The Crimes of Elizabeth Holmes | A 10 Billion Dollar Fraud

[Music] Elizabeth Holmes was just 19 years old when she dropped out of Stanford University with a dream of creating a company that would revolutionize blood testing our work is in being able to make testing more accessible they did nothing to verify that her scientific claims were true I felt like she was deceiving the public Interline the doctors you're lying The Regulators you're also lying to the public most people would call that fraud as well [Music] the Bahamas were once home to one of the richest men in modern history a 29 year old billionaire Named Sam

bankman freed described by one YouTuber as the most generous billionaire in the world fast forward a year and Sam's name is now shrouded in National infamy losing his Billionaire's status when it was discovered his company FTX had been illegally using customer money to invest in worthless cryptocurrency the ordeal led to the collapse of the company that forced Sam to abandon his role as CEO shortly before being arrested at his 200 million dollar estate he now faces up to 115 years in federal prison for allegedly defrauding countless unassuming investors with the help of his Harry Potter

loving ancient Harem Obsessed girlfriend what's insane is that up until a few months ago the FTX crypto exchange was lauded as one of the most respected entrusted parts of the crypto industry buying the name rights to the Miami Heat arena securing massive celebrity brand deals and even broadcasting a Super Bowl commercial starring Larry David like I was saying it's FTX it's a safe and easy way to get into crypto yeah I don't think so which all seems to Lend Sam and his company more credibility a lot of otherwise very smart and successful people bought into

the elaborate fraud Sam was peddling and unfortunately countless Innocence Lost a collective eight billion dollars in what one Court filing described as the biggest corporate failure in American history but the cautionary tale of Sam bankman freed is nothing new in a country where professional con artists accumulate massive net worth by Intentionally misleading the general public one name in particular boasts a historic degree of disgrace Elizabeth Holmes Elizabeth Holmes Elizabeth Holmes wants a Silicon Valley Superstar Elizabeth Holmes will spend 11 years behind bars for defrauding investors in 2014 the healthcare technology giant theranos was valued at

a whopping nine billion dollars eclipsing the valuations of both Uber and Spotify at the time with its young 20 something year old Founder touted as a Pioneer in Silicon Valley theranos was once considered to be at the cusp of revolutionizing the blood testing industry a healthcare Pioneer is being compared to Visionaries like Bill Gates and Steve Jobs revolutionary Diagnostics company this is a very big deal if you think the story of a young Stanford Dropout overcoming All Odds to spearhead a contemporary medical Revolution is too good to be true that's Because it is fairness was

a lie one that ended with patients lives in Jeopardy and the company's own Founders Behind Bars join me in revisiting one of the most bizarre and truly mind-boggling medical swindles of all time as we uncover the true intent behind a false promise to save lives and the complex personalities that pushed theranos to the bleeding edge this is the story of Elizabeth Holmes every person should have the ability to get that type of Test this is what happens first they think you're crazy then they fight you and then all of a sudden you change the world

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up through Mobile you'll get real-time alerts if your data is breached or leaked so that you can take Swift action immediately so what are you waiting for join over 1 million people who have already installed today by visiting guard.io jobri or clicking the link in the description below to check out their affordable premium plans starting at just 20 off the usual monthly subscription huge thanks again to guardio for sponsoring this video and Providing you and me with a clean and secure browsing experience I grew up spending Summers and the holidays with my uncle I remember

his love of crossword puzzles and trying to teach us to play football I remember how much he loved the beach see a world in which no one ever has to say goodbye too soon Elizabeth Ann Holmes was born on February 3rd 1984 in Washington DC raced alongside her younger brother Christian Elizabeth always felt she had big shoes to fill given her family's vast history of accomplishments her great great grandfather for instance was such a masterful surgeon they named a hospital after him in Cincinnati he went on to marry the daughter of a man named Charles

Lewis Fleischmann Hungarian immigrant accredited with founding the largest East Empire of the 1800s revolutionizing baking forever so yes Elizabeth Holmes's great great great Grandfather is basically the reason bread can be mass produced and eaten today the more you know I guess While most of the yeast Fortune may have been spent on the extravagant lifestyles of her great grandfather and grandfather over the course of two generations enough was still left over for Elizabeth you enjoy a pretty comfortable upbringing her father Christian Holmes IV was a vice president that the once bustling Energy company in Ron and

her Mother Noel doused worked as a staffer on various congressional committees aiding U.S representatives on issues from defense to foreign policy her mother's familial history isn't without success either with Noel's father both planning and carrying out this shift from a draft-based military to an all-volunteer force in the U.S by the 1970s according to journalist John Kerry Roo Elizabeth's ancestry has even been traced back to the Marshall Lewis Nicholas devout a French military commander ranked among one of Napoleon's finest generals with such an array of accomplishments coursing throughout the family tree Elizabeth grew up with Monumental

expectations when her family asked what she wanted to do when she grew up she'd responded I want to be a billionaire written off is the unrealistic imaginary nation of a child back then this was a goal that would be realized a few decades later Elizabeth Telling the New Yorker in 2014 I grew up with these stories about greatness and people deciding not to spend their lives on something purposeful and what happens to them when they make that choice the impact on character and quality of life I've always believed that when people find what they're truly

