Elizabeth Holmes, the founder of Theranos, was convicted of defrauding investors and will be sentenced in October. Her partner in fraud, Sunny Balwani, was also convicted of fraud, but defrauding patients as well as investors. He’ll be sentenced in November. I predict both will get jail time, though far less than the maximum (20 years for each of them).
In this new piece from 60 Minutes Australia, the scandal of the fake blood machine is reprised, but the centerpiece is two whistle-blowers who came forward to report that the Theranos machine, called “Edison”, supposedly able to diagnose 200 diseases from a tiny amount of blood, didn’t work. Both, Tyler Schultz and Erica Cheung, were scientists given access to the inner sanctum of Theranos. Both quickly discovered that Edison didn’t work and the startup was a big hoax. Eventually, worried about patient safety, both began talking to John Carreyrou, a Wall Street Journal reporter who broke the story on Holmes and Theranos and wrote the definitive book on the scam, Bad Blood. (Well worth a read!) Cheung also testified in court against Holmes and Balwani.
Schultz is involved in another way: his grandfather, ex-diplomat and businessman George Schultz, was both a patron of Holmes and an investor in Theranos. Because of Tyler’s whistleblowing, his relationship with his grandfather was damaged.
What’s new about this is that we get to hear from the whistleblowers themselves, who talked not only to Carreyrou, but to federal regulators and the prosecution. They’re admirable people whose lives were put on hold for a long time (and of course who put themselves out of business) because they valued the truth. They address several questions that have arisen in this saga, including Holmes’s defense that her fraudulent actions resulted from her being manipulated and dominated by Balwani. (Schultz and Cheung both reject that claim.)
If you’ve been following this saga, this is a nice 19-minute video that fleshes it out.
Holmes & Balwani were no better at blood diagnostics than they were at dancing to MC Hammer’s “U Can’t Touch This.” They should both get some extra downtime for bustin’ those embarrassing moves.
They should have started a religion and left science out of it. Doesn’t matter if you’re good at marketing and promotion. You can’t hide forever behind secrecy and non-disclosure agreements by claiming other people want to steal your product. Science is an honest method that requires criticism and replication. You can go only so far on charisma.
Or — if you absolutely MUST have science backing up your religion — go into Alternative Medicine. If Elizabeth Holmes had claimed her machines measured “vibrations of the human energy field” and produced soft results like “improved sense of self” or just “improvements” she’d have had a more modest, but predictable and long-lasting, success with people who don’t trust the Medical Establishment
Trials, of course, are products of their participants. Nonetheless, I find it utterly baffling the the odious Balwani could be convicted of defrauding both investors *and* patients, but the no-less-despicable Holmes was found guilty only of defrauding investors.
Much has been made of poor Holmes being somehow held to higher account because she is a woman who made good in Silicon Valley.
Bollocks, as some say. Holmes is a grade-A liar who knew bloody well what she was doing. There is, as Tyler Schultz noted in the 60 Minutes Australia piece, approximately zero chance that she didn’t know her phony machine did not work as she claimed.
The bigger the sentence for these two scumbags, the better, so far as I’m concerned.
Perhaps she had better lawyers.