Transcripts For KGO 2020 20240713

To create theranos. Doing any lab test from a tiny drop of blood from the finger. From a finger. Oh, my god, this is a rocketship. She was able to put a magic spell on people with her big, blue eyes and deep voice. The whole steve jobs look. The youngest selfmade female billionaire, magazine cover after magazine cover after news article, blog post, speech. The golden girl of Silicon Valley. Part of the new time 100 list. Only problem it didnt work. Did ms. Holmes know theranos could not do all those tests . Yes, she knew. This is a product that didnt work. Not only did they fool the investors all the nanotainers. They fooled patients, doctors. Elizabeth holmes charged with massive fraud. Elizabeth holmes and another former executive await a trial. Holmes pleaded not guilty. I am so incredibly humbled. Enough, Elizabeth Holmes. Listen, this company is a fraud. This is an investigation by the securities and Exchange Commission in the matter of theranos, inc. Elizabeth holmes, grilled by 12 lawyers, investigated for massive fraud. Not how a young billionaire thought her empire would end. Please raise your right hand. Do you swear to tell the truth, the whole truth, and nothing but the truth . I do. It is certainly not where it began. Elizabeth holmes was born in 1984, at the dawn of tech nation, just one month after the macintosh computer. She was raised in washington, d. C. Her parents, from a young age, thought of their daughter as a special person. The mother worked for various members of congress. The father worked for the state department. Mostly involved in human rights. And she looked up to him as an idealist, which is what she thought of herself as well. She wrote a letter to her father when she was 9. Dear daddy, what i want out of life is to discover something new. Something that mankind didnt know was possible. I also want to study about man and his ways. Life is really interesting. I love being with you. Its my most favorite thing in the whole world. Love, elizabeth. I wanted to do something with my life that people thought was impossible before. At a young age shes asked by a relative, what do you want to do when you grshanswered immedit to be a billionaire. And the relative says, dont you want to be president . And she says no. The president will marry me because ill have a billion dollars. Her family was no stranger to wealth. Elizabeth is the greatgreatgreatgranddaughter of charles fleischmann, and the massive fleischmann yeast fortune. A 42room mansion with 40 servants, polo, yachts, safaris. They helped found the new yorker magazine, and bought Coconut Island off the coast of hawaii. They entertained amelia earhart, and Shirley Temple had a Birthday Party on their estate. But the fortune was no more. This magnificent Family History that they had in terms of this extraordinary wealth had been dissipated by prior generations. So this is a picture of a Young Elizabeth and her brother christian v. Joe fuisz was the familys neighbor when elizabeth was a child. This is my brother, justin, a Young Elizabeth. No evidence as yet of the black turtlenecks. The past of the Holmes Family frequently came up. And its was not hard for me to imagine that the Holmes Family believed that elizabeth was restoring them to their rightful place. The holmes moved to houston, where elizabeth excelled at a private school. Megan long went to st. Johns with her. They both ran track, and she says elizabeth was incredibly driven, and never gave up. Typically when you run a race, the thing that youre going to remember is the person who gets first place. But elizabeth always finished her races last. Everyone would finish the race, and youd hear the announcer say, dont cross the track, theres still a runner on the track. That runner was elizabeth. She was determined to do it. Her High School Yearbook page says dream, laugh, reach for the stars. Years, trying to save th world. Her song, im in a hurry. All i really gotta do is live and die but im in a hurry and dont know why it all paid off when elizabeth went to california for college. She picked stanford which was, like, the obvious choice if you were interested in becoming an entrepreneur and a successful one. In the heart of Silicon Valley, its where many tech giants started. Varian, hewlettpackard, sun, yahoo. Thats why its called Silicon Valley and why it really generated that entrepreneurialism. And of course thats probably why elizabeth came here in the first place. Yes, im sure thats why she came here. Phyllis gardner is a professor of medicine here. She first met elizabeth in 2002. This is wilbur hall. Wilbur hall. Where most stanford freshmen start out. Elizabeth holmes first dorm. First dorm room, right. Elizabeth was brought to me by a person whod been the former president of panasonic, saying to me that she was this brilliant girl and she had this wonderful business idea. She came up with an idea for this blood testing device. And the idea behind the blood testing device was that you would have a sticker on your arm, and this would be constantly checking your blood levels and then if you needed to, youd be able to give yourself an injection of whatever medicine you needed. The skin is a terrible barrier to go across. I kept saying to her, its not feasible. And it just went to deaf ears. How did she respond to the criticism . Just kind of blinked her eyes and nodded, and left, and then came back another time with the same sort of concept. It was just a 19yearold talking whod taken one course in microfluidics, and she thought she was gonna make something of it. Elizabeth didnt want to be told it was impossible because she loved the idea. So she went to another professor. He never allowed freshmen in this advanced course. And she persuaded him that she was capable of doing it, and in fact she was. Elizabeth took Chemical Engineering classes as a freshman. I was very intrigued by her vision. Channing robertson was the chair of the department. Felt it would be a really interesting proposition. And he thought, hey, you know what, i see an opportunity here. Maybe you can do this. Maybe you cant. But lets give it a shot. And he became a kind of a mentor to her and said to me maybe once a century you come across someone like beethoven. Shes a beethoven figure, he said, shes a genius. She is this rare creature. And he bet his career on it. I think he was the first enabler. He dragged her around campus, introduced her to people. And she was breaking down doors herself. This used to be my Advisers Office and i would sit here literally in the hallway waiting for him to come back to his office to try to convince him to let me into his graduate research program. In Silicon Valley, one of the things that people brag about is that they drop out of college. I was at a point where another few classes in Chemical Engineering was not necessary for what i wanted to do. Steve jobs dropped out of college. Mark zuckerberg dropped out of college. Bill gates dropped out of college. Zuckerberg, gates, jobs, holmes. You just have the sense that there are certain people who cannot be held back. Elizabeth dropped out too. She decided she was going to actually try to build it. I think its fair to say that, sure, its a great idea, but its actually scientifically impossible. But that didnt stop her from filing her first patent, the first of many. She had all the ideas, but she didnt have the cash. She didnt actually want to go to some of the traditional investors because she would have to prove that this was something that was even on a remotely, faroff, distant world something that you could do. One person she went to, this guy, tim draper, who was a family friend. He has made billions of dollars from his investments. And he agreed to give her some money to get started. I ended up giving her her first milliondollar check. Everything seemed possible in 2004. But her next idea was much bigger. Something that would use just a drop or two of blood and draw more than a billion dollars in investments. Elizabeth holmes, theranos, a revolution. Wow. And her company began. So did the questions. How quickly was it before you start to notice problems . Say hi. A pandemic has the possibility of bringing us together in ways none of us would have been able to expect. Im so small said the mole. Yes said the boy, but you make a huge difference. boy got it. dad its slippery. boy nooooooo. grandma nooooooo. dad nooooooo. dog yessssss. vo quick, the quicker picker upper bounty picks up messes quicker and is two times more absorbent than the leading ordinary brand. boy hey look, i got it. Bounty, the quicker picker upper. The spread of covid19. To help, were offering free prescription delivery, by simply going to cvs. Com or calling your local cvs. So, stay safe. Because the more we stay apart, the sooner we can all get back together. No. Uh uh, no way. Come on. No. No. N. Ni ni, no no only discover has no annual fee on any card. Reporter Silicon Valley. Built on ambition and innovation. Silicon valley, built on ambition and innovation. Where Everyone Wants to change the world and make a billion dollars while theyre at it. Silicon valley is the largest creation of wealth in a 50squaremile radius than anywhere in human history. The allure of success drew in 19yearold Elizabeth Holmes. She had just dropped out of stanford