes and Ramesh ‘Sunny’ Balwani, who hope to stay free for at least part of 2023.
Elizabeth Holmes: In a joint filing on 30 December, Federal prosecutors and Holmes’ defense requested a hearing by Judge Edward Davila of the District Court on Holmes’ request to remain free on bail until her appeal in the Ninth Circuit Court of Appeals is resolved. In the filing, the prosecutors agreed to file their objections to her freedom by 19 January. Holmes’ defense had filed her three-page appeal on 3 December with 10 reasons why there should be a new trial. The full legal brief is due on 3 March. Both prosecution and defense had requested that the hearing by Judge Davila take place on 17 March.
Holmes was convicted on four counts of defrauding investors, with her sentence of 11 years and three months taking place on 18 November 2022. She remains free on bail until 27 April, her surrender date. The US Bureau of Prisons has not made public where she will spend her sentence. There is also a question of restitution of $121 million yet to be decided in court. SiliconValley.com
Sunny Balwani: His appeal was filed on 20 December, on the two-week deadline after sentencing, also in the Ninth Circuit Court of Appeals. Unlike Holmes, Balwani was convicted on 12 counts, including two counts of patient fraud. The appeal reportedly will be on the grounds of Judge Davila’s rulings and decisions adverse to Balwani during the case. Other possible factors: the weakest counts are the two on patient fraud where testimony and proof were indirect–Balwani had little to do with patients–and that he left in 2016 before the collapse. His sentence was 12.9 years (155 months). Like Holmes, his restitution is yet to be decided. Balwani is currently free on bail, with his surrender date 15 March. No motion to remain free on bail while the appeal is in progress has been disclosed, nor the Federal prison location decision. Yahoo!Finance
For those craving a recap of l’affaire Theranos and perhaps to reflect on it, Yahoo!Finance has produced an hour-long video documentary, ‘Culture of Hype’, on Theranos as a product of Silicon Valley culture. It was produced before their convictions and sentencings. It ends with discussion of how the multiple conflicts between an admittedly naïve founder vision, transparency, and the need to finance said vision in multiple iterations in any startup or early stage company can lead to borderline executive behavior and company collapse. (And yes, your Editor has seen it happen firsthand.) Was Elizabeth Holmes a victim, a sociopath, or something in between? She will have time to contemplate it, as this Editor continues to maintain that her chances of reversing her conviction and going free are as small as that nanotainer she is modeling above.
Most Recent Comments