passionate about they can build great things various family members have since shined a light on Elizabeth's Competitive side being known as a ruthless Monopoly player as a child and throwing fits when she lost to the extent that she apparently ran directly through a screen door more than once regardless Elizabeth's ambition drove her to design detailed inventions in her notebook which later translated to achieving huge success in school even when I'm in her sleep schedule and social life may suffer her inability to maintain a tight Social Circle as a Child was only exacerbated by having to

get up and move cross-country once her father's job was dissolved along with the entirety of Enron after an accounting fraud Scandal tore the company apart crazyo history repeats itself this led to her father working a myriad of jobs across various government agencies moving Elizabeth from DC to Houston Texas where she'd attend high school at St John's this is where she'd really sharpen her neck for business Becoming interested in technology Elizabeth claimed in an interview with Fortune magazine that as a student she kicked off her first ever business by selling C plus plus compliers to universities

in China eventually studying Mandarin and even getting the opportunity to attend Stanford's summer Mandarin program as a high school student which was pretty rare by the time graduation rolled around Elizabeth and her family had already established Enough connections at Stanford that attempting the Ivy League school seemed like a no-brainer being accepted in 2002 Elizabeth carried a goal of obtaining a degree in chemical engineering knowing she wanted to change the world finding her true calling just a few short semesters later and saws is becoming more aggressive the number of victims expected to Triple within weeks we

are truly in the middle of the evolution of an epidemic in early 2003 the viral Respiratory illness SARS was first identified in China before ripping across over two dozen countries in what would become a global Health epidemic that spanned the next year and a half it was here during the summer between her freshman and sophomore years at Stanford that Elizabeth Holmes worked at the genome Institute of Singapore during the fight against SARS by conducting traditional nasal swab testing by working with patients up close Elizabeth Determined this wasn't always the most ideal method and immediately began

dreaming up other ways to ensure the comfort and convenience of anyone in need of a test she began working on the concept for an alternative immediately upon her return to California where she sketched up the design for a small wearable arm patch that would both diagnose and treat various illnesses see being at Stanford exposed her to what's known as lab on its ship technology Which is inc.com puts it enables diverse results to be extracted from a minuscule amount of liquid on a microchip now if you're like me and only have a fifth grade understanding of

science and chemistry at best that's okay not all of this matters the important thing to know here is that Elizabeth's overarching goal throughout all of her work in the field relied on her desire to make tiny technology work on Tiny minuscule samples which apparently is incredibly Hard to do Elizabeth's patch would ideally detect a virus in a patient and treat it with the appropriate antibiotic in doses that were adjusted according to variables in the patient's blood and to update doctors wirelessly something that was considered challenging but not impossible at least according to Stanford's then dean

of engineering Channing Robertson who claimed it was not only bold but also remarkable in terms of its engineering and scientific Integrity see Robertson may have been sold but not everyone at Stanford was as optimistic about Elizabeth's new idea in fact when she approached professor of medicine Phyllis Gardner with her proposed Gardner fired back with a dose of reality bluntly stating that she didn't think her idea was going to work according to her a tiny patch that could diagnose and begin treating a patient's ailment defied the laws of physics and practically it wasn't anything other Than

a work of fiction but this didn't stop Elizabeth from filing a patent and hiring Stanford lab students to build the Prototype putting together this semblance of a small company with the help of Robertson Elizabeth soon realized she was spending more time pitching her brilliant idea to venture capitalists than actually the attending school but I wasn't going to any classes and I was spending all of my time talking to VCS and so then logistically It just seemed like a waste of money after just a year and a half of trying to juggle grades into getting a

medical startup off the ground Elizabeth dropped out of Stanford in March of 2004 breaking up with her boyfriend to focus more on work and putting what was left of her tuition money toward the dream of changing Diagnostics forever in other words at the beginning of the end for Elizabeth Holmes hurry down from Here Elizabeth officially founded what would become theranos in 2003 at just 19 years old at the time it was called real-time cures which was written as real-time curses on the company's early paychecks thanks to an unfortunate typo really seemed Elizabeth was foreshadowing something

there in the beginning the company operated out of the basement of a college house before upgrading to an office on the edge of East Palo Alto Which Elizabeth discovered wasn't the best part of town after her car windows were apparently shot out showing up to work with glass shards still in her hair one day but these circumstances did little to deter her from taking the first step in making her idealistic technology a reality phrasing money as the case with every startup a good handful of willing investors was crucial for getting anything concrete's off the ground