and had a grand vision to revolutionize health care by making by blood testing more affordable and more accessible for all. She opened her first office in the words therapy and her com diagnosis. But instead of that skin patch idea shed dreamt up in college, she came to envision something else. Weve made it possible to run comprehensive Laboratory Tests from a tiny sample or a few drops of blood that could be taken from the finger. She made it sound so simple. The puncture will be made. The collection tubes will now be held up to the drop. And you will see the blood wick into the channels. The nanotainer tubes are then removed and the sample can be processed immediately. That sample was then put into a cartridge and then placed into this portable device, which she claimed processed hundreds of blood tests, which could detect diseases from stds to even cancer in real time. The ability to be able to use a pinprick and test you right there in a Doctors Office, or even in a battlefield, is revolutionary. It changes everything. I said, this could be the holy grail. She named early prototypes of her invention the edison after another revolutionary thinker. Elizabeth became a master at marketing. Having gone through in my own life, losing people that i loved, i couldnt think of anything that was more meaningful than being able to change what people go through when they say goodbye too soon. From highprofile panels to t. E. D. Talks, that phrase a world in which no one ever has to say goodbye too soon. Became elizabeths mantra. A world in which you dont have to say goodbye too soon. A world in which people dont have to say goodbye too soon. Saying goodbye too soon. She was a good storyteller. Thats part of her seductiveness which is why she was able to raise all this money. By february, 2005, the 21yearold had already raised around 6 million. Behind those piercing eyes was a peculiar young woman who seemed to survive on ambition alone. I had this image of her as kind of like a nunlike existence. You know, black, quiet, all alone. She lived in an apartment, which she wouldnt let me see. She said there was just one bedroom. The refrigerator just had a bottle of water in it. She had a lot of, you know, green drinks, and and all this stuff that i you know, i looked at and i said, oh, my god, i cant. If you are what you eat, what are you . Green juice. Best word to describe you . Mission oriented. Favorite place to visit . My office. One of elizabeths most bizarre characteristics was just her obsession with steve jobs and with Apple Computer and imitating him and the company. She even went after steve jobs own righthand man. Id like to now welcome one of my colleagues, somebody ive worked with for over a decade, dr. Avie tevanian. Avie tevanian had been head of software at apple and was one of jobs closest friends. After retiring, avie learned about Elizabeth Holmes and theranos. When you find these ideas that can cut across everything, its huge. And so clearly if this could be made to work, then it was going to be hugely impactful. Was she selling you on the mission of theranos . How did she come across . She was definitely selling me on a vision for what she wanted to do in this realm of blood testing and making it something that was much more accessible than its ever been. So you joined the board. Joined the board. His involvement attracted others from apple to join theranos like ana arriola, who had helped design the iphone. The opportunity was altruistic, it was potentially humankindchanging and i was very curious. Unfortunately i left 15,000 shares at apple but cest la vie. Ana might have left apple, but to her surprise, she certainly did not leave all of steve jobs behind. Elizabeth was very curious about steves attire, and i explained to her that he was inspired by sonys heritage of having issey miyake come in and create a lot of the line manager apparel. And then i think she went off and tracked down who issey miyake was and the rest is couture history. But ana says elizabeths transformation didnt end there. Her voice what she could figure out a surprising baritone was that it would likely cost her a few thousand dollars to get these tests done. Was fake, according to ana. We didnt know that it wasnt her voice until much later. I think it was at one of the parties, and maybe she had too much to drink or whatnot, but she fell out of character and exposed that that wasnt necessarily her true voice. In this interview with npr from 2005, we hear a very different sounding elizabeth. No, it hasnt. Well, if i use traditional words to describe what were doing, its hard. When she came to me she didnt have a low voice. She didnt . No. What was her voice like when she came to you . Just like a typical undergrad student. When i next saw her again was at the Harvard Medical School Board Meeting where she was being introduced. She has this low voice, and im like, oh, my god. You know, its this pastiche. Whether it be the turtleneck, the baritone, the swagger, the sense of belief in herself. You were captivated. But then as the money poured in, the problems poured out. Suddenly, it wasnt just her voice that insiders were worried about. I would never expect that anyone would behave the way that she behaved as a ceo. And believe me, i worked for steve jobs. I saw some crazy things. Dr. Jerome adams why should young people care about the spread of coronavirus . Well we know that people with underlying medical conditions over the age of 60 are at highest risk, but theyve got to get it from somebody. Dr. Deborah birx so were asking everyone to be selfless for others so that we can protect those who are most susceptible. Dr. Anthony fauci not going to bars, not going to restaurants, it all just means physical separation, so that you have a space between you and others. Dr. Jerome adams for more information on how you can social distance please go to coronavirus. Gov when the murrays go to work. Michelangelo goes to work, too. Good thing they use new gain ultra flings with two times the oxi boost, and febreze. Fresh again. Gain. Seriously good scent. Nourishing oils meet fastabsorbing lotions for beautifully nourished skin. Nivea oilinfused lotion. Try new nivea body wash with nourishing serum. Mom look take something that can wipe you out . Or dont, and fight through every second. New quickdissolve nurtec™ can bring you back when migraines attack. Just one dose can work fast and last so you can keep going. Dont take if allergic to nurtec. The most common side effect was nausea. Nurtec one migraine. One dose. Onederful™ othat could mean an increase byin energy bills. You can save by setting your heat to 68 or lower. Unplugging and turning off devices when not in use. Or just letting the sun light your home. Stay well and keep it golden. So where are we right now . Were at coupa cafe in palo alto. This is where we met elizabeth. This is where you met elizabeth. Coupa cafe, a bustling eatery in downtown palo alto. Just a small black coffee, please. This was the hot spot where the heavy hitters of tech were known to make business happen. And Elizabeth Holmes wanted in on this elite club. Eagleeyed viewers of the social network might even spot Mark Zuckerbergs character with his coupa cafe cup in this scene. Im not a bad guy. Somewhere over there, theres a 40 million check being cut. No, im just kidding. Thats yours, right . By 2006, elizabeths obsession with steve jobs was in full swing. She had already recruited his former righthand man, avie tevadegn a aiolaanw e was ntinu aggressively from apple and Silicon Valleys ranks. I had just gone in there with this expectation that i was meeting brilliance, the next steve jobs, next zuckerberg. Something like that. Shes incredibly passionate. Her passion was pretty intense, pretty compelling. Very expressive with her hands. She has a lot of conviction in her vision. You know, were changing the world. We have the technology to do it. They all eagerly jumped on board. It was the opportunity to join the rocketship. Right . I think i can in retrospect look at intensity in a different light but at the time, yeah, it was great. Almost as soon as they started, they say, life at theranos was just a little bit off. How would you describe the culture at theranos . Justin . Not a lot of camaraderie. A lot of paranoia. The Office Environment was designed to not really interact with anybody else. She believed in multiple levels of secrecy and compartmentalization. Employees say elizabeths style was offputting. For justin, what began as excessive micromanaging turned into actually noticing that this person is willing to lie to me about extremely trivial unimportant things. Silly things like saying she had left the office for the day. And she was actually just in an office right down the hall from me. You could see her sending you that email. So i walked over to her and had a bit of an argument with her and she stormed after me and said, dont ever walk off on me again. Like, if you watched the office, there was a lot of like looking at the camera in disbelief. And that was all day. We were all just looking just like, what is going on . You got a sense that not everyone in the company at that time really knew what was happening from a holistic picture. That was partly through a somewhat intentional effort. Adam says the departments were