Tag: expert witnesses

Criminal JusticeCriminal LawExpert Witnesslegaltech

Fingerprints Lifted from Social Media Photo: Expert Evidence and Impact on Criminal Defense

Friday morning, I read a really interesting article from the FindLaw Technologist blog (their legal technology blog). The headline grabbed my attention because it was about drug dealers’ fingerprints being lifted from a photo on social media application, WhatsApp. This was news to me. I had no idea law enforcement could obtain digital fingerprints or that they could be used for an arrest. In hindsight, it seems perfectly reasonable that fingerprints could be obtained this way because the cameras in our cell phones are so advanced.

Probably, like many laypeople, I thought law enforcement had to access latent fingerprints left on a physical object (doorknob, weapon, cell phone, etc.). Based on my years of watching police procedural television shows and documentaries, I assumed the fingerprints had to be dusted by an evidence technician, input to a database, and then compared to other prints in the database. Today, however, I discovered that’s not the only way to do it.

As the Findlaw article explained, “Law enforcement arrested members of a drug ring using fingerprints on a cell phone photograph. Investigators didn’t even need the suspects’ cell phone because the photo was posted on the messaging application, WhatsApp.” The photo showed a male hand holding a bag of drugs. The agency’s forensics team uploaded the photo to a fingerprint data base and they found a match. The article specifically states the officers “acting on other information” located and arrested the man.

My assumption was the officers needed additional evidence in order to make an arrest.  Authorities can likely use the image as an investigative lead and then they have to go find additional evidence to establish probable cause for an arrest.

Alas, these were only my assumptions. It’s been a long time since I spent any time on criminal procedure. As such, I have asked for some input from Walter M. Reaves, Esq. Walter is a friend and colleague I’ve met through the LegalMinds Mastermind Group. He is a criminal defense attorney located in Waco, Texas. To find more about his practice, visit waco-criminal-attorney.com.

Input from Criminal Defense Attorney Walter Reaves:

Walter jumped on the questions I asked and elaborated on the entire concept of using digital and social media photos. Here is what he said:

“Given the way cell phones have taken control of all our lives, it’s not surprising that they are being used as evidence in criminal cases. For several years, the police have been obtaining cell tower location to place a suspect (or at least their phone) in a certain location. Evidence found on cell phones has also been used – for some reason, dope dealers seem to like taking pictures with their stash. And of course, there’s always text messages.

A new technique may be lifting fingerprints from phones. The process would utilize a picture on the phone of someone’s hand and fingers, and attempt to match that like you would a latent print developed at a crime scene. The process may be no different from what is being done now. Latent prints are placed on a card, and pictures are taken. The digital photos are what are used for comparison.

If a fingerprint on a cell phone is used, you can expect challenges from defense lawyers. The prosecutor will have to convince the court the process for making the comparison is reliable, which may be a problem.

For starters, there could be problems with manipulating the photos in order to get something to use for comparison. The photos will probably need to be enhanced in some way, and you can expect defense lawyers to challenge the way that is done. Some adjustment will have to be made for the photo itself, since no camera produces an exact representation of what it is capturing. Establishing the admissibility of the photo of the fingerprint will therefore have to be the first hurdle the State will have to meet.

Even if the State can establish the identification is reliable, I seriously doubt this is going to be a common practice. I can’t imagine many situations where it would be relevant. Maybe if someone is holding dope, and all you can see is their hand, the fingerprint could be used to establish possession. I can’t think of many other situations though. In most cases, you would think if a picture is being taken, you could identify who was in the picture. You also might have problems with identifying location, and time, if that’s important.

There will be an even bigger problem when you are trying to use the photograph to prove possession of a controlled substance. The problem is proving what the substance is. If you don’t have it, there’s no way to test; it could be baking soda just as easily as it could be cocaine.

So, it’s an interesting concept, but don’t expect it be coming to a courtroom near you anytime soon.”

Based on reading this information from Walter, I stand by my contention this is an investigative tool for law enforcement. However, such images are unlikely to be used as evidence in court. It seems there will be problems with relevance, reliability, and authenticity. These hurdles may in time be overcome as technology advances.