Luckily Elizabeth prided herself on a dazzling pitch by painting a grandiose picture of what the world could look like with the help of her technology Elizabeth emphasized how her company had the potential to change the entire way we fight and diagnose diseases without delving too far into how the technology actually worked on a practical level her strategy was to talk up a big game and kind of hope the rest just fell into place along the way the details didn't Matter especially not to the people she was trying to win over who weren't exactly the most

knowledgeable on medical science [Music] her first wave of investors was described as more of a grab bag of random entrepreneurs who didn't want to miss out on what was being depicted as the next big thing for healthcare Elizabeth's technology was meant to be used by everyone after all ideally Cutting out the need to be tested for illnesses in a lab altogether combine that utopian concept with the Charisma and charm that Elizabeth was said to have espoused and suddenly people wanted in specifically a family friend named Tim Draper who made a fortune from his early investments

in unicorn companies like Hotmail Tesla and Skype did he know anything about the inner workings of Medical Laboratory Testing no but he along with many other Rich investors Didn't want to risk fomo the fear of missing out can be a popular incentive to capitalize on these opportunities as early as possible it's what led him to cut Elizabeth a check for one million dollars on the spot and allowed theranos to raise six million dollars in venture backing by the end of 2004 a brand name Elizabeth derived from combining the words therapy and diagnosis of course not

everyone bought her lackluster pitch especially not those in the medical Field when one venture capitalist firm known for their Investments and you know Medical Technology it tried to pressing Elizabeth on the specifics of her device during a pitch the young CEO found herself unable to answer basic questions cutting the meeting short when she stormed out of the room if we were to use Elizabeth's own words the way her technology worked was that quote a chemistry is performed so that a chemical reaction occurs and generates a Signal from the chemical interaction with the sample which is

translated into a result which is then reviewed by certified laboratory Personnel if that doesn't sound like me trying to BS my way through a mandatory writing assignment my sophomore year of chemistry I don't know what it does the people who knew anything about what she was trying to do rarely fell for her charm whereas those with little to no prior knowledge of healthcare were the Ones to jump on board one of Tim Draper's Associates telling inc.com you hear a lot about young entrepreneurs who come in with a certain confidence Holmes had 10 times that one

drop of blood two drops of blood 50 tests 50 tests two drops of blood from your fingers yes and it worked beautifully well the investors remained content blinded by the hype of a new company they didn't know and a product they didn't understand theranosis chemists and Engineers lost more confidence by the day maybe the theropatch wasn't impossible but inventing a wearable device that could do everything Elizabeth wanted it to would pose significant logistical problems for the time being a theranos decided to focus on just the Diagnostics part but even that opened the door for challenges

that weren't helped By Elizabeth's rigid expectations she ultimately wanted it to run dozens of tests at once which meant It needed to incorporate more equipment and thus needed to be bigger than something you could simply wear on your arm because of that the idea for a patch was sort of discarded and replaced with a new prototype dubbed the theranos 1.0 an erratic boxy machine that relied heavily on microfluidics and biochemistry the theranos 1.0 used a cartridge and reader system that wasn't exactly in line with her original idea but still gave the company something to Wheel

out during demonstrations to allow more potential investors even if the device didn't actually work ever really [Music] theranos employees told us they were instructed to Stage fake demonstrations for investors in 2006 Elizabeth and her team made the trip out to Switzerland to present the theranos 1.0 in front of the global health care company in Novartis if all went well A fairness would secure a lucrative new Investments which they Could really use now that they had blown through so much of their initial backing unfortunately though one of the two devices Elizabeth brought with them was malfunctioning

the night before the demo while any normal person may have been honest about these flaws and works to fix them before presenting the machine to clients Elizabeth decided to go the insane route calling up her bioinformatics team back in Palo Alto and having them send all the test Results before the presentation occurred so at the demo in Switzerland they would obtain a blood sample with a small finger prick and set the cartridge in the machine but as opposed to flashing its usual will error message the machine spit out the fake results from California giving Swiss

investors the false impression that their blood was really being tested and the machines actually worked Elizabeth was so excited with the successful demonstration she Emailed the entire company saying team we all nailed this one you all did an incredible job making this happen this is the theranos way but when the CFO found out about this he brought it up with Elizabeth at the next meeting saying we've been fooling investors you can't keep doing that to which Elizabeth responded you're not a team player I think you should leave right now he was fired on the spot

the theranos way and then to convince investors that they Really did have groundbreaking new technology they would stage these demos with not just investors but board members even media members they would prick the visiting vip's finger they would put the blood in the cartridge turn it on you know it start worrying and then they would say oh um it's going to take a little while one of them you come and either visit the lab or go look at what's over here go meet with Elizabeth in her office Elizabeth had Proved she wasn't above faking demonstrations

to win over the hearts and wallets of clients and frankly lying about the state of your product is hardly an uncommon occurrence in Silicon Valley the reality is plenty of tech entrepreneurs have managed to raise money for their companies by fudging the details a bit but theranos wasn't selling iPads this was being marketed as life-changing medical equipment if it ever became commercially available Accurate blood testing is obviously crucial for doctors to know what's wrong with their patients and act accordingly filling a prescription based on a false positive or worse in not informing a patient to

the serious ailment carries huge consequences for everyone involved and we've since seen the effects of it without getting too ahead of ourselves here one class action lawsuit filed by the people of Arizona a decade later included a woman who blamed the theranos Test for saying she was miscarrying when she was still pregnant another patient received a false positive on their HIV test and another was wrongfully instructed to stop taking her blood thinning medication all as a result of theranos rushing to get what they knew were faulty products out on the market this wasn't something you

could be flippant about yet Elizabeth was determined to go commercial as quickly as possible which included using real Cancer patients as test subjects back in 2007 when Elizabeth orchestrated the 15-month study for Pfizer that measured how 27 late-stage cancer patients responded to treatment as measured by theranos devices depending on the results theranos was looking at another lucrative partnership with one of the biggest names in medical manufacturing according to one retired Pfizer scientist the results displayed wild variations that theranos couldn't Explain not even offer offering a response for two weeks Pfizer ultimately decided against a partnership