purposely kept separate, designed so no one could catch on that the technology didnt actually work. Were expecting people to prick their fingers, which is hard and scary, and draw blood, put it into the device and it turned out if you screwed up the introduction of the blood into this cartridge it was, like, game over. Wouldnt work . It would be inaccurate. You would get a wildly wrong result. Right. How quickly is it before you start to notice problems . Nine months into it. I was starting to get a little bit frustrated that we would see demos and they just wouldnt work. But some of that you expect to get from a startup that has a product thats not done, right . But the problem was, it never got any better. I think what she didnt expect was that i would ask a lot of questions and that i would ask tough questions. She did not want to hear other peoples opinions. Elizabeth reacted swiftly and harshly, eliminating those who raised doubts. There were posts from employees. They equated it to a south american dictatorship or a drug cartel. They assembled some of the best people that they could possibly get and they just vanished. I was one of the few people that stood up to her. I have told her no on numerous occasions. In august, 2007, ana found out about a Research Study that was testing theranos technology on terminal Cancer Patients. There were patients who were third and fourth stage oncology Cancer Patients that had given their blood to test this device. Light was seeping in and it was corrupting the blood assays and so the data was faulty. The test results wouldnt be used to impact the actual treatments given to patients. But employees hated doing research on such vulnerable people. I brought this to elizabeth and she gave me an ultimatum. Suppress it and continue on with business as usual, and i was like, thats unacceptable. And i decided to resign. I just literally had nothing i wanted to do with that company anymore. Ana wasnt alone. Justin sent elizabeth two management books with titles not safe for broadcast. I cant say any of this on abc news unfortunately. And a pretty epic letter of resignation. Hi, im resigning. Lying is a disgusting habit and it flows through conversations here like its our own currency. The cultural disease is what we should be curing. I really, truly believe you know it already. And for some reason i can justin maxwell. Avie, perhaps her biggest recruit, was at his breaking point too, and expressed his concerns to another board member. I said, im going to give you a choice. I think that there is a chance this company can make this product work. I would love to stick around with you and we probably need to revisit elizabeths role. Or if you want, i resign. Your choice. He said, elizabeth wants you to resign. He said, you ask too many questions. Were you surprised that he said i want you to resign . She had already poisoned the well. The apple era at theranos had burned bright and crashed hard. I would never expect anyone would behave the way that she behaved as a ceo. And believe me, i worked for steve jobs. I saw some crazy things. But elizabeth took it to a level id never seen before. While on the inside, there may have been turmoil, on the outside, people were fawning all over elizabeth and her idea. Are we crazy now that all these people are making a big deal out of it . Maybe were crazy. She was becoming a fullfledged star. Please welcome the only person i know who makes me feel like a lazy bastard, Elizabeth Holmes. Like a lazy Elizabeth Holmes. With this one little nexgard chew comes the confidence, youre doing whats right, to protect your dog from fleas and ticks for a full month. And its the only chew, fda approved to prevent infections that cause lyme disease. Nexgard. 60 of women wear the wrong size pad, and can experience leaks. You dont have to with always my fit try the next size up and get up to 20 better coverage day or night because better coverage means better protection always. In 2009, Elizabeth Holmes found herself in an uncertain place. Despite losing key recruits, her company was now six years old. She had a new office in palo alto where theranos employees were working to carry out her revolutionary mission. But she was desperately in need of more money. The nation was in the middle of economic turmoil. The country is officially declared to be in recession. 6. 5 million americans have lost their jobs. Companies that had been around for generations were struggling to get loans, and even the giants were falling like dominoes. The Lehman Brothers Investment Bank appears headed towards bankruptcy. But unlike so many others, elizabeth had an ace up her sleeve. First name is ramesh. Last name is balwani. Most people call me sunny. Sunny balwani was a multimillionaire who seemingly came out of nowhere to save the day. I knew this mission, what the company was trying to do, was paramount. So i ended up giving a 13 million personal loan. Sunny balwani had made his own fortune at microsoft and lotus. He had zero medical credentials. Did he have any qualifications in the Lab Testing Business . He did not. Or in pathology or anything like that . Not to my knowledge. And yet he became essentially the most powerful person at the company, next to elizabeth. I always wondered why he was there. If she held this vision of really impacting the world, i was like, why . Why did she pick him then . He was terse and he was a bit of a hothead. He brought this ruthlessness with him that the company had never seen. The license plate on his lamborghini was a fitting metaphor for his management style. It paid homage to caesars famous i came, i saw, i conquered. And yet sunnys vision for the company seemed to line up with elizabeths. We have been working hard to build something which we think is magical. In early 2010, their work was about to pay off when the duo secured a meeting with pharmacy giant walgreens. We were interested in partnering with walgreens because of the retail footprint. The partnership with walgreens is a huge gamechanger because walgreens has these Wellness Centers. And if they have the ability to test peoples blood with a finger prick right in the store, it could change everything. According to walgreens, theranos said their technology had been comprehensively validated and was viable and consumer ready. I thought, this is incredible. If these people have actually pulled off what theyre claiming then that could certainly change the practice of lab medicine. Walgreens saw the chance to be at the forefront of something huge. So they eventually cut a 140 million deal. Fastforward to three years later, and elizabeth is celebrating the opening of her first Theranos Wellness Center in this walgreens in palo alto, california. And with that are you one of these people that love blood tests . No. It grosses me out. Elizabeth started peddling her product to the masses, launching this striking Video Campaign directed by oscarwinning documentarian errol morris. I was wondering if you would take a blood test for us, which is one drop of blood. One drop . Bring it on. Thats it . How are you feeling . Feeling good. They exude confidence. They exude this reality that this thing is real. Im a fan. Likewise. Our work is in the belief that access to Health Information is a basic human right. Elizabeth took her mission to the mainstage, charming the audience at the clinton global initiative. You founded this company 12 years ago, right . Yeah. Tell them how old you were. I was 19. Dont worry about the future. Were in good hands. In june, 2014, she was vaulted to stardom after she was profiled in fortune magazine. The article stated that theranos offers more than 200 blood tests without the need for a syringe. But precisely how theranos accomplishes all these amazing feats is a trade secret. And thats when the press coverage really started picking up and you saw her almost once a week. Elizabeth holmes from theranos. Elizabeth holmes. Elizabeth holmes. Thank you for having me. I am so incredibly humbled. We did this. These big, splashy profiles were kind of big, wet kisses. She did mad money with jim cramer, charlie rose, cbs this morning. Little tiny tubes which we i mean, on and on and on. Congratulations on all the success youve had, and i sure hope you win. We cannot lose sight of how much we wanted to believe. There is no better story than the young woman at stanford who dropped out because she wanted to save peoples lives. To the young women in the room here, do everything you can to be the best. She was named one of time magazines 100 most influential people. Wired called her work mindblowing. I got what it takes i will never break always going hard no matter what they say i got what it takes elizabeth started living the life befitting of a cover girl. I also heard she was traveling with four bodyguards packing heat. Further adding to the hype, her allstar board of directors. Her board was made up of some of the biggest names in history. George shultz, i think that was her first connection. The former secretary of state, the guy who many people credit with winning the cold war. He met Elizabeth Holmes back in 2011. She is a dropout. She left after her sophomore year. He then introduced her to all these other aging exstatesmen. Bill frist. I was impressed with the technology. Admiral roughead. I just saw this this