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.