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Speaker 1: This is Bloomberg Law with June Brusso from Bloomberg Radio.

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Speaker 1: During seven days of deliberations, there was only one piece

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Speaker 1: of evidence. The jury in the Elizabeth Holmes trial asked

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Speaker 1: to review a thirty minute recording of the Pharaonos founder

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Speaker 1: pitching her blood testing machine to potential backers. In this

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Speaker 1: company is about being able to change the healthcare industry,

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Speaker 1: and that's something that we plan on doing for the

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Speaker 1: next fifty sixty years. We had the opportunity to create

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Speaker 1: an industry here, and that's what this is about. The

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Speaker 1: jurors found the thirty seven year old guilty of criminal

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Speaker 1: fraud for her role in building and promoting the blood

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Speaker 1: testing start up into a nine billion dollar company that

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Speaker 1: collapsed in scandal. Joining me is Bloomberg Legal reporter Joel Rosenblatt,

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Speaker 1: who covered the trial. Did Holmes have any reaction when

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Speaker 1: the jury vertical red She maintained the same posture and

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Speaker 1: expression that she has for the entire trial, which is

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Speaker 1: staring directly at the clerk as the verdict was being read,

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Speaker 1: and staring directly at the jurors as they were pulled,

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Speaker 1: sitting straight upright and fairly expressionless. I will say, I

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Speaker 1: didn't note a softening in her eyes, which had been

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Speaker 1: kind of focused and hardened for the entire trial. She

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Speaker 1: didn't appear to be crying, but maybe just a little

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Speaker 1: more expression, you know. The most telling thing that I

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Speaker 1: saw was actually outside the courtroom, her father, he was

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Speaker 1: waiting for her, and he had found this nook just

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Speaker 1: out of public view, just barely out of public view,

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Speaker 1: and he sat down in his suit and tie on

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Speaker 1: the ground with his knees to his chest for a

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Speaker 1: very long time, and he was staring at a wall

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Speaker 1: maybe two or three feet in front of him, just stunned,

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Speaker 1: I think. At the verdicts, and to me, that was

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Speaker 1: kind of the most telling thing about the verdict. She

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Speaker 1: was convicted of four out of eleven counts. Explained the breakdown,

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Speaker 1: sure well. The breakdown kind of most simply put. The

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Speaker 1: charges were defrauding investors and defrauding patients, and the charges

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Speaker 1: pretending to the patients. She was acquitted on all of those,

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Speaker 1: and that just didn't go over well with jurors. They

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Speaker 1: did not find that she intentionally defrauded patients. The investor counts,

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Speaker 1: on the other hand, stood up pretty well. She was

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Speaker 1: convicted of four of them, and there were others that

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Speaker 1: she was not convicted of, And we don't know why.

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Speaker 1: We don't know why jurors chose to convict her of

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Speaker 1: some investor counts and not others. There were clearly details

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Speaker 1: in some investor accounts that made them less compelling to jurors.

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Speaker 1: That surprises me a bit, because the investor accounts were

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Speaker 1: very similar. There was a similar pattern that was involved

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Speaker 1: in terms of the information they got, the pitches they

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Speaker 1: heard from Elizabeth Holmes. The government seemed to make a

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Speaker 1: point of making almost a kind of repetition of what

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Speaker 1: each investor faced, But the jury kind of interestingly detected

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Speaker 1: some differences that I haven't yet figured out. Tell us

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Speaker 1: about that investor call the jurors wanted to listen to

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Speaker 1: during deliberations. Yeah, that was a really interesting piece of evidence.

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Speaker 1: It was an investor call from two thousand thirteen in

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Speaker 1: which Elizabeth Holmes is describing her machines, how accurate they are,

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Speaker 1: how quickly she's ramping up. She's describing the company's efforts

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Speaker 1: to move into Safeway in Walgreens, and how quickly she

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Speaker 1: wants to establish what she described as a national footprint.