with theranos after such a poor experience despite theranos calling every six months after that trying to get them to change their mind which I'm surprised didn't work Elizabeth has always had a persuasive charm managing to talk her way out of being removed as CEO in 2008 by the board of directors a fate not even Elon Musk could withstand when he Was oust from PayPal but by this point she had garnered a reputation for rushing her employees setting unrealistic expectations for their machines ignoring ethical obligations firing anyone who questioned her actions and of course lying to

investors and patients about the reliability of their technology but that's not the only thing she was lying about now to the trial of EX theranos executive Sunny bawani prosecutor showed new text message Exchanges between balwani and theranos founder Elizabeth Holmes Elizabeth hired a man named Johnny balwani in 2009 despite having no prior experience in any scientific field Sunny quickly Rose to the top of the theranos pyramid it was promoted to president and CEO of the company what employees and the board didn't realize though is that sunny and Elizabeth were in a secret relationship thank you

for inviting us here for the record my name is sunny balwani born in 1965 a Ramesh Sunny balwani began his career during the 90s at Microsoft where he claims to have written over a million lines of code which is virtually the impossible given the time frame in 1999 he joined a company called commercevid.com and made 40 million dollars after it sold to Commerce one shortly before the.com Bubble Burst being in just the right place at the right time Sunny got lucky with tens of millions to his name he was pursuing his MBA at Berkeley at

age 37 when he met Elizabeth Holmes an 18 year old senior in high school while it's uncertain when the two actually began dating they were confirmed to at least be living together by a 2005. joining the company four years later without any investors knowing about the true nature of their relationship which was cold and bizarre as evident by these screenshots of them to Florida I think you are the breeze in my desert for me my water and ocean Meant only to be together tiger okay awesome as Elizabeth is second in command Sonny was described by

employees as overbearing uncompromising and paranoid when he wasn't spying on people's conversations he was desperately encouraging employees to work long hours even if they weren't being productive the amount of time you spent at work was what made you a good loyal employee he also at once called the cops on a worker who refused to sign An NDA hysterically accusing him of stealing property in his mind in short Sunny was this unqualified rich guy who used his position in theranos to LARP as a dictator because come on it's not like this guy knew anything about chemistry

or health care every day he'd pull up to work in his blacked out Lambo and proceed to misunderstand basic scientific terms in front of the entire team mistaking the term end effector for Indo factor a word that doesn't exist Needless to say this guy wasn't the smartest meanwhile Elizabeth had commissioned a former Logitech employee Tony Nugent to improve the way blood samples were being handled in the lab with all of the constraints Elizabeth posed Nugent figured automation was the best way to go but since building a robot from scratch is hard he decided to just

buy one a three thousand dollar mechanical arm with three degrees of motion that Nugent programmed to mimic The movements of a chemist in a lab working with only 50 microliters of blood this prized machine was later named The Edison being described as an 8th grade science project by those who had seen it in action one whistleblower later referring to it as a quote piece of crap consisting of six pipette tips that would constantly break off in the middle of tests get stuck in the gears causing the gears to jam up sometimes the tips wouldn't eject

so they'd use Coat hangers to free up the gears if they didn't just straight up user bare hands subjecting themselves to all kinds of pointy objects and toxic chemicals sure the Edison looked Sleek on the outside but with such a far cry away from Elizabeth's original Vision on the inside on the rare times it did work it only carried out immunoassay tests which only detect drug levels hormone levels and some cancer makers but their scope is limited this meant the Edison could Not run the full range of tests Elizabeth had been telling investors it's like

she cared more about The Branding than the actual mechanics that you know affect patients well-being theranos has struck a partnership with drugstore chain Walgreens to build thousands of wellness centers it wasn't until the Silicon Valley Boom at the beginning of 2010 the theranos officially reached out to Walgreens touting the productivity of the Edison Via email and insisting they had the capability to run any blood test with no more than a few drops of blood fricked from the finger a pitch they knew was a lie but Walgreens didn't know that and became highly interested in doing

away with their slower more expensive labs and arranged a meeting almost immediately it was with the help of an enthusiastic Walgreens team member Dr J that an agreement was reached theranos readers would be used in 30 to 90 Walgreens stores no later than the middle of 2011. if it worked it could benefit everybody involved it would give patients the opportunity to receive blood tests in under an hour it gave theranos the chance to land another massive partnership and it would let Walgreens make a ton of money Walgreens was moving especially fast in this instance out

of fear that theranos would soon be swept up by CVS if they didn't act now plus it helped that Dr J had the Ear of the Walgreens CFO who excitedly hopped on board as well to further convince them theranos bragged to Walgreens about its commercially ready lab that could handle 192 blood tests on their own devices had anyone from Walgreens actually been given the chance to explore a said lab however they'd find that it was only an r d lab for research purposes and that half the tests they listed couldn't even be performed on The