Input from Photographic Evidence Expert Witness Dr. James Ebert:

For a more in-depth understanding of this practice, I reached out to Experts.com member and expert witness Dr. James Ebert. Dr. Ebert is a forensic photogrammetrist who is regularly called to interpret and testify about photographic and mapped evidence in civil and criminal matters. You can learn more about Dr. Ebert’s expertise and practice by visiting his website ebert.com.

Dr. Ebert’s comments left me feeling behind the times when I heard about the use of digital photos as a law enforcement tool. Here is what he had to say:

“It has been widely known and discussed on the web for a decade or more that identifiable fingerprints can be recovered from photographs for good or bad purposes, given that the photos are of sufficient resolution, lighting, focus, and that enough of the fingerprint can be seen to allow a match to be attempted.  Faces published on the internet can, of course, also be identified through photo matching services like TinEye reverse image search, or facial recognition software.  Both fingerprints and faces can, for instance, be run on the FBI’s new Next Generation Identification system by law enforcement agencies around the country.  This does not insure false positive results as are common with all automated fingerprint or facial identifications.  I have never attempted to make identifications of fingerprints in my practice as a forensic photogrammetrist, but are certainly possible and they should be just as reliable as are those done with fingerprint or facial data collected in other ways.  I am often, however, called upon to do facial identifications from photographic evidence. Whether such fingerprints and facial identification are ethical clearly depends on whether they are done for ethical purposes.  Identification of possible criminals from fingerprints by law enforcement is an example of a good use of technologies, and if done for purposes like hacking or harassment it’s not.”

Based on Dr. Ebert’s comments, it appears this practice has been considered and possibly utilized for some time. As Dr. Ebert mentioned, there is potential for abuse in matters of hacking and harassment. I cannot speak for Walter, but I imagine he would think there is potential for abuse by law enforcement as well.

Technology is changing so rapidly that it is difficult to keep up with all the advancements. What we’re doing with this blog is trying to discover how technology impacts the criminal justice system. If you have any suggestions for future  posts on technological advancements in criminal or civil justice, please comment below.

 

 

Accident Investigation & ReconstructionForensic Accident InvestigationTransportation

Southwest Airlines Engine Failure: Aviation Accident Investigation

If you are anything like me, you have constant access to your Twitter feed. Besides the fact that it’s a platform for developing relationships with professionals across the world, it is my source for news. I use it to find out what is going on in the justice system, legal technology, and world events. Today, my feed erupted with news of a Southwest Airlines emergency landing at Philadelphia International Airport. If you use Twitter, your feed probably reacted similarly.

According to an article from CBS Channel 3 in Philadelphia, the airliner made a successful emergency landing, “after an engine blew out as the plane left LaGuardia Airport in New York on Tuesday morning.”

It seems that after the explosion in the engine, some shrapnel damaged one of the passenger windows causing the plane to depressurize. Early reports describe one passenger as being partially sucked out of the plane at the broken window. A horrifically frightening event for certain. Luckily, the plane made a safe emergency landing. It appears several passengers were injured and one life was lost.

These incidents leave passengers shaken and afraid. Some suffer physical and emotional damage. Those of us who hear of these events experience a feeling of unease the next time we have to take a flight. Safety, is the top priority for travelers and transportation companies alike, which is why agencies like the NTSB react swiftly to the news of an emergency landing due to engine failure. At the time of this writing, the NTSB is about to hold their first news conference on this aviation accident.

Since matters like this often lead to litigation, I reached out to some of our aviation accident investigation and reconstruction expert witnesses. As of publication, I received one response. We will update the blog post if other responses come in.

I provided six questions to aviation expert witness Robert Ditchey. You can learn more about Mr. Ditchey by visiting his website Ditchey.com.

Let’s hear from the aviation accident investigator:

Nick: Where would an aviation accident investigation begin?

Mr. Ditchey: The most important starting point is to quarantine the aircraft itself and do a thorough inspection of the aircraft and all of its parts and components.  That is quickly followed by an examination of the maintenance records, which are also quarantined immediately.

Nick: Is it common for an engine failure to break a window and cause cabin depressurization?