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Speaker 1: She described the company as being valued at this point

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Speaker 1: at seven billion dollars, which was an incredible run up

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Speaker 1: in terms of the valuation of the company and the

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Speaker 1: pressure to get these investors to turn over their money

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Speaker 1: because the window was closing, as she described, the opportunity

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Speaker 1: was closing. So this was an amazing piece of evidence.

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Speaker 1: And this call was recorded surreptitiously by an investor in

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Speaker 1: Dallas on a paper recorder, and that was replayed for

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Speaker 1: the jurors at their request. And you know, interestingly, the

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Speaker 1: jury did not find Elizabeth Holmes guilty on accounts that

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Speaker 1: applied to this particular investor who recorded this call and

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Speaker 1: also testified, and for whatever reason, they found that not compelling.

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Speaker 1: I thought the evidence was actually quite quite damning against her.

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Speaker 1: I thought it was really interesting and compelling to hear

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Speaker 1: her in her own voice pitching the Farness blood analyzers,

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Speaker 1: which was kind of an important, overall overarching piece of

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Speaker 1: evidence for the government. It was surprising to me that

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Speaker 1: that was the only piece of evidence the jury asked

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Speaker 1: for it's seven days of deliberations in this complex case.

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Speaker 1: It is surprising. For many days they were so quiet

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Speaker 1: and working for so many hours just so quietly. It

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Speaker 1: was really kind of agitating. I think two members of

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Speaker 1: the press who wanted to hear more, they wanted something.

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Speaker 1: I do think the government presented a clear case. I

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Speaker 1: think the evidence, the testimony was clear. It was a

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Speaker 1: lot of evidence. It was just a real pile of

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Speaker 1: evidence of over two dozen witnesses, many documents, But I

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Speaker 1: think it was clear. So I don't think I think

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Speaker 1: it was kind of a matter of sorting through it

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Speaker 1: and kind of moving through that and each witness. But

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Speaker 1: in terms of actually understanding what happened to what they said,

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Speaker 1: what the documents represented, I think that wasn't probably very confusing.

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Speaker 1: Usually when a defendant takes the stand, it almost flips

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Speaker 1: the trial on its head because the question for the

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Speaker 1: jury becomes, do we believe her or not? Do you

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Speaker 1: think that she did herself any favors by taking the stand.

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Speaker 1: I think she did herself a huge favor by taking

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Speaker 1: the stand. It was it was a huge risk, as

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Speaker 1: you know, white color and all defendants don't often do

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Speaker 1: that because they exposed themselves too, oftentimes withering cross examinations.

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Speaker 1: I think the calculation here was that the evidence which

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Speaker 1: I've described was so overwhelming that she had to take

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Speaker 1: that chance. It was just kind of I don't want

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Speaker 1: to say hail Mary, because that's that makes it sound

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Speaker 1: a little bit too desperate, but the best chance she

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Speaker 1: could give herself, and she was compelling. She was dynamic

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Speaker 1: as a witness. She came, I thought, dangerously close to

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Speaker 1: her dre I think she came very close to lying

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Speaker 1: under oath. She walked a very fine line in terms

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Speaker 1: of doing a combination of things. One is that she

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Speaker 1: owned up. In fact, she admitted to some of the

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Speaker 1: lies that you and I have discussed here already today about,

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Speaker 1: for example, placing the logos on the reports from pharmaceutical companies.

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Speaker 1: She actually owned up to that, but she would explain

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Speaker 1: it by saying she wished she had done it differently.

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Speaker 1: So that was, in some ways, I think, actually compelling.