Edison but Elizabeth And other Top members of theranos repeatedly refused to let anyone from the Walgreens Camp actually see the lab Elizabeth had sooner gifted them an autographed flag than an actual look at their technology and when they finally did conduct a live test on the Edison by pricking the fingers of top Walgreens Executives and making a big show of it they never ended up sending the results it was around this time that a man named Kevin Hunter who had been sent by Walgreens to make sure theranos was on the up and up weren't in

a report that the company quote might be overselling or overstating where they are at scientifically with the cartridges and devices but Walgreens still did not want to risk losing out on on such potential one executive telling Hunter we can't not pursue this we can't risk a scenario where CVS has a deal with them in six months and it ends up being real but they weren't the only ones with fomo the Supermarket chain Safeway had also been eyeing theranos and ended up signing a deal in 2010 for a 30 million dollar loan and significant overhaul of

Safeway stores which included adding brand new Labs where customers to get their blood tested in minutes by this point everything was falling into place theranos had secured two major Distributors raised more Capital funding and seemed to be on a great path to success if things weren't collapsing Behind the scenes of course see theranos wanted to go live with a new product they called the mini lab which Elizabeth believed was quote the most important thing Humanity had ever built as the name suggests it was basically a bunch of already existing equipment shrunk down into a tiny

little box to put bluntly the mini lab or 4S was a conceptual Nightmare and was still in the very early prototype stages by 2013. almost three whole years after theranos Had originally planned to launch with Walgreens they had nothing to show but by that point Walgreens couldn't wait any longer the partnership was going to fall through if theranos didn't go live with something theranos needed access to patients and Walgreens made that happen by opening wellness centers inside its stores theranos received their first real blast of national recognition from The Wall Street Journal with a headline

that Praised Elizabeth for her breakthrough of instant diagnosis the 2013 article made therano sound to be the solution to painful slow and expensive blood testing serving as a resounding endorsement of Elizabeth other than its quite unflattering illustration I have to say the journal would not decide how the company's devices could quote automate and miniaturize more than a thousand laboratory tests from routine blood work to Advanced genetic analysis using a Simple finger stick to draw a few droplets of blood from the capillaries at the end of your hand the blood would be placed into a vile

Elizabeth dubbed the Nano Tanner which could hold a blood sample no bigger than the size of a raindrop you'd have your results almost instantaneously she promised just a few days after the article theranos set the mini lab aside to launch the Edison and select Walgreens stores along with their own website after a decade in stealth Mode Elizabeth had finally publicized her life-saving technology that she insisted was a godsend for society and for about the next year and a half that's what everyone else thought too Elizabeth home is part of the news time 100 list just

out Elizabeth Holmes from theranos Elizabeth for example she has become wildly popular among those bucks who follow things like this appearing on the covers of Forbes Fortune tea and ink magazine in one illustrious cover story After another I guess these magazines just can't get enough of Rich frauds but at the time it was hard to deny how inspiring her journey was here was this female College Dropout who had worked 10 years building one of the biggest companies in a male dominated industry wired called her achievements mind-blowing the New Yorker gave her a glowing profile and

Time magazine named her among the top 100 most influential people in the world she was being Compared to the likes of Bill Gates Mark Zuckerberg and especially her own personal role model Steve Jobs Elizabeth had idolized the Apple Foundry since the early days of her career and worked tirelessly to match his product activity and creative Outlook right down to her wardrobe sporting jobs as signature black turtleneck every day adopting a similar diet hiring security detail snatching up former Apple employees to work at theranos and even commissioning His advertising agency to make their commercials I've always

followed a challenge and I think the reason I got into engineering was because I looked at it and I said that looks hard it's so empowering and Powerful to to be a part of a company created by a woman who is so incredibly intelligent and also nurturing next to every glass ceiling there's an iron lady she even referred to her technology as the iPod of healthcare everyone knew Elizabeth was obsessed with Steve Jobs in fact when his biography came out those at theranos who were also reading it could tell what part of the book she

was at by the way she was talking and behaving that's how much she ripped this guy off maintaining a particular image became her top priority it's almost like she got so swept up in the hype of being a media darling that she forgot that her technology was a practical failure behind the scenes as far as the public Was concerned theranos was the new Apple by this point their board of directors consisted of former Secretary of States Henry Kissinger future Secretary of Defense Jim Mattis Wells Fargo CEO Richard kovich [ __ ] man Richard kavoked hang

on kavachovich kavachovich former Secretary of Defense William Perry former CDC director William foage and another former Secretary of State George Schultz who served under President Ronald Reagan during the Iran Contra and Cold War you know she's got the probably one of the most impressive Boards of any startup with Henry Kissinger and former Secretary of State George Schultz I talked to Henry Kissinger who said she is iron willed about getting this done such a powerful board of directors was practically unheard of and offered a new level of legitimacy to what theranos claims to be doing to

top it all off Elizabeth managed to raise more than 700 million dollars of capital funding Thanks to the help of colossal investors including Fox News owner Rupert Murdoch oracle's Larry Ellison future Secretary of Education Betsy DeVos and the Walton family of Walmart inflating the value of theranos to nearly 10 billion dollars at its Zenith with Elizabeth owning half the company in 2015 this officially brought her personal net worth to an estimated 4.5 billion dollars the youngest billionaire in the world is that heady when you hear that You know it's it's not what matters um what