Mr. Ditchey: Engine failure itself is today very uncommon.  It is even more uncommon to have resultant damage to the aircraft as a result of engine failure.  The engine is designed to contain any mechanical damage to the engine.

Nick: It seems an incident like this has a variety of different issues including: engine failure, engine maintenance, safety protocols, aircrew training and response to emergency. What issue takes priority?

Mr. Ditchey: None take priority per se.  All are very important.

Nick: What is the NTSB’s priority in responding to this incident?

Mr. Ditchey: NTSB’s first priority is to discover what caused the engine failure.

Nick: What is the airline’s priority in responding to this incident?

Mr. Ditchey: Find out what happened and ensure that it won’t happen again.

Nick: Any thoughts or comments you would like to add…

Mr. Ditchey: The traveling public needs to be assured that the odds of a fatality are minuscule and that nobody is going to get hurt.  Next, we all need to give the NTSB some breathing time and our patience to let the investigators do their job.

 

 

Expert WitnessExpert Witness TestimonyFraudLawyers

Trump Lawyer Michael Cohen’s Home and Office Searched by Feds: Attorney-Client Privilege?

Yesterday, news broke about the FBI raiding the home and office of longtime Donald Trump attorney, Michael Cohen. All the major news outlets and talking heads are discussing the matter. Naturally, I felt I should join in and add some food for thought from the expert witness perspective. Assuming the case against Michael Cohen goes to trial, there are likely to be a variety of experts called to opine on different issues. At the time of this writing, reports indicate the federal government is investigating Mr. Cohen for both bank fraud and wire fraud.

Here is what we have learned since yesterday. According to NBC News:

“On Monday, the FBI raided the law office of Michael Cohen, President Donald Trump’s personal lawyer. They were seeking information about a $130,000 payment the attorney says he personally made to adult film star Stormy Daniels days before the 2016 election, sources told NBC News.

The search warrants were sought and executed by FBI agents and federal prosecutors in New York in coordination with special counsel Robert Mueller’s team after an initial referral from Mueller’s office.”

We have further discovered that Special Counsel Robert Mueller would have to consult with Deputy Attorney General Rod Rosenstein if his investigation discovered evidence unrelated to Russian interference in the US election. If such information was discovered, Rosenstein would then have to decide to expand the scope of Mueller’s investigation or refer the new investigation to another US Attorney’s office. It appears the Cohen investigation was referred to the US Attorney’s office for the Southern District of New York.

In essence, search and seizure of a lawyers office, where that lawyer maintains protected attorney-client communications, had to go near the top of the Justice Department. Thereafter, a warrant had to be approved by a federal judge, before the FBI could conduct the raid and seize these protected communications (among other evidence).

What about attorney-client privilege?

We should start with a simple definition of the attorney-client privilege. Here is a definition from Nolo.com: “The attorney-client privilege is a rule that preserves the confidentiality of communications between lawyers and clients. Under that rule, attorneys may not divulge their clients’ secrets, nor may others force them to.”

Finding the violation of attorney-client privilege a little disconcerting (note, I am not addressing the possible crime-fraud exception to the rule), I reached out to one of our legal and judicial ethics experts for comment. Experts.com member, Mark Harrison, Esq., is an Arizona-based civil and appellate litigator at the firm of Osborn Maledon, PA. He has extensive experience litigating and testifying in cases involving legal malpractice, legal ethics, and judicial ethics.

My request of Mr. Harrison was as follows, “Do you see any issues arising from this seizure related to fiduciary duties, attorney-client privilege, judicial ethics, or other items?”

Mr. Harrison provided me with a rather thorough explanation based on available information. Details about the subpoena or the documents seeking the subpoena have not been reported at this time. I have included several pertinent comments from Mr. Harrison, below:

“As I am sure you are aware, in order to get a subpoena issued in this situation the US Attorney had to satisfy a magistrate judge or a federal district judge that there was good cause for the issuance of the subpoena.

The potentially dicey ethics aspect involved in a situation of this kind is the risk that confidential client information – other than the information clearly covered by the subpoena – is inadvertently or unintentionally taken by the FBI officers executing the subpoena.”