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Speaker 1: It showed that she was contrite in a way, there

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Speaker 1: had some some amount of regret, but there are other

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Speaker 1: ways in which she deflected responsibility. And then there was

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Speaker 1: this really shocking testimony in which she explained that she

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Speaker 1: was raped as a student at Stanford and that that

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Speaker 1: was the reason she left Stanford to start their notes,

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Speaker 1: and that she suffered further sexual abuse from her own

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Speaker 1: partner and the president of their notes, Sonny Balwine, who

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Speaker 1: was on trial next month facing the same charges. It

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Speaker 1: was designed to raise questions injured's minds about whether or

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Speaker 1: not this was a reason for her behavior and for

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Speaker 1: doing the things that she did. And I think she

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Speaker 1: did her best, and I think she was actually quite compelling,

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Speaker 1: and it raised a lot of interesting questions and maybe

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Speaker 1: some doubts. Ultimately, it didn't work for her. So now

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Speaker 1: we assume she's going to appeal. Sitting through the trial,

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Speaker 1: did you notice any points, any obvious points of appeal?

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Speaker 1: This to me is a very interesting question and a

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Speaker 1: very importan and point. The short answer is no, I

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Speaker 1: think there's nothing for her to appeal here. The judge

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Speaker 1: went out of his way to let Elizabeth Holmes and

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Speaker 1: the governments hash out differences in the middle of trial.

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Speaker 1: He allowed the defense to raise every argument that they

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Speaker 1: wanted to, to the point where it got long. The

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Speaker 1: trial started in late August, it finished in early January.

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Speaker 1: There was the shadow, that kind of cloud of first

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Speaker 1: the coronavirus, the delta variant, and then now more recently

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Speaker 1: a macron which threatened to derail the entire thing. Yet

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Speaker 1: the judge just let it play out kind of very

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Speaker 1: slowly and very carefully, and I think that this was

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Speaker 1: very specifically designed to not allow for any issues to appeal.

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Speaker 1: And the way the verdict broke down with her being

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Speaker 1: acquitted on some charges, found guilty on others, and a

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Speaker 1: deadlock stury on three counts indicates that they through the

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Speaker 1: counts one by one, very carefully mapped out the verdict

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Speaker 1: form what they were required to do under the rules,

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Speaker 1: and I think that time that they spent on that

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Speaker 1: and now carefully they worked through it makes for I

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Speaker 1: think zero issue on appeal. She's stacing twenty years on

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Speaker 1: each count, but that's not going to happen. So what

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Speaker 1: might the sentence be. Well, as you know that he

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Speaker 1: has sumbly way within the guidelines, but she is going

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Speaker 1: to spend time in prison for sure. My early assessments

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Speaker 1: was that she would spend being a first time offender

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Speaker 1: and the white collar criminal, probably between three and five years.

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Speaker 1: A closer look at that and some conversation with experts

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Speaker 1: tells me something different. One of the counts was for

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Speaker 1: one hundred million dollars. She was doune guilty of in

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Speaker 1: one instance defrauding an investor of one hundred million dollars.

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Speaker 1: The money matters, and it bumps up by statute the

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Speaker 1: amount of time that she may end observing. And I

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Speaker 1: think she's going to spend a minimum of five years

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Speaker 1: in prison and maybe even a bit more, and most

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Speaker 1: likely will she be held in one of those cushy

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Speaker 1: minimum security prison camps, like the so called Camp Cupcake.

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Speaker 1: That's right. I mean, as far as prisons go, it's

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Speaker 1: going to be a comfortable setting. There's a lot of

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Speaker 1: speculation that she would have time to write a book

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Speaker 1: or a screenplay. You know, she's going to be relatively

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Speaker 1: free to do what she wants. I do think it'll

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Speaker 1: be a big change for her, though, even after their

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Speaker 1: knows she has had a baby with Billy Evans, who's

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Speaker 1: an heir to a hotel fortune, and you can tell

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Speaker 1: just during trial she's being picked up in a car

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Speaker 1: and driven to an estate where she's staying and living

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Speaker 1: a very extremely luxurious lifestyle. That's going to be gone,

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Speaker 1: and I think it will be a difference for her.