matters is how well we do in trying to make people's lives better that's that's why I'm doing this that's why I work the way that I work and that's why I love what I'm doing so much at that point theranos had made it to the top of the mountain Elizabeth was doing TED Talks being invited to speak at various institutions and could barely walk down the street without being sworn by ravenous young fans who admired her More importantly she was also cozying up with the Obama Administration in a move that some wondered was a calculated

ploy to avoid potential regulatory scrutiny down the line after all schmoozing the most powerful individuals in the country had seemed to work in shielding her for most doubters if she could ever become Pals with the president of the United States she may just be unstoppable so in July 2015 when then Vice President Joe Biden planned to visit theranos's California facility Elizabeth was determined to do everything she could to make a great impression which included staging an entire fake lab with fake equipment instead of taking Biden on a tour of their actual workplace Elizabeth and sunny

cobbled together in erroneous display of defunct equipment that if anyone had tried using wouldn't actually do anything the entire event was nothing more than a pathetic theatrical display to impress the country and it worked the Meeting ended with Biden making it apparent that he along with the entire Administration saw Elizabeth Holmes as a leading figure in the medicine World a much hyped Silicon Valley startup had a special visitor today we mentioned earlier in this newscast Vice President Joe Biden spending time at theranos it wants to shake up the health care industry it's made some progress

so far and today got a big boost though if the people praising her actually knew what Was going on behind closed doors they discovered that Elizabeth's Edison device could only test for about 15 of the 240 illnesses they advertised on their menu as it was later found out that theranos had been conducting the vast majority authority of its tests on other companies machines secretly buying commercial analyzers from Simon's in bulk as opposed to actually using the product they insisted would change the world the truth was the Edison was a Piece of garbage pushing some employees

to the point of quitting when they could no longer cope with the fact that these broken machines were being used on real life patients culminating with a concerned whistleblower at theranos reaching out to Federal Regulators rumors began to spread that the company was obscuring test results deleting outliers that would have caused the Edison to fail quality control checks which is not just unethical but highly Illegal that whistleblower was Tyler Schultz the grandson of board member George Schultz who at that point had taken Elizabeth in as a close family friend in fact Tyler only applied at

theranos when he ran into Elizabeth that his grandfather is home being hired to work in their protein engineering lab in 2013 what Tyler witnessed missed it theranos was far from the Utopia he had seen her spew to investors describing the blockades and locked doors that Sprawled throughout its headquarters Tyler Maines tamed that many who worked at the company had never actually seen their own blood testing machines there was a list of words he wasn't allowed to say when describing his job to people and the morale was basically in the toilet probably because the amazing invention

that had been hyped up to the entire world was just a pipette in a box which barely worked as it was when it often malfunctioned Tyler says he Witnessed employees shoving their entire hands into the box even when highly dangerous chemicals like potassium cyanide were still inside I was told when I was working with it to be extremely careful because it was what Hitler used to kill himself then an engineer goes in and reaches in with his bare hands and you're just like no evidently theranos took lab safety about as seriously as it took quality

control the company puts speed above anything Else according to several key Witnesses including Erica Chung another major whistleblower who later testified against Elizabeth in court she argued the machines were never recalibrated because quote that would take days and with the lack of breaks employees were made to sleep in their cars while they waited Erica even kept a tally of all the times the tech failed quality control checks and when she'd put up error report sheets by the machines They'd just be taken down people didn't want to actually know the number of times that we were

having issues because they were starting to realize we were having them so frequently she stated employees were heavily pressured into lying to doctors and Regulators out of fear of getting fired or sued by the company this cost such a massive problem that people were leaving in droves creating a high turnover rate that resulted in a lab director being Replaced by a [ __ ] dermatologist at one point employee were a secretly forwarding emails from their theranos account to their personal ones so they could clear their name if the time ever came for a federal investigation

that's how it's Shady all of this was Elizabeth and sunny were so freakishly paranoid about people going to authorities that they monitored all employee interactions by prohibiting various departments from speaking to each other as you can Imagine hampering communication between the engineering team and chemistry lab made a working together to create a revolutionary medical device unreasonably difficult in court it was even revealed that two theranos lab directors both in charge of the same lab weren't even aware of each other's existence until the trial each department was required to go directly to the top when they

had a question or concern Elizabeth made sure that she was The only one who knew what was happening in all departments and as she intended to keep it that way in the name of proprietary information and Trade Secrets which was really just code for her not wanting to listen to any potential concerns writing off worried employees is just vicious detractors if she didn't fire you on the spot she'd threatened to or at least see to it that you were ostracized from the rest of the company making sure you were rightfully Punished for challenging the company's