According to news reports, none of us know whether Mr. Cohen has clients other than President Trump. If he does have other clients, Mr. Harrison explained, “the FBI officers executing the subpoena must exercise great care not to compromise the confidentiality afforded the information of other clients in Mr. Cohen’s files or to compromise the confidentiality of information relating to Mr. Trump that is beyond the scope of the subpoena.”

My personal experience in law firms and my professional responsibility education in law school left me with the belief that the attorney-client relationship was sacred. There was good reason for this as it encouraged clients to be open and honest with counsel so counsel could zealously represent their interests. As such, I am hoping the FBI does exercise great care in the review of these files. However, in reviewing documents, the FBI has to view the documents to know whether or not they are “beyond the scope of the subpoena.”

I had one follow up question for Mark Harrison. I asked if he thought a judge would ask an expert on legal ethics to oversee the review of attorney-client files to make sure the federal agents didn’t go beyond the scope of the subpoena? In asking this question, I also realized that the judge is likely to fill that role. However, I was interested to see if additional oversight might be necessary in this case.

Mr. Harrison said “I would be surprised if the judge or magistrate appoints an expert for that purpose unless Cohen’s lawyer seeks that oversight.”

So, based on information available to us at this point, the attorney-client privilege has or will be breached by the federal agents in their review of documents maintained by Mr. Cohen.

It’ll be interesting to see how this case develops and what other expert witnesses may be involved in a future criminal prosecution.

Does this open Michael Cohen to professional malpractice?

Some questions I have for future blog posts are as follows: Does the breach of attorney-client privilege by the FBI, expose Mr. Cohen to malpractice liability? Does the attorney have a duty to conduct himself in a way that would have precluded the FBI or anyone else from seizing all of his files? Does an attorney have a professional responsibility to avoid suspicion that may potentially place confidential client information at risk of being breached? Or, does the issuance of a search warrant protect the attorney from civil liability?

 

 

 

Expert WitnessIntellectual PropertylegaltechSocial Media

Tinder v. Bumble: Swipe Right for Your Next Patent Infringement Expert Witness

Last Friday I was sitting at my desk trying to find the next topic to blog about. Friday was an incredibly slow news day and nothing had piqued my interest. So I reached out to some lawyer-friends in the LegalMinds Mastermind Group for some ideas. I received a lot of feedback with some really great ideas. However, this Tinder v. Bumble lawsuit sounded like the most fun. A special thanks to patent lawyer, Karima Gulick, for the idea.

In fact, I had not even heard about this lawsuit until Karima mentioned it. It seems that Tinder’s parent company, Match Group (think Match.com), has decided to sue Bumble for patent infringement. For those who haven’t heard of Bumble, it is another popular dating app that allows women to make the first move. It seems they are now using very similar features to Tinder. An article in The Verge described the two patents at issue:

“…one called ‘Matching Process System and Method,’ in which users swipe cards and mutually select one another, as well as ‘Display Screen or Portion Thereof With a Graphical User Interface of a Mobile Device,’ which it describes as an ‘ornamental aspect’ of Tinder’s App. The lawsuit also points to similarities between each companies’ apps, and Bumble’s descriptions of ‘swiping’ run afoul of Tinder’s registered trademarks.”

It seems Tinder is accusing Bumble of infringing on the item that really made Tinder famous (i.e. swiping). Swiping did away with all that scrolling, reading, and learning about a potential romantic interest. Who has time for that? Even if you have time, who wants to do it? Instead, Tinder allowed you to make the important dating decision based on looks and looks alone, if you’re that shallow. It does appear there is a short biography portion some might want to read, but only if the potential match fits your physical requirements per their photo.

“Swipe right” and “swipe left” became a part of our nomenclature, often used outside of dating. I’ve heard comics and late show hosts use the terminology. There is no doubt in my mind, those using the terminology associate it with Tinder. Alas, Bumble decided to use the feature as well. Probably because users liked picking their mates via the swipe method.