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Speaker 1: But as far as prison goes, yeah, it'll be a

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Speaker 1: comfortable prison life. Can Sunny belwanna divorce himself from her

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Speaker 1: actions during his trial or is it going to be uphill.

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Speaker 1: It's going to be uphill. One of the accounts that

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Speaker 1: she was convicted of was conspiracy. He's not named in

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Speaker 1: the count, but clearly the conspiracy was with something Bowani.

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Speaker 1: He faces that same count, and the evidence at trial

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Speaker 1: just really tied them together. The government had to struggle

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Speaker 1: at times to kind of make Elizabeth Holmes at her

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Speaker 1: trial in charge because they wanted to make clear that

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Speaker 1: she was the one making these decisions. Um, they're gonna

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Speaker 1: have to kind of invert that a bit the government

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Speaker 1: at his trial, but not they're not gonna have to

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Speaker 1: stretch to do that because the emails and the text

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Speaker 1: between the two just showed that they were working so

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Speaker 1: closely together and we're very much involved, and even show

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Speaker 1: there's one email that I'm remembering that shows his concern,

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Speaker 1: his expressing concern about her overstating the capabilities of the

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Speaker 1: blood analyzers and and worried about it. And I can

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Speaker 1: only imagine how that evidence plays at trial. It's the

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Speaker 1: fact that she was convicted I think bodes badly for him.

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Speaker 1: Thanks Joe. That's Bloomberg Legal reporter Joel Rosenblatt. President Joe

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Speaker 1: Biden beat out every president since Ronald Reagan in getting

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Speaker 1: judges confirmed in his first year, and Biden helped to

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Speaker 1: diversify the bench with his nominees. Twenty were Black, fourteen

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Speaker 1: were Hispanic or Latino, thirteen were Asian American and Pacific Islander,

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Speaker 1: and three were Native American. But the road to confirmations

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Speaker 1: may be more difficult this year. Joining me is Professor

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Speaker 1: Carl Tobias of the University of Richmond Law School. So,

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Speaker 1: first of all, tell us what Joe Biden accomplished with

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Speaker 1: his judicial confirmations in well, he tied Ronald Reagan's record

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Speaker 1: for the first year of her presidency because Biden confirmed

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Speaker 1: forty appellate and district judges, eleven for the appeals courts,

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Speaker 1: nine for the district courts. Uh. And you have to

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Speaker 1: go back to the time of Reagan to see anyone

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Speaker 1: who came close to that, and to Biden easily surpassed

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Speaker 1: the number whom Trump nominated and confirmed in so it

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Speaker 1: was very successful. And the nominees who were confirmed, and

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Speaker 1: the nominees themselves, we're very diverse in terms of ethnicity, gender,

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Speaker 1: sexual orientation, experience in ideology, and all of that is

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Speaker 1: critically important for the federal kid issue or so some

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Speaker 1: groups are complaining that there should be more Hispanics on

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Speaker 1: the bench and nominees who are disabled or who have

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Speaker 1: a background in disability law. Are you getting the best

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Speaker 1: candidate possible when you're looking to change the diversity on

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Speaker 1: the bench. Well, it depends on which kind of diversity

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Speaker 1: you're talking about. But the types of diversity which Biden

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Speaker 1: has promoted, I think are important. To have a judiciary

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Speaker 1: that reflects the country gives more confidence to citizens in

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Speaker 1: the federal courts when it reflects America, limits prejudice against

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Speaker 1: people whom might experience discrimination the federal courts, and so

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Speaker 1: all of that is valuable and also means you'll have

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Speaker 1: better decisions. And so everyone has a different definition of

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Speaker 1: what qualified person is for the federal bench. But certainly

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Speaker 1: all of Biden's nominees and companies have been highly qualified,

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Speaker 1: and I think something like the highest American Bar Association ratings.