Vision long time theranos Chief scientist Ian Gibbons had indicated to his wife these problems from the very beginning as he had been with the company since 2005. being an accomplished inventor himself with over 60 patents to his name Ian did not take his craft lightly and began to notice serious problems with the way the company was run as his wife later told CBS he started talking to me about all These Investments all the money that the company was bringing in and he told me that he couldn't imagine why people were giving the company any money

because there was no invention there was nothing there adding Elizabeth lives about everything after racing these concern times with Elizabeth and board member Channing Robertson Ian was fired rehired and demoted all within a couple hours working at a lesser rank than before Ian's a passion for the company dwindled Significantly over the next few years and it didn't help that he was also showing signs of depression in the meantime when he was eventually issued a court subpoena in an unrelated patent dispute against Elizabeth Ian became it terrified the testifying against his boss would breach the terms

of his NDA and result in losing his job the day before he was set to testify Ian overdosed on Tylenol and died in the hospital a few days later when his wife Rachelle notified Elizabeth of Ian's passing she received no call back simply acknowledging the death of a top scientist who had been with the company from the very beginning was not on Elizabeth's agenda and instead Rachelle got nothing other than an office manager calling back and asking her to return Ian's company property work resumed like clockwork with Elizabeth pretending like nothing had happened to this

day Rachelle is convinced her husband would Still be alive had he not gone to work at theranos I think of it every day I mean I think of it all the time do you believe that if Ian had not gone to work for theranos that he would be oh yeah for sure no question many ex-employees can attest to the fact that Elizabeth and sunny created a culture of hostility at theranos but their intimidation tactics could only go so far doing little to deter Tyler Schultz from speaking with an investigative journalist by the name of John

Kerry Roo a man who had spent nearly that entire year carefully crafting a series of articles for the Wall Street Journal exposing theranos for who they really were by interviewing countless employees and doctors Kerry Roo confirmed that the vast majority of tests were not being conducted on theranos equipment but instead other commercial testers due to how unreliable The Edison truly was in fact most theranos testing centers were using blood from the arm the exact method theranos set out to destroy the way their system worked included drawing blood the traditional way in the clinic then since

using blood samples via FedEx truck to their California Lab where they'd be tested either by humans or Siemens analyzers but hardly any of it was being done on the Edison's themselves because he reached out to Elizabeth for comment before the story was released she knew it was coming and had already deployed her legal muscle David boyes who began strong arming whistleblowers David boys rocketed to National Fame by defending presidential candidate Al Gore in the 2000 election recount successfully arguing to overturn California's homophobic proposition a grilling Bill Gates in a suit against Microsoft and defending yeah

boys has a pretty textured background to say the Least and Elizabeth was paying him in Company stock which meant he also sat on the board of directors in a possible conflict of interest that she used to her Advantage he was more than financially obligated to see the survival of the company by any means necessary so he had no problem running up Hefty legal bills for whistleblowers which almost made Tyler's parents sell their house but that was of little concern to Elizabeth by the time October 2015 rolled around [Music] as soon as the first few articles

dropped Elizabeth Holmes put herself directly in the line of fire instead of canceling an upcoming conference with the Wall Street Journal in Laguna Beach she used the event to hit back at her detractors and double down on her company's practices you've said that the journal's reporting has been erroneous and grounded in faceless assertions she Expressed concern for the misinformation she claimed to have been spread by the journal and denied accusations that theranos was using commercially available equipment for its tests she asserted that their full commitment to transparency was evident by their willingness to voluntarily seek

FDA approval but didn't acknowledge that theranos had been operating in sort of a gray Zone where because their tests were considered lab developed the FDA had Little to no oversight as The Verge put it if a test is designed by and used in a single lab that lab is allowed to sell and advertise the test without the FDA sign off it's a dangerous loophole that still lingers to this day overall Elizabeth made it clear that she wasn't about to back down in the face of journalistic scrutiny maintaining her innocence even a safe way and Walgreens

pulled back over the coming months Safeway unable to turn any kind of Profit at all after already sinking 350 million dollars into building on-site theranos clinics and their stores dissolved their partnership before they could even get their hands on any devices Walgreens announced it would no longer be sending tests to theranos's California lab and suspended all theranos services at its Palo Alto location following a letter from CMS stating theranos's lab had failed to comply with Federal standards to an Extent that put patients lives in immediate Jeopardy giving theranos 10 days to fix things or else

Elizabeth and sunny would risk being banned from running laboratory as a result Sunny exited the company in May 2016. some speculate this was around the time he and Elizabeth broke up but the details around their personal lives will always be a bit fuzzy what we do know is that same month theranos decided to void two years worth of blood tests in what the Journal estimated corrected tens of thousands of blood reports with new leaks and information being published every other week things were coming apart fast as far as their value went farados was in a

free fall and it didn't look like shake-ups to the board were helping much either by that summer Walgreens closed their 40 theranos locations as Forbes heavily reduced the company's valuation bringing Elizabeth's personal net worth down from 4.5 billion To zero just as it seemed Elizabeth had lost it all CMS officially revoked her license in July 2016. Elizabeth could not run a lab for two years the company became the epitome of a car crash she just couldn't look away from but Elizabeth was convinced she could still turn things around in spite of such public degradation in

an attempt to bypass CMS stipulations Elizabeth abandoned the idea of using Labs or clinics at all revealing in August 2016 the mini lab meant to replace the now condemned Edison Elizabeth insisted the new and improved 4S could handle a range of more varied tests including zika which was pretty widespread at that time Elizabeth presented it as the last Hail Mary to save the company from sure failure claiming it would one day be able to test tiny drops of blood for viral and bacterial infections analyze blood chemistry probe for problems in the Immune system and assess