There are some further accusations as set forth in this article by Recode, “[Tinder] also claims that early Bumble executives Chris Gulczynski and Sarah Mick, who both previously worked at Tinder, stole ‘confidential information related to proposed Tinder features,’ including the idea for a feature that lets users go back if they accidentally skip someone, according to the suit.” This is important, because when you’re swiping for volume (because it’s a numbers game) and get into a zone you might accidentally eliminate someone you find attractive. You need to undo that ASAP.

Finally, there is the issue of Match/Tinder trying to purchase Bumble last year. They offered $450 million, which was turned down, due to the acrimonious relationship between the two companies. Is Tinder using this case to apply some pressure on Bumble, thereby encouraging a sale? Quite possible.

If the case actually moves ahead and a sale is not negotiated, we can expect to see some expert witness participation. What kind of experts? I wish I could encourage you to swipe right to view them. However, you just have to keep reading!

Intellectual Property / Patent Infringement:

Intellectual property is sort of wide ranging term for expert witnesses. A broad range of expertise fits into the category intellectual property, such as patents, patent infringement, trademarks, trade dress, copyrights, licensing, trade secrets, and more.

In the Tinder v. Bumble issue, it appears they are only suing over a couple of patents and The Verge told us what those patents are. Both patents appear to be connected with the user interface, so I anticipate we will see intellectual property experts with software, programming,  and design engineering backgrounds. There is potential need for electronic engineering expert witnesses, but I think that will be less likely as it doesn’t appear hardware is at issue in this case.

Trademarks:

The lawsuit also claims that Bumble’s use of the word “swiping” infringes on Tinder’s registered trademarks. This legal dictionary from Cornell Law School’s Legal Information Institute describes a trademark as follows, “A trademark is any word, name, symbol, or design, or any combination thereof, used in commerce to identify and distinguish the goods of one manufacturer or seller from those of another and to indicate the source of the goods.”

The Legal Information Institute also tells us that “Two basic requirements must be met for a mark to be eligible for trademark protection: it must be in use in commerce and it must be distinctive.”

As I mentioned above, I knew that “swiping” was something associated with Tinder and I know that Tinder is a subscription based dating service. So, according to this layperson, the mark is being used in commerce and I recognize it as distinctive to Tinder. Now that I’ve made this information public, I cannot imagine Bumble wanting me on the jury. Luckily, the case has been filed in the US District Court in Waco, Texas.

Furthermore, a trademark expert witness retained by Bumble, may be able to provide information about “swiping” that indicates it is not distinctive. In fact, the terminology may be quite prevalent in software uses.

A Similar Matter?

The software matter I equate to this lawsuit would be the “Stories” issue between Snapchat and Instagram. Snapchat was the first social media platform to use the Stories feature, allowing users to post a continuing series of video clips or photos in order to create an ongoing story. Instagram copied it, nearly outright, and even admitted that they took the idea from Snapchat. To my knowledge, this has not resulted in litigation. However, the use of software-based features seem nearly identical and I wouldn’t be surprised to see a patent infringement and trademark dispute between Facebook (Instagram’s parent company) and Snapchat.

Requests:

As I am not practicing in this field, I think it would be great to get some feedback from a some lawyers who regularly deal with patents and trademarks.

I have asked Karima Gulick of Gulick Law and Joey Vitale of Indie Law to provide some real insight, rather than lay punditry, in the matter of Tinder v. Bumble.

UPDATE:

Intellectual property and patent attorney, Karima Gulick, has provided her insight about this case on her blog. Here is her blog post: Tinder v. Bumble: Patent dispute in app dating paradise.

Copyright and trademark attorney, Joey Vitale, has provided his insight about this case on his blog. Here is his blog post: Be careful if you “swipe”: trademark battles in Tinder v. Bumble.

 

 

Accident Investigation & ReconstructionCranesEngineeringExpert WitnessForensic Accident Investigation

Let the Finger Pointing Begin: Who is Responsible for the FIU Bridge Collapse?

[DISCLAIMER: In this post, we are going to name probable defendants based on available information. We are not determining liability or placing blame.]