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Speaker 1: There's a vacancy on the Philadelphia Circuit Court that'll give

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Speaker 1: Biden a chance to flip that circuit. Yes, Brooke Smith,

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Speaker 1: who was the chief judge of the court, recently a

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Speaker 1: student senior status and he was appointed by a Republican president,

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Speaker 1: and so that means when his seat is filled that

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Speaker 1: that court will flip back, if you will, to a

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Speaker 1: majority appointed by Democratic presidents. How many other circuits has

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Speaker 1: Biden managed to flip back in a year? The other

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Speaker 1: I think was the second because a Vermont judge, Peter Hall,

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Speaker 1: resigned and then died a week later, but he had

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Speaker 1: been appointed by a Republican president, and so that meant

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Speaker 1: filling his seat with Judge Robinson meant that that court

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Speaker 1: flipped back. Trump had managed to appoint enough people that

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Speaker 1: there was a majority appointed by Republican presidents, but it

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Speaker 1: flipped back to Democrats with replacement of the Hall. So

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Speaker 1: how important is that, you know, flipping of the circuits

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Speaker 1: when the panels are composed of three judges and so

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Speaker 1: it depends on the look of the draw for that

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Speaker 1: it does. And you also have to remember on bonk

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Speaker 1: review by a majority of judges in active service as

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Speaker 1: so the second circuit rarely takes up on bonds, but

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Speaker 1: other courts are quite active on that front. But you're correct.

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Speaker 1: I mean they're supposed to be random draws with three

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Speaker 1: judge panels, and it's somewhat of a crew measure. To

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Speaker 1: talk about who the appointing president was. But generally I

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Speaker 1: think when it's the Republicans, the dominees and appointees are

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Speaker 1: more conservative, and when it's a Democrat, appointees and nominees

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Speaker 1: are more moderate. And sometimes coming up next will the

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Speaker 1: confirmation process be more uphill In year two? This is

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Speaker 1: Bloomberg nominations. So tell us a little about the sixth

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Speaker 1: Circuit nominee who's facing opposition from the Republican senators, Andre Mathis.

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Speaker 1: He is a nominee for the sixth Circuits. He's highly qualified.

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Speaker 1: He's a long time a commercial litigator, but has done

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Speaker 1: a fair amount of criminal litigation as well, and was

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Speaker 1: nominated recently by the President. The Home state senators from

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Speaker 1: Tennessee Senator Blackburn, he sits on Judiciary Committee, and Senator

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Speaker 1: Haggarty said they weren't consulted enough by the White House

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Speaker 1: in terms of whether they agreed to that nomination, and

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Speaker 1: the President did go forward and nominate Mathis, but the

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Speaker 1: White House and the Council's Office to have responsibility for

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Speaker 1: that said that there was considerable consultation with the Homestage senators.

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Speaker 1: So it maybe that's Blackburn will bring that up in

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Speaker 1: the hearing. If mathis is that most people think is scheduled,

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Speaker 1: It isn't official yet, but it's likely to be confirmed

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Speaker 1: that he would be on that panel tomorrow, So we'll

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Speaker 1: see how that plays out. But remember that Cenator Graphleys

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Speaker 1: share of Judiciary in carved out an exception from blue

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Speaker 1: slips called a circuit exception, and with that change, fifty

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Speaker 1: four extremely conservative Republican appointees of Trump were able to

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Speaker 1: move through of the Judiciary, and Senator Blackburn voted for

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Speaker 1: every one of Trump's nominees from a blue state who

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Speaker 1: did not have two Blue slips, and so it doesn't

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Speaker 1: seem like she has much grounds to complain in this

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Speaker 1: situation given her voting records. And I think the White

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Speaker 1: Houses certainly going to honor the circuit exception that was

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Speaker 1: created by Republicans and used to basically appoint all of

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Speaker 1: the Trump appointees in blue states over objections of home

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Speaker 1: state senators from the Democratic Party. And so that's where

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Speaker 1: we are, and I think Chair Durban is committed to

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Speaker 1: that position, So we'll see how that placed out in

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Speaker 1: the herring. If he's on considered liberal, it's not clear

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Speaker 1: he's been in private practice. I believe his whole career

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Speaker 1: with a smaller firm in Memphis and then now with

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Speaker 1: Butler and Snow, which is a fairly substantial firm in

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Speaker 1: that part of the country. And he's litigated many cases,

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Speaker 1: mostly commercial, but a number of criminal cases that he

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Speaker 1: took on I think pro bono and some quite substantial

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Speaker 1: and difficult cases in the criminal justice system. And so

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Speaker 1: I don't know whether they think he is liberal or not.