potential that was there and was intrigued by that. Shes got kissinger. Come on, kissinger a friend of mine said your board, looks like you guys are ready to take over the world, not start a medical device company. I remember thinking what an odd group of people that is. And its interesting, there wasnt a woman on the board. Its kind of fascinating if you think about it. What Elizabeth Holmes gift was, was she was able to take older white men who were incredibly successful at one point in their careers, and wrap them around her finger. The board and the walgreens deal became significant selling points, enticing a variety of investors from the ultra wealthy to the everyday joes. By 2014, theranos was valued at 9 billion. The founders of walmart invested 150 million. Media mogul rupert murdoch, 125 million. And the devos family, including now education secretary betsy devos, 100 million. She was able to sell to all these people and get them because they all trust each other. If youre doing it, it must be good. Im seeing things pop up inside of walgreens and im wondering, maybe it finally works. But im still in my mind remembering all these other things and saying i still dont believe it. I still dont believe it. She seemed forthcoming except when you asked her about, can i see the machine . No, you cant. And then downstairs in the basement was the secret place you couldnt go. This is my body of proof. Proof i can fight moderate to severe rheumatoid arthritis. Proof i can fight psoriatic arthritis. With humira. Proof of less joint pain. And clearer skin in psa. Humira targets and blocks a source of inflammation that contributes to joint pain and irreversible damage. Humira can lower your ability to fight infections. Serious and sometimes fatal infections, including tuberculosis, and cancers, including lymphoma, have happened, as have blood, liver, and nervous system problems, serious allergic reactions, and new or worsening heart failure. Tell your doctor if youve been to areas where certain fungal infections are common and if youve had tb, hepatitis b, are prone to infections, or have flulike symptoms or sores. Dont start humira if you have an infection. Humira is proven to help stop further joint damage,. And its the 1prescribed biologic for psa. Want more proof . Ask your rheumatologist about humira citratefree. However you celebrate. Lets make it special. Easter for everybunny. Nivea essentially enriched body challenglotion with can be. Nourishing serum deeply nourishes skin, because soft can be powerful, just like you. Nivea. Try new nivea body wash with nourishing serum. Charmin ultra soft is so soft too much, are you hon . Youll have to remind your family they can use less. Charmin ultra soft is twice as absorbent so you can use less. Enjoy the go with charmin. Step by step, were going to figure this out. Were gonna find a way through this. Were working really, really hard in hospitals, our nurses, our techs, all the docs. Its about staggering when people get sick so that the hospitals can cope. Were gonna go through an awful lot of these. All across puget sound, people have been stepping up and donating personal protective equipment. We stay at work. For you. You stay at home for us. Just know were all with you. Thank you, thank you so much. Thank you doctors nurses. Now just 28 years old, elizabeth continued to carefully craft her brand. She set her sights on chiat day, the legendary los angeles ad Company Behind iconic campaigns like apples think different. Heres to the crazy ones. The misfits, the rebels, the troublemakers. And 1984. Youll see why 1984 wont be like 1984. Right off the bat, elizabeth made quite the impression. Elizabeth and sunny flew to los angeles on a private jet and met with our team members. At that time we were told of the story and her vision for theranos. And it was great. The stature of everything felt very, like, i dont know, like a politician or like royalty was there. Like we were rolling out the red carpet. The pomp and circumstance around it, it was really like, who is this person and what is what is this product . The first thing that youll if you ever meet elizabeth that youve noticed is her voice. Im not in a position to do that. Its extraordinarily deep. It sounded to me like she was a man or a robot or both, a man robot, and so you were kind of struck so demeanorwise she carried herself like a highly intelligent person which she is. We thought something really special was going to happen. Theranos eventually inked a 6 million retainer with the agency. Thats a lot of money for marketing. Im always wary when people do a lot of marketing. Same thing with office furniture. The offices are too nice. Im always like, hmm, i wonder whats going on here . The team built out the theranos website and created ad campaigns reminiscent of that other tech giant. There are some similarities to what apple does when you take a look at very minimalistic on white, choice of type font. There are definitely some parallels to that. Everything was based on this tiny drop of blood. So we wanted to make that a big portion of the iconography of the brand. One of the lines was goodbye, big bad needle and it had a picture of a child with big blue eyes and he had just quizzical look on his face. You felt the importance of the mission. But before the ads went live, chiat day had to confirm that all the assertions theranos was making were in fact true to legally protect themselves. Mike, you sent over this claims messaging matrix. We had spreadsheets with feedback that we were trying to explain to them what type of proof that you needed to get this done. They say elizabeth got a little fast and loose with dramatic claims about the technology. I mean, there were specific claims like the fourhour claim. You cant say that unless its four hours. If you want to say hundreds of tests on one single drop, that it has to be hundreds of tests on one single drop. It has to be true at the time of publication or y cant you cant do it. Now it was the ad guys, not just theranos employees, poking holes in the story and holding them accountable. They told elizabeth they had to amend the copy, eliminating specific, unproven claims and distilling them down to vague catchalls. But then things got weirder. There are times where she would go dark for a month. Is that typical . No. That is not typical. Not given the ambition and the desire to move quickly and then to be completely unresponsive was odd, very odd to us. With Wellness Centers now poised to open in multiple cities, mike asked an innocent question. I asked, where is the wheres the lab in phoenix . Because i was curious where it was. I was told, oh, we havent built it yet. Its like, but youre doing the tests. How do you do the test then . And this is great. And then it was, oh, we fedex them up to palo alto. Theyd stumbled on a bombshell. Turns out theranos wasnt going to actually put these devices inside of walgreens because that would have required fda approval, something they didnt have. Instead they were exploiting a legal loophole and flying the blood samples to a central lab. Mike and i looked at each other and there were two problems with that. One was the speed. Another is, how are you using fedex to actually carry somebodys blood . It was like, whoa, wait. And especially when you consider what the promise of the box was. It was portable, you can run tests real quick. I thought they were just going to be in every store and they were going to do it there. It was my contention that the box didnt exist or that they couldnt manufacture it. It wasnt long before many on the chiat day team were wondering exactly who or what they were really dealing with. I will say i was at one point convinced it was a front for the government. And the reason why is that one of the first meetings i had with her, she had said that the box had been field tested in afghanistan and then you look at her board and you look who is sitting on the board and she would continue to drop Major Political and military names. And it got to a point where, okay, maybe this whole thing is some sort of cia. And i mean, and im kind of joking but im also not joking. Im like, whats going on here . Suddenly, with no clear explanation, theranos pulled the plug on chiat day. They were done and chiat was relieved. But the lingering apprehension that elizabeth and theranos might retaliate against naysayers never really went away. Theres still a part of me that has fear. Is this are we being set up . Just because they were just very unscrupulous when it when it came to protecting and make sure nobody talked. But somebody would. A brave and unlikely whistleblower was about to emerge. There was definitely a culture of fear. I dont know how it started but it was definitely there. Meanwhile, real people were now potentially at risk. She said, im so sorry. Thats not good. There could be a tumor growing somewhere. It was oz. And you got behind the curtain and you realized, wow, theres no wizard. An realized, wow, theres no wizard. Its the next one. You always drive this slow . How did you make someone i love . That must be why youre always so late. I do not speed. And thats saving me cash with drivewise. My son, he did say that you were the safe option. And thats the nicest thing you ever said to me. So get allstate. Stop bossing. Where good