One attribute of legal education is viewing an event and knowing, without a doubt, litigation will ensue; it is a blessing and a curse! I had this experience yesterday as I watched the horrific news unfold about the Florida International University bridge collapse. Issue spotting and parties were being identified within minutes after I received notice a bridge had failed in Florida.

For many catastrophic injury and wrongful death attorneys, this is a dream case. This sounds bad, I know, but hear me out. The result of this disaster is appalling and fault is abundant. None of that fault can be attributed to the victims. They were going about their day – sitting in their cars, stopped at a red light, probably admiring the new bridge – when the bridge collapsed on top of their vehicles. The victims did nothing wrong. They have no-fault (contributory, comparative, or otherwise) and, for certain, someone else is to blame.

The list of defendants will be ample. I’ve listed some of the probable defendants below. Don’t worry, these companies and institutions will be doing their own finger pointing. Whether we see it reported in the news or not, the blame game has already begun. To limit their liability, these defendants will point to others as responsible for this catastrophe, and the others will point back and point to others.

What we know:

In the City of Sweetwater, Florida, a pedestrian overpass at Florida International University (FIU) collapsed onto a notoriously busy road below. The Miami-Dade fire department confirmed six people are dead as a result. According to this article from Yahoo News, “at least eight vehicles were trapped in the wreckage of the 950-ton bridge.” Evidently, the bridge was constructed on the side of the road and was installed last Saturday.

“To keep the inevitable disruption of traffic associated with bridge construction to a minimum, the 174-foot portion of the bridge was built adjacent to Southwest 8th Street using a method called Accelerated Bridge Construction (ABC). It was driven into its perpendicular position across the road by a rig in only six hours on Saturday, according to a statement released by the university.

The $14.2 million bridge was designed to withstand a Category 5 hurricane, the most dangerous measure by the National Hurricane Center, and built to last 100 years, the university said.”

We can safely say the bridge did not live up to the purpose of its design. It didn’t have an opportunity to be hurricane tested because it was unable to remain standing for a whole week.

Possible Defendants: Anyone Involved in the Design, Construction, Inspection, and Erection of the Bridge

Where do I start? There are so many possibilities. Here is the list I’ve developed so far:

  • Munilla Construction Management (built and installed the bridge)
  • FIGG Engineering Group (bridge design, engineering and construction services)
  • Barnhart Crane and Rigging (moved the bridge into place)
  • BDI (structural testing and monitoring services)
  • City of Sweetwater
  • Miami-Dade County
  • Florida International University
  • Florida Department of Transportation
  • Materials Manufacturers (concrete, steel, etc.)

There will probably be other subcontractors and unknown parties who will be added to this list. The city, county, and state probably conducted inspections at different times during the design and construction of the bridge, so failures may be attributed to the municipalities as well.

Where Experts Come In:

What we have in this case is a bridge collapse. Failure analysis is the technical phrase used to determine why the bridge collapsed. The NTSB is sending their own investigative team to determine the cause for the failure. In litigation, both Plaintiff and Defense will retain a variety of experts to conduct their own analysis. Experts for all parties will have many questions to address. Here are some of the issues that come to mind immediately…

Were there defects in the construction of the bridge? If construction defects are identified, they may indicate a breach in the standard of care used by Munilla Construction Management during building of the overpass.

What about the design of the walkway? Did FIGG Engineering follow appropriate standards in designing the structure? Design and structural engineers will have to evaluate errors in the specifications which may have left the platform in a weakened and unsafe state.  This will also play a role for BDI who monitored the installation and later posted this picture, on Twitter:

 

bridge-collapse.PNG

 

Was the platform moved and installed according to crane and rigging policies and standards? Had there been a failure to secure the pieces of the bridge when moving it into place? Had the installation process added stress to components unnecessarily? This will all have to be analyzed to see if Barnhart Crane and Rigging had breached their standards of care during installation. Again, this will play a role for BDI, as they believed the move was a “job well done.”

By images and videos available in the news, we can see significant concrete slabs on top of the damaged vehicles. It will have to be analyzed and determined if the materials themselves had failed. Was the concrete, steel, or other material defective? Was it built to specifications? If not, what is the acceptable industry-standard deviation? If so, a product liability lawsuit against the materials manufacturers may also be appropriate.