crucial blood components that could ideally save Millions this technology that we introduced today is the latest version of our mini lab technology and what we wanted to do was introduce the invention and the capability to run a broad range of assay methods on a single platform but nobody was having it theranos was slammed with law lawsuit after lawsuit their biggest investor partner fund management accusing theranos of Security Fraud seeking 96 million dollars in Damages the company was forced to lay off hundreds of employees as Walgreens sued them for 140 million the amount they had initially

sunk into theranos years prior while they settled for way less than that a year later the company was on its last legs by 2017. laying off almost half of the remaining staff before failing a second regulatory lab inspection in September forcing them to shut down their last remaining Laboratory right then and there after being exposed by the media pummeled by lawsuits and slammed by Regulators theranos had no choice but to dissolve in 2018 but not before Elizabeth and sunny face the music themselves I'm gonna follow my counsel's instructions I'm going to follow my counsel's instructions

following his instructions [Music] Shadows walking by you on March 14 2018 the former couple were Each personally charged with a massive fraud by the SEC who claimed the two raised money under faulty circumstances or in their words through an elaborate years-long fraud in which they exaggerated or made false statements about the company's technology business and financial performance the complaint also alleged Elizabeth and sunny both knew that the Edison could only carry out 12 of the 200 tested advertised on its patent testing menu which up until This point was only hearsay finally an official government institution

was looking at theranos through a more appropriate critical lens as the SEC went on to further insist the company lied about its Revenue projections claimed regulatory approval for their devices was voluntary when it wasn't and they had in fact been using slightly modified third-party Machinery without the public knowing the SECU some of Elizabeth's own public statements Against her too citing multiple instances where she lied to make the company seem more legit to the media she would then use that positive attention to get more money from investors not to mention how she'd illegally slap the Pfizer

and John Hopkins logos on fake lab reports to make themselves out to be some serious health care entity everything was conducted under a false pretense that the technology was far more advanced than what the chemists Engineers and technicians on the inside kept telling Elizabeth the evidence proves she was warned time and time again about the status of their technology but her willful ignorance got the best of her as she continued to deceive everyone on the outside Elizabeth had even doubted her relationship with Jim Mattis to make it seem Thera knows how to track record of

working with the Department of Defense while it's true Elizabeth had hoped to Eventually use Edison devices to test on soldiers overseas this never would have happened given the FDA guideline times they needed to have met together the charges involved over 700 million dollars and in June 2018 Elizabeth and sunny were both indicted on criminal wire fraud charges over engaging in a multi-million dollar scheme to defraud investors patients and doctors delayed by covid and more than one possible strategic pregnancy Elizabeth's trial Found her guilty on four of the 11 federal charges what's interesting is that she

was actually found not guilty on four other charges related to defrauding patients but regardless in November 2022 Elizabeth was sentenced to 11 years and three months in federal prison with sunny getting almost an identical sentence in December ensuring the two will live out the next decade of their lives behind bars for swindling hundreds of millions of dollars from Unsuspecting investors and putting the lives of countless Innocents in Jeopardy all in the name of careless arrogance and false Innovation every person should have the ability to get that type of test because if you understand that early

that you're at risk there's a lot more that you can do about it and we'd like to see a world in which every person gets access to this type of basic testing and the types of tests that are Done or ones that provide insight into the onset of disease in time to do something about it we may never know whether or not Elizabeth truly believed in theranos's Mission while her initial goal after dropping out of college may not have been to endanger patients and to bark on a decades-long fraud to Swindle the country's richest people

out of hundreds of millions of dollars it's just kind of what happened if you ask me the tragedy of Elizabeth Holmes is a Combination of unrealistic ambition and unrelenting ego Elizabeth took fake it till you make it to a whole new level and ended up Landing herself in jail when her technology failed to live up to her incredibly lofty Vision at the beginning she figured she could just make certain promises and to iron out the details later on but before she knew it all those little white lies began to pile up into a massive fraud

her goal may have been to revolutionize an Industry and become a cultural Pioneer in the meantime but the problem is she put more effort into the latter than perfecting what would have actually gotten her there inside her paranoia-ridden mind she had all the answers and anyone who said differently was only trying to deter her from whatever pipe dream she had conjured up she'd rather fix on the trivial nature of theranos's branding then wastes time on the boring difficult and confusing Details of what would actually breathe life into her idea but as we've seen you can't

afford to do that when the well-being of patience is at the heart of your idea why so many people continue to have faith in her vision I think comes down to human nature with the way our brains work it's often we see someone speaking with enough Charisma and conviction that we just kind of assume whatever they're saying is legit plus it's not like anyone wanted it to Be false people unfortunately lose loved ones to infectious diseases and Cancers all the time and the prospect that maybe we don't have to say goodbye too soon is a

powerful one maybe it's some form of what Elizabeth envisioned can still happen one day but I just don't think we're there the plan was always too ambitious from the start but Elizabeth would rather stop at nothing to pursue an idealistic reality where she wins then listen to the more Xperia against Grounded voices around her proving the story of Elizabeth Holmes to be one of extraordinary aspiration followed by crushing defeat in the form of a devastating reality check and bounce houses [Music] keep on keep running [Music] foreign