drivers save 40 for avoiding mayhem, like me. This is my sons favorite color, you should try it. [mayhem] you always drive like an old lady . [tina] youre an old lady. Do i look like a child to you . man cheerios. buzz honey nut cheerios are heart healthy and can help lower cholesterol man mmmmmm. buzz did you just mmmmmm. . man no. buzz im pretty sure i heard an mmmm. Aand were here for you ry day fespecially now,rs. Doing Everything Possible to keep you connected. Through the resilience of our network and people. We can keep learning, keep sharing, keep watching, and most of all, keep together. Its the job weve always done. It is the job we will always do. Fred would do anything for his daughter even being the back half of a unicorn. Fortunately, the front half washed his shirt with gain. Ahhhhhhh. The irresistible scent of gain. From the firstloving touch music everything that touches your baby should be this comforting. Thats why pampers, the 1 pediatrician recommended brand, wraps your baby in breathable softness to help keep their skin dry healthy so every touch is as comforting as the first pampers. The 1 pediatrician recommended brand covid19 is enough to worry about without worrying about cures or claims that seem too good to be true. Do you swear to tell the whole truth . I do. Theres no better story than the young woman at stanford who dropped out because she wanted to save peoples lives. Once touted as Silicon Valleys sweetheart. If they have the ability to test peoples blood right in the store, this could be the holy grail. If you could take a blood test one drop . Did she really believe this stuff . Did ms. Holmes know theranos couldnt do that . She knew. Even talking to you guys now, theres still a part of me that still has fear. Everyone that invested lost it all. Send me my 100,000 back please. Theres this argument shes trying to change the world and its not easy to change the world. Should someone go to jail for this . Orange is the new black. After ten years in Silicon Valley, Elizabeth Holmes seemed unstoppable. Aleensat the largestan and th way is the way to go. She now envisioned a onwidev. Access for every person means rolling this out ultimately within five miles of every persons home. That would give millions of people access to her socalled revolutionary technology. When will i have that opportunity to go use a small test like that and find out data for myself . Working on it as fast as we can. I can tell you our next states are under way. As theranos began building its Wellness Centers in walgreens, the first major expansion was arizona. I first was diagnosed with Breast Cancer back in 2013. I would get a sharp pain in my left breast. Id gotten pretty thin, everybody was worried. And boom, there was a tumor. Sheri ackert, a wife and grandmother, was 57 years old when she began the fight of her life. I had the bilateral mastectomy in the beginning of reconstruction. I had four months of chemotherapy. I managed well through the treatments and i just kind of went back to life, kind of my new normal. That new normal meant getting her blood drawn regularly to make sure she remained cancerfree. My obgyn said, do you want to try one of the theranos labs . I think walgreens has a great reputation. Oh, theyre willing to bring theranos in. They must be okay. All right. This is the walgreens where i had the infamous blood draw. They seemed to know what they were doing and that was that. But things took a terrifying turn when sheri got her results. I will never forget that day, when i saw that the estradiol amount was over 300. I also called my oncologists office and the nurse called me back and she said, im so sorry. Thats not good. There could be a tumor growing somewhere. The doctor told sheri to go in for more tests, but this time recommended a nontheranos lab. It was about a week later i got the call from my doctor and he said, congratulations, your estrogen is basically nonexistent. No new tumor, no new cancer. The theranos tests had been off by hundreds of points. Sheri says she tried to reach out to the company for answers, but didnt get a response. No one from theranos ever called me to apologize. Thats the least you can do when you mess up so badly. Not okay. It turns out this wasnt an isolated incident. Back in palo alto, theranos had caught the attention of Health Care Entrepreneur pallav sharda. Pallav, a husband and father, th a famy sty ofetes, hacently his life when his doctor had warned himo changes. Completely changed it. I gave it three years. I could barely run a mile and a half. And in those three years, i became a guy who did 5 ks every alternate day. He wanted to be sure he was on the right track. So you went to walgreens to take this test. The first thing i noticed was the phlebotomist who was taking my blood, i asked her, well, wait. Wait a minute. This is supposed to be a pin prick. But she was doing a test tube draw in the usual way. It was a little red flag. I was, like, well, thats false marketing. The theranos results indicated that he was prediabetic. But before starting on medication, he was advised to take the same tests at a different lab. Withinays the owed he was safely outside the prediabetic range. How did you feel when you saw this alternate outcome . Pissed. Like, i was this is not right. Like, you just cant lie. Can you guarantee nobody took an extra shot of insulin . Over time, the complaints from customers started pouring in. But what these people didnt know was that employees on the inside had been having serious concerns too. It really ate me up inside. Fresh out of berkeley, erika cheung started working in the lab that processed patients samples. And says she almost immediately noticed an intense culture of secrecy. They would barricade certain portions of the lab so you couldnt see. Especially when outside vendors would come in, like, they always had to be escorted by security. At what point do you start to think something isnt right here . I think the transition happened when i started processing patient samples. So you basically start out with a base test. Yes. You put that base test in your machine just to say, okay, we know its working. We know its cleared. Exactly. And what happened . And it kept failing. I kept running it over and over. And how it was handled totally blew me away. They took out data points and said, oh, well, this is the best two out of six, the way we average things. So youre saying essentially that you were cherrypicking. Exactly. The information in order to make the information make sense. But the thing is, we were still processing patients. Meaning those patients were taking information that you were providing to them and making medical decisions. Right. Our Quality Controls were failing, at one point what seemed almost every day. When erika says she raised these issues directly with sunny balwani, theranos president and coo, she says he would become enraged. He had asked me, so how do you like working for this company . And i said, i really enjoy working for this company, but there are a lot of problems. Were having a lot of issues with our Quality Controls. And then he just sort of lost it at that point and he said, im tired of people coming in here and starting fires where there are no fires. Erika and otherabh ior the Warning Signals from their own people and forged ahead. Weve been able to serve a huge number of people in the last year and it has been phenomenal. There is no doubt in my mind that she knew she was crossing that bright red line when she went live with the fingertip tests. Did ms. Holmes know that theranos could not do all those tests . Yeah, she knew. Yeah, she knew. What about here . Here . Here . Daddy, is that where were from . Well, actually. Were from a lot of places. You see were from here and there and here. Turn questions youve always had into stories you cant wait to share; with ancestry. Imagine a shower enriched with a little bit of goodness. Like this, and that, and even that. 