All of these items will come back to the municipalities involved. Why did they retain the above-named companies? Was there a history of safety concerns with any of the firms? Were they overlooked? Did the municipalities fail to properly inspect the construction efforts? The Miami Herald covers some items about Munilla Construction Management and FIGG Engineering (and their respective work histories) in this article.

Traffic and pedestrian safety standards also come to mind as issues that may be addressed in upcoming litigation. Was there an alternative traffic route that could have been used until construction was completed? Were traffic safety procedures followed for the installation of an overpass?

There are many questions to be answered. For the victims, those answers will not ease the pain of losing loved ones. But the one guarantee we have is that one or more parties are responsible and those parties will be busy pointing the finger at each other and at others.

Business ValuationExpert WitnessLitigationUncategorized

SEC Charges Theranos CEO with Massive Fraud – Securities Expert Witnesses

Once considered “The Next Steve Jobs” or the “female Steve Jobs,” Elizabeth Holmes has fallen from grace and landed directly in the cross-hairs of the Securities and Exchange Commission (SEC). Today, the SEC filed a civil complaint against Elizabeth Holmes and her company Theranos, Inc. There was a separate action filed against the Chief Operating Officer, Ramesh “Sunny” Balwani.

The complaint alleges, in part:

“Holmes, Balwani, and Theranos raised more than $700 million from late 2013 to 2015 while deceiving investors by making it appear as if Theranos had successfully developed a commercially-ready portable blood analyzer that could perform a full range of laboratory tests from a small sample of blood. They deceived investors by, among other things, making false and misleading statements to the media, hosting misleading technology demonstrations, and overstating the extent of Theranos’ relationships with commercial partners and government entities, to whom they had also made misrepresentations.”

Oh the good old torts of negligent and intentional fraud and misrepresentation. Takes me right back to the first year of law school, when Nickelback was a hot new band, rather than the sad punchline of Internet memes. I digress.

The complaint goes on to allege that based on representations, investors believed Theranos had developed a proprietary medical device able to conduct comprehensive diagnostic tests from a small amount of blood taken from the patients’ finger. They also made representations that they would collect and transport these samples in order to complete the tests on their proprietary analyzer. All of this would be done more efficiently and economically than traditional blood testing labs.

According to the complaint, Theranos was only able to perform about 12 of the 200 tests they claimed they were capable of performing.

Let’s stop here and give a simple warning: If you are soliciting money from investors, make it very clear what you are able to achieve. Differentiate this from what you hope to achieve in the future. Do not mix the two. Otherwise you get into a bad area called misrepresentation, or in this case, securities fraud.

A wide variety of expert witnesses:

In complex civil litigation such as this, there is room for a wide variety of different experts. I can only imagine the SEC and Theranos are both using consulting experts at this time in preparation for a long drawn out litigation. The complaint has only been filed today, so expert disclosures are a way off. Here are a few types of expert witnesses or consulting experts I expect to see in this matter.

Corporate Governance:

Expert witnesses on corporate governance are highly likely to play a role in this case. Officers of a corporation are fiduciaries of the corporation. Holmes owed a duty of care to the company and to her investors. She is accused of misrepresentation which, if proven, would certainly violate the standard of care owed to shareholders and the company. I expect there will be significant dispute by the parties to prove she either did or did not violate her fiduciary duties.

Securities & Finance:

Several different types of experts who practice in the area of securities fraud may come into play. We are likely to see experienced Wall Street experts with a history in equity trading, proprietary trading, investment research, securities valuation, financial forecasting, venture capital and investment banking.

Some experts will probably have backgrounds in IPO’s, private equity financing, securities financing, and stock options financing.

In this area, I feel as though I can go on ad infinitum. That’s not true and it is probable one or two candidates will have the requisite expertise, described in this section, to address the finance and fraud related matters.

Economics:

Although the SEC is primarily suing for injunctive relief, they do mention the potential for civil monetary penalties. I would expect there will be some need for an economist (by both parties) to establish the value of Theranos and shares owned by Holmes and Balwani.