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Speaker 1: He's a partner in that major firm, has record as

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Speaker 1: a highly qualified litigator, and so knows his way around

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Speaker 1: federal courts. What other nominations are ahead, well, there were

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Speaker 1: a number of nomination seventy five, which is a very

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Speaker 1: substantial number in twenty twenty one. And what's most striking

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Speaker 1: is how the Biden administration is prioritizing it's not dominations,

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Speaker 1: by first being sure that as many appellate nominees are

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Speaker 1: there to fill all of those vacancies, as well as

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Speaker 1: targeting states that have high numbers or percentages of vacancies,

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Speaker 1: for example New York and especially California and Emergency, which

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Speaker 1: both of those states has substantial numbers of So they're

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Speaker 1: setting priorities about which are most critical and then moving people.

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Speaker 1: For example, on December fifteen, there was a package of

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Speaker 1: ten nominees, the most recent some of the most recent nominees,

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Speaker 1: and a number of them were from California and New York.

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Speaker 1: And so they that is the way in which they're proceeding,

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Speaker 1: and I think that makes sense for the needs of

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Speaker 1: the judiciary. Biden has been concentrating the overwhelming number of

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Speaker 1: nominations or in states represented by two Democrats. Do you

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Speaker 1: see things getting tougher in the second year, and certainly

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Speaker 1: it's a year when they have to move fast due

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Speaker 1: to the upcoming possible change in the Senate. Yes, I

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Speaker 1: think they're very aware of that, and they are acting

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Speaker 1: as if they might lose Senate majority. And I think

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Speaker 1: that's pragmatic and realistic on the part of the administration,

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Speaker 1: and so they're doing everything possible to expedite nominations and confirmations.

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Speaker 1: For example, tomorrow, I think they're likely to be five

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Speaker 1: district nominees as well as mathis and I think we'll

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Speaker 1: see every two weeks that Senator Durban his share of

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Speaker 1: Judiciary will schedule hearings and move them forward to committee

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Speaker 1: votes and then on to the floor um as quickly

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Speaker 1: as possible. There'll be more nominee slates I think this

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Speaker 1: month and every month, and probably two or three a

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Speaker 1: month as we move forward UM during So I think

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Speaker 1: that's the plan. As to your point, I think that

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Speaker 1: there are enough appointees who Democratic Presidents confirmed to take

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Speaker 1: up much of the time of the Senate this year,

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Speaker 1: though I think there's been a reach, and we'll see

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Speaker 1: for certain that the three nominees in the Northern District

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Speaker 1: of Ohio who have come forward and need a committee

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Speaker 1: vote tomorrow, all supported by Portman, who's Republican in Browns

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Speaker 1: Democrats and worked through their excellent Bipartisan's Election Commission, we'll

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Speaker 1: see them confirmed. So it shows that at least in

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Speaker 1: swing states of purple states, that you can work together

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Speaker 1: and move forward. Thanks Carl. That's Carl Dubais at the

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Speaker 1: University of Richmond Law School. And that's it for this

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Speaker 1: edition of the Bloomberg Law Show. Remember you can always

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Speaker 1: at the latest legal news on our Bloomberg LA podcasts.

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Speaker 1: You can find them on Apple Podcasts, Spotify and at

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Speaker 1: www dot Bloomberg dot com Slash podcast Slash Law. I'm

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Speaker 1: June Grosso and you're listening to Bloomberg