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Elizabeth started this company when she was 19. Shes raised more than 400 million. At 31 years old, Elizabeth Holmes topped forbes list of americas richest selfmade women. This ceo is out for blood. A 9 billion evaluation . Yeah. Congratulations on that. She continued to be a media darling, but this dogged investigative journalist just wasnt buying it. I read a profile of Elizabeth Holmes in december, 2014, written by ken auletta in the new yorker and one of the first things that struck me as off in that story was this notion that she had dropped out of stanford with just two semesters of Chemical Engineering classes under her belt and gone on to pioneer a groundbreaking new medical science. John carreyrou, a reporter with the wall street journal, had his hands on his next story. One of the first things that raised my eyebrows was that sunny and elizabeth were an item. And i was stunned by that because in the new yorker story, the clear implication was that she was single. I had heard through the grapevine that she had a boyfriend. I thought, oh, thats a weird little lie to tell. When she was 18, he had been around 38 or so. I met ms. Holmes in 2002. We were in the same Stanford Program at beijing university. The entire department knew about her chinese, her skills. And so when i first met her, im like, oh, you must be the Elizabeth Holmes. Were you and sunny balwani ever engaged in a romantic relationship . Yes. When . For a long period of time. For the majority of that time were you living with ms. Holmes . Yes. Did you ever tell investors that you had had a romantic relationship . No. It was concealed from the board. It was concealed from the press, it was concealed from investors. You think it was intentional that they hid it . It was absolutely intentional. Carreyrou dug deeper, contacting a number of theranos employees, but many had signed confidentiality agreements and feared the repercussions of violating them. The threat of litigation was always in the air when you worked at theranos. Elizabeth had sued former employees in the early years of the company. She had been very ruthless. Ultimately, carreyrou would find his big break in a then 25yearold former employee, tyler shultz. I noticed he checked out my profile on linkedin. So i emailed him. I ignored it for a few weeks. I was beginning to lose hope that he would ever make contact. Why did it take you so long . I was afraid all this would happen. And then one day i pick up the phone and it is tyler. He was calling me from a burner phone because he didnt want our communications to be traced. But tyler wasnt just a theranos employee. He was also the grandson of one of the companys most influential Board Members, george shultz, the former secretary of state who was also a longtime mentor to Elizabeth Holmes. Good morning. Good morning. Have you ever been deposed before . Nope. Okay. What tyler would reveal to carreyrou was ultimately the story he would tell under oath, in this deposition, years later. Did you develop an impression of ms. Holmes as a person . I was in love with her vision. I thought she was brilliant. Did your impression of ms. Holmes change from the time that you started at theranos through the present day . Yes. How did it change . I felt like she was very manipulative. What do you mean by that . Shes really good at telling you what you need to hear to keep going. She definitely did that a lot with my grandfather. She would just feed him things that were just completely factually not true. People can come in and do full Service Laboratory testing with a stick from the finger, as opposed to having tubes and tubes taken from your arms. Can you recall any of the factually not true things that ms. Holmes told you . The big ones are being able to run hundreds of blood tests from a single drop of blood. My grandfather would go get a theranos test done and he would have a needle in his arm. Its like, i thought this was a single drop of blood. There would be some excuse about why they needed to take a venous draw for him, but for everyone else its a finger prick. And he continued to buy into that. When you read the articles, it sounds like the tests were being done at walgreens, but they were really sent to theranos and then most of the tests were being run on thirdparty machines. Did ms. Holmes know at the time that theranos could not do all those tests . Yeah, she knew. And of the few tests they were running on theranos devices, tyler says the results were often inaccurate. I think that at the end of the day, everyone was concerned that we were not giving patients the right results. Do you think in 2013, in 2014, that ms. Holmes was aware that theranos was not giving patients the right results . I dont know. What about mr. Balwani . Based on what other people were telling me, i would say that, yes, he knew. Tyler tried to voice his concerns directly with elizabeth. After attempting to set up a formal meeting on numerous occasions, he settled for an email. She responded later that evening. She writes, tyler, these are very, very serious comments and allegations that youre making. And then she says that she will have to have the teams go through this line by line. So it will take some time before i get back to you on this. But rather than a followup from elizabeth, tyler got this pages long email from sunny balwani, who wrote in part, that reckless comment and accusation about the integrity of our company, its leadership, and its Core Team Members based on absolute ignorance is so insulting to me that had any other person made these statements, we would have held them accountable in the strongest way. The only reason i have taken so much time away from work to address this personally is because you are mr. Shultzs grandson. The only email on this topic i want to see from you Going Forward is an apology. Tyler responded with his two weeks notice and says he went to meet with his grandfather. Tyler tried to make him realize that this was a fraud and his grandfather had sided with Elizabeth Holmes and didnt believe him. He said, theyre trying to convince me that youre stupid, but they cant do that. They can however convince me that youre wrong and in this case i do believe youre wrong. And my grandfather said that the theranos devices were currently being used in medevac helicopters. Did he tell you who had told him that . He didnt say who had told him that, but i have a really good guess. He also said they were being used in operating rooms. I remember saying that that couldnt possibly be true because the devices were barely working within the walls of theranos. Realizing his grandfathers allegiance to elizabeth was strong, tyler put his trust in John Carreyrou and the journal. But it wasnt long before elizabeth and theranos became aware of tylers secret conversations with carreyrou. My dad said, they know. You to like everything and be positive. But with my depression, its hard to keep up this brave face and hide my symptoms. Even though im taking my antidepressant, i still feel depressed. Many people taking antidepressants still experience symptoms. When added to an antidepressant, rexulti is proven to reduce depression symptoms 62 more than the antidepressant alone. So you can stay on your Current Treatment and help build on your progress. Rexulti can cause serious side effects. Elderly dementia patients have increased risk of death or stroke. Antidepressants may increase suicidal thoughts or worsen depression in those under 25. Call your doctor if you have fever, stiff muscles, and confusion, which may signal a lifethreatening condition, or uncontrollable muscle movements, which may be permanent. 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Having gathered enough information from inside sources like tyler shultz, carreyrou was ready to publish. But he says he underestimated who he was up against. Good afternoon. My name is david boies. The outside counsel for theranos was david boies. Its a wonderful day for america. David boies was known for being one of the most aggressive litigators of his time. One of weinsteins lawyers, high powered attorney he was on the winning side of history making cases. For theranos employees he was a scarecrow. They thought if they expressed their misgivings, that it would be david boies and his law firm that would be coming after them. They get him to take on the wall street journal and any other news outlets that even came into the crosshairs of theranos. David boies and two of his associates at Boies Schiller came to our newsroom. Their demeanor was very aggressive. They proceeded to tell us that i had misappropriated theranos trade secrets. A 23pagelong letter comes a few days after that and that letter is essentially a searing indictment of me as a journalist and the threat is very explicit that theranos is going to sue if we proceed any further with this story. But it wasnt just the journal that theranos was threatening. Did theranos have a private investigator follow you at any time, to your knowledge . Yes. Tyler emails me to let me know that theranos lawyers knew that he and i had met. My dad asked me, have you been speaking with a wall street journal reporter . And i said yes. And he said, they know. You are totally [ bleep ]. You know how aggressive they are. So then i called my grandfather. And he said, there is a onepage confidentiality agreement, and if you sign it, they will make everything go away. And i said, that sounds fine, but can i come talk to you in person first, without any lawyers around . And he said, yes. Tyler shows up at his grandfathers place and he thinks he is going to talk just with his grandfather. I reiterated my concerns. And he continued to believe in what elizabeth had told him. And then he just says, whatever the case may be, will you just sign this onepage document to make everything go away . And i said, yeah, i will definitely sign that. And then he said there are two theranos lawyers here right now. Can i go get them . There just happened to be two lawyers hidden somewhere in the house . Yeah. And what was your reaction to learning that . I was totally surprised. Those attorneys proceed to come down and are extremely aggressive with tyler. They tried to get him to sign a document naming the journals other sources. Did you ever sign anything . Never signed anything. Tyler withstands this unbelievable pressure. My grandfather would say things like, your career will be ruined if this article comes out. Over the course of several months, his attorneys negotiate with theranos attorneys. Ends up costing his parents close to a half Million Dollars in legal fees. But stays firm and in the end i am able