As I do not practice securities litigation and this is not a law review article, it is possible the civil penalties are predetermined by the Securities Act and there is no need to value the penalties other than by the trier of fact.

UPDATE:

Within hours of writing this blog post, I discovered that Elizabeth Holmes has settled with the SEC. According to Reuters, she will be stripped of her majority control of the company and will have to return millions of shares to Theranos. She will also pay a $500,000 fine and be barred from being an officer or director of a public company for 10 years. As of this update, Mr. Balwani has not settled with the SEC.

 

 

Expert WitnessMedicalToxicology

Freed Russian Spy Likely Poisoned: What experts might be used in this investigation?

Yesterday, news broke that a former Russian spy, Sergei Skripal, and his daughter, Yulia, were found unresponsive on a park bench in Salisbury, England. News reports revealed Mr. Skripal and his daughter were suffering from exposure to an “unknown substance.”

According to an article in the Daily Mail today, “Two police officers who were among the first to come into contact with Mr Skripal and his daughter on Sunday were also admitted to hospital after suffering itchy eyes, rashes and wheezing on Sunday. Up to 10 other people suffered symptoms including vomiting.” One member of emergency services remains in the hospital as of this writing. Mr. Skripal and his daughter are both in critical condition. The substance remains unknown.

Of course, this instance immediately reminded me of the 2006 poisoning of former Russian spy Alexander Litvinenko. Mr. Litvinenko’s tea was laced with a radioactive material known as polonium-210, causing sudden illness and hospitalization. He died approximately three weeks later. UK inquests have determined the Russian Federation was responsible for Litvinenko’s assassination.

From reading a bit about both of these matters, I begin to understand that Russia does not take kindly to turncoats. They are also very brazen in their efforts to eliminate enemies of the state.

Reading about the potential poisoning of Mr. Skripal got me thinking about the types of experts that would be used in the investigation and possible criminal or civil actions related to this assault.

HAZMAT & Emergency Services:

Images from multiple news stories show a HAZMAT response to decontaminate the area from exposure to the “unknown substance.” I am unfamiliar with different levels of hazardous material responses, but I imagine HAZMAT experts will be required to help investigators determine the type of substance based on their response. It appears the immediate area around the bench, first-responders, and a restaurant in Salisbury are all being decontaminated.

There is no evidence of a large-scale quarantine nor is an entire block cordoned off. So, it appears HAZMAT believes the chance for further exposure to the community is limited. Such a response likely eliminates the threat of certain chemical or biological contaminants which could result in greater danger to the community.

Nuclear, Chemical, and Biological:

The post from the Daily Mail tells us, “Tests on the substance involved are being carried out at the defence research centre at Porton Down.”

There must have been evidence of the substance available at the scene allowing for samples to be taken for testing. Based on the previous assassination of a former Russian spy using radioactive materials, one can conclude nuclear scientists will be vigorously investigating the substance for radioactivity.

Since Scotland Yard’s counter-terror investigators are involved, it is reasonable to assume chemists and biologists will also be conducting tests on the substance.

A Toxicology Investigation:

I know most of us in the legal community think of forensic toxicologists being needed to detect drugs in a person’s system. Usually we see the use of toxicologists in a DUI, employment, or toxic tort related matter.

We don’t normally think of the need for toxicologists in an assassination or attempted assassination. However, if we remove the international intrigue from the equation, we are simply left with murder or attempted murder. Therefore, investigators will need to know the impact of the substance on Mr. Skripal and his daughter.

The Daily Mail noted, ” Emergency services initially believed Mr. Skripal and his daughter had taken fentanyl, a synthetic opioid that is up to 100 times more potent than heroin that has caused thousands of deaths among drug addicts worldwide.”

A toxicological investigation of the Skripal’s will be necessary to help determine the substance used to either drug or poison them.

Conclusion:

It is too early to conclude anything. Until we know more about the substance, we cannot identify the most appropriate experts to assist in the investigation. As the substance appears to be unknown as of today, we can only suspect UK authorities will employ all of the above during their investigation.

Should this incident turn into a murder investigation, we are likely to see several of the above experts testifying as expert witnesses.