to publish. On october 15th, 2015, the wall street journal ran the first of many reports that stated, among other claims, that the company wasnt using its technology for all the tests it offers but instead, was using traditional machines bought from Companies Like siemens to run the majority of its tests. At first, people kind of didnt know what to make of it. Theres ten years of articles saying that this is the greatest company thats ever stepped foot in Silicon Valley and this is the greatest ceo theyve ever had. And then theres this wall street journal article saying, no, none of that is correct. I found myself thinking, i hope that reporters wrong. I wanted to believe so badly how great it would be if this were true. But it turned out not to be. And so instead, you start thinking, god, does she really believe this stuff . Elizabeth, i have to tell you, in all my years i cant recall a private company that i think candidly many have never heard of getting this kind of attention and scrutiny. What do you think is going on here . This is what happens when you work to change things and first they think youre crazy. Then they fight you. Then all of a sudden you change the world. Oh, come on. No. No, enough. Enough, Elizabeth Holmes. Enough with this belief in yourself. I have to say, i personally was shocked to see that the journal would publish Something Like this. Enough with this insanity in the face of an article that basically says, listen, this company is a fraud. But elizabeths next fight wouldnt just be in the court of public opinion. Do you swear to tell the truth, the whole truth, and nothing but the truth . I do. Around here, nobody ever does it. I didnt do it. So when i heard they added ultra oxi to the cleaning power of tide, it was just what we needed. Dad . I didnt do it. 1 stain and odor fighter, 1 trusted. Its got to be tide. Nourishing oils meet fastabsorbing lotions for beautifully nourished skin. Nivea oilinfused lotion. Try new nivea body wash with nourishing serum. While keeping safe and staying in, we can still go out sort of. So while youre discovering new things to do in the box, well be here for you. At the drivethru, on the mobile app, and with delivery. I do motivational speakingld. In addition to the substitute teaching. I honestly feel that thats my calling to give back to younger people. I think most adults will start realizing that they dont recall things as quickly as they used to or they dont remember things as vividly as they once did. Ive been taking prevagen for about three years now. People say to me periodically, man, youve got a memory like an elephant. Helpdous prevagen. Healthier brain. Better life. While keeping safe and staying in, we can still go out sort of. So while youre discovering new things to do in the box, well be here for you. At the drivethru, on the mobile app, and with delivery. Reporter Elizabeth Holmes, Elizabeth Holmes, once the darling of Silicon Valley, was in a precarious spot. A bombshell article came out accusing her company of shocking deception. And potentially lifethreatening practices. Elizabeth went on the offense. First they think youre crazy, then they fight you. Then you change the world. The tables are here, just like they were when we left. I was sitting right over in that booth over there. Amidst the chaos, elizabeth and her president and coo, sunny balwani, called an all staff meeting in the cafeteria at theranos headquarters. We were all gathered in here. Elizabeth right in the middle there. There was probably, like, 500 people, maybe. Then sunny got up and he basically called out John Carreyrou for being a slanderous, slimy kind of guy. And then he started this chant, getting everyone to do it on three. Two words . Am i allowed to say them . You tell me. [ bleep ] you carreyrou is what we chanted. Fists in the air and saying it. Lets not let the facts get in the way of the story. Sorry, john. I thought it was crazy, but i didnt dwell on it too much because i was in the heat of, you know, reporting more stories and reporting the fallout. Were you buying it . At the time, yeah. When youre really committed to something youll do whatever you need to do to believe it. They really believed that the world, particularly the press, was out to get her. She was very nixonlike in that sense. She had her enemies list. Ever defiant, elizabeth went on cnn to make excuses for why patient results were off. Theres a man that was suggesting the lab results from theranos werent accurate and he had a heart attack a month later. Im not the lab director. But youre the ceo of company and this is as serious as it gets. What i know is that i put the best people in place to investigate every aspect of this. I know theyre doing that. But elizabeths empire began tumbling down in a matter of months. Walgreens halted plans to open any new Wellness Centers, ultimately terminating its contract and suing theranos. The two companies settled for an undisclosed sum with no finding or admission of liability. Federal lab inspectors issued a warning that theranos tests pose immediate jeopardy to Patient Health and safety. Forbes cut elizabeths net worth from 4. 5 billion to zero. And amidst all of this, sunny and elizabeth called it quits. The sort of romantic piece that was there at the very beginning died. Both personally and professionally. Sunny left theranos in may, 2016. And then the biggest blow yet. Elizabeth was now under the harsh glare of a very different kind of spotlight. Ms. Holmes, please raise your right hand. She was finally forced to answer to the securities and Exchange Commission as she was investigated for an alleged elaborate yearslong fraud. Do you swear to tell the truth, the whole truth, and nothing but the truth . I do. Suddenly, the woman who had always seemed to have all the answers we are the only lab company that is actually really focu on leading with transparency. Now had none. I dont know specifically. Im not sure. I dont know exactly. Claiming ignorance more than 660 times. I would be speculating. I just dont know. Elizabeths carefully crafted narrative began to unravel. There were those hundreds of blood tests she said her Signature Technology could supposedly perform. Making it possible to do any lab test from a tiny drop of blood from a finger. How many tests could it run . I dont know exactly what the number was. There was probably tens of tests. So when you say tens of tests, you mean something less than 100 . Yes. And those claims she allegedly peddled to highpowered Board Members was theranos technology deployed in emergency rooms, hospitals, and provider offices . No. Was a theranosmanufactured device ever deployed in the battlefield . No. Was it ever deployed in a medevac helicopter . No. She was challenged sentence by sentence on what she told Roger Parloff in that starmaking fortune cover story. Is the statement that theranos currently offers more than 200, and is ramping up to offer more than 1,000, of the most commonlyordered blood diagnostic tests, all without the need for a syringe was that statement correct . Reading it now, i dont think it is. And as for those assertions that all tests were done on their own proprietary device . Did you tell mr. Parloff that most of theranos tests were run on commercially available analyzers . I i dont think so. Sunny balwani, her former lover and coo, was also questioned about the claims in that fortune article. Theres a paragraph that begins, theranos, which does not buy any analyzers from third parties, is therefore in a unique position. Was that a true statement in june of 2014 . No, it was not. Were you worried that if mr. Parloff wrote an article mentioning only theranos manufactured devices, that people would be given an inaccurate impression of how theranos was conducting its patient testing . Not at the time. Because at the time i thought it was all about the aspiration and the vision. Looking back at it now, i absolutely wish we had handled our communications differently. Roger parloff later wrote another, very different article. The title . How theranos misled me. As this divide between elizabeths grandiose vision versus reality became clear, and after lengthy depositions with elizabeth and sunny, and people on the inside, the s. E. C. Was now ready to bring civil charges. Elizabeth holmes charged with massive fraud. Her Company Theranos raising funds through fraud. She and the government settled the case. Paying a 500,000 fine. Elizabeth settled with no admission of wrongdoing. She got off with a slap on the wrist, but the storys not over yet. She was about to Face Criminal Charges for multiple counts of fraud, which could land her in jail for decades, if convicted. They both pleaded not guilty. I would be shocked if she didnt finish this behind bars. Both plead i would be shocked if she didnt finish this behind bars. To ensure your toyota is in top condition, many Toyota Service centers are open to serve you with certified technicians and genuine toyota parts. And many even offer Online Service scheduling and nocontact vehicle dropoff. Were here for you. Contact your local toyota dealer to see how they can help. Toyota but when allergies attack,f any the excitement fades. To see how they can help. Allegra helps you say yes with the fastest nondrowsy allergy relief and turning a half hearted yes, into an all in yes. Allegra. 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Thank you, thank you so much. Thank you doctors nurses. Elizabeth holmes, once valued at 4. 5 billion, once touted as Silicon Valleys sweetheart. She was able to put a magic spell on people with her big, blue eyes and her deep voice. She would have been the next steve jobs. Now worth nothing. Her carefully constructed world was crumbling around her. The theranos lie was unraveling. The department of justice announced they were filing criminal charges against Elizabeth Holmes and sunny balwani. Elizabeth holmes is stepping down. She could end up going to jail for at least 20 years. Holmes and Ramesh Balwani both pleaded not guilty. Just last month, it was announced they would face separate charges. Up first, holmes trial, scheduled for late this summer. By september of 2018 theranos was officially out of business. And hundreds of millions of dollars from some of the wealthiest and connected individuals on the planet, wiped out. Everyone who invested in theranos lost it all. Reed kathrein is one of the attorneys who sued theranos on behalf of investors. I think its probably the most interesting fraud case ive dealt with. Bernie madoff would be second. Bernie madoff, the now infamous financier, whos serving life in prison. I spent six hours in jail interviewing him. You think theyre similar people . I think theyre very similar people. Smart, charming bullies. And just like madoff, it wasnt just the ultrawealthy investing. I was told it was going to be the next big thing. Eileen lepera, a retired 00 it was the biggest investment and what did you expect . A new house. While she didnt know a lot about theranos, eileen thought she knew enough about the people who were vouching for elizabeth. Well, i was trusting the knowledge and the expertise of who i bought it from. And im not placing any blame because everybody pretty much got snookered from big mucketymucks. In the end eileen lost that 100,000. If you could Say Something right now to Elizabeth Holmes . Send me my 100,000 back, please. Ill never earn that much money back in my life. I dont have enough years. Its a hard pill to swallow. Elizabeth and her counsel did not respond to our repeated requests for comment. But the attorney for sunny balwani wanted to defend his client. Does he feel in any way that he was duped by Elizabeth Holmes . No. Mr. Balwani believed in Elizabeth Holmes and her vision for the company. He tried to execute that plan with her to make it a success. If you were going to give him a grade on the job he did at theranos, what would that grade be . I would give him an aplus for dedication and effort but obviously when we look at this after the fact, it has been a business failure. And, you know, mr. Balwani is very sorry about that. But that is not the same as fraud. But among the allegations from the department of justice against elizabeth and sunny were those false and misleading statements they made about their socalled revolutionary technology. Turns out the majority of their tests were actually being run on devices they purchased from other companies. Dont you think that walgreens would have wanted to know what device you were using to process these samples . I am not aware that they were very focused on what hardware that we were using. Why use a thirdparty product, if youre charging for that Cutting Edge Technology . Right, good question. The concept was to collect the samples from the Walgreens Stores and transport them to the central lab where theyd be tested. If you have lots of samples being collected, you need machines that are going to have higher throughput. Machines from other companies. Right. Did theranos ever disclose to walgreens what devices it was using to run different test types . No. We would never do that. Why not . Well, there was a lot of trade secrets here. There was no secret that theranos was doing traditional blood testing. Except for the fact that the advertising itself suggested you could have your tests done with a prick of blood. I was wondering if you would take a blood test for us which is one drop of blood. One drop . Bring it on. Well, that was it never said thats the only way it would go. When they did the venous draw they did do it in a way that drew less blood, that was a little less painful and difficult. But the impact of theranos alleged crime goes far beyond corporate fraud. Lives were potentially put at risk. Tens of thousands of patient test results had to be voided. How can you claim that the technology is accurate when the company itself theranos is withdrawing those results . Mr. Balwani was doing anything he could to make sure the testing was accurate, by hiring the very best people. He had to rely on his scientists. Are you suggesting then that it wasnt possible for sunny balwani to know whether the Technology Actually worked . I mean the head of the laboratory . Of course it was possible to know and he did think it worked because his Scientific Team was telling him it worked. The Quality Controls were failing. At one point what seemed almost every day. Recall those scientists, like erika cheung, who said they tried to speak out but were angrily brushed off by sunny. Weve heard from some employees that the scientists were those who were most afraid of sunny balwani. I just dont think thats accurate. When it comes to our health, people want to know its 100 accurate, day one. They want to know that whats inside of a walgreens or at their Doctors Office can actually do what it says it will do. Rebecca, of course thats true. I think, though, the unfortunate thing is that in our system of health care theres mistakes that are made every day. Theres no perfect answer. I think people may accept that mistakes happen but if you know that something is systemic, thats a problem. Of course that is a problem. Thats not what happened here, though. Should someone go to jail for this . No. I think this is a business failure. But its not fraud, and im very confident that when the jury hears the whole story youre going to see an acquittal in this case, acquittals. What does life look like now for the fallen former billionaire . At a bar table, staring right at me, it was Elizabeth Holmes. She looked like a fraction of offered a self. Android users may keeping our customers, employees, and communities safe. During these Uncertain Times we want you to get the Great Service you expect without leaving the safety of your home. Sprint. Com makes shopping easier by offering free next day shipping and no activation fees on our best new phone deals, like the amazing iphone 11 for just 15 a month when you switch. For now sprint. Com is the best way to learn about our plans, buy new phones and get the services you need. Stay healthy and go to sprint. Com today. For people with hearing loss, visit sprintrelay. 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Im on it. Thats a step in the right direction. Once a blazing star, Elizabeth Holmes has all but disappeared from the public eye. I never really expected to ever see her again in person. Michael craig had only heard whispers about his former boss until one chance encounter at a bar in sausalito. I looked over to my left, and at a bar table, staring right at me, i realized it was Elizabeth Holmes. And then she got up and came over. But she wasnt the poised woman he once revered. She looked like a fraction of that former self. She was always in the steve jobs black thing. Always very made up. She didnt have any makeup on. She was in a dark hoodie and jeans. She introduced her friend as her fiance. And i was like, i wonder what story she has been telling him, and herself, really. The Elizabeth Holmes story has had an undeniable impact on those left in her wake. Like whistleblower tyler shultz. He and his grandfather, george shultz, have since made amends. The former theranos board member told abc news that his grandson did not shrink from what he saw as his responsibility to the truth. Even when he felt personally threatened and believed that i had placed allegiance to the company over allegiance to higher values and our family. As for tylers confidant John Carreyrou, he wrote a bestselling book, bad blood. But what remains to be seen is whether the story of Elizabeth Holmes is one of misguided ambition or deliberate deceit. There is this argument that shes trying to change the world, and its not easy to change the world. We could all have a great idea. Were going to have a car that flies tomorrow. Thats a great idea. The great ideas are a dime a dozen, but its how you implement them. Do you think its humanly possible that Elizabeth Holmes wasnt aware of what was going on at her company . No. No. She knew what was going on. So many people wind up in jail for such little things. This is not a little thing. Do everything you can to this day Elizabeth Holmes denies any wrongdoing. Last i heard about Elizabeth Holmes is that she is currently in Silicon Valley, trying to start a new company and seeking funding for it. Was elizabeth a sociopath . I think History Speaks for itself. As she once declared at a forbes conference, Elizabeth Holmes is not a woman who will go down without a fight. You will get knocked down over and over and over and over again and you win by getting back up. I would start this company over 10,000 times if i had to