Encore: Theranos | The Race to Publish | 3

Summary

American Scandal: Encore: Theranos | The Race to Publish | 3

Host: Lindsay Graham
Author: Wondery
Release Date: October 1, 2024

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Introduction to Theranos and Elizabeth Holmes

In the spring of 2015, Elizabeth Holmes stood at the pinnacle of Silicon Valley fame. Regarded as a visionary and a pioneering female entrepreneur, Holmes had successfully positioned Theranos as a revolutionary force in the healthcare industry. Recognized by Forbes as the youngest self-made female billionaire and invited by President Barack Obama to serve as a global ambassador for entrepreneurship, Holmes's public image was untarnished. However, beneath the surface, Theranos grappled with malfunctioning blood testing devices, setting the stage for a monumental scandal.

John Carreyrou's Investigation Begins

John Carreyrou, a respected reporter at the Wall Street Journal, found himself drawn into the Theranos controversy after completing an exhaustive investigative piece on Medicare fraud. Seeking his next big story, Carreyrou received a mysterious tip from Adam Clapper, a physician and blogger who had raised questions about Theranos's claims. As Carreyrou delved deeper, he sensed that Theranos's success was built on a foundation of deceit.

“Well, if this is for real and they want to talk, send them my way, please. Course. But there's one more thing. Please be delicate with this one.”—[02:30]

Interview with Alan Beam and Other Sources

Persisting in his investigation, Carreyrou connected with Alan Beam, a former Theranos lab director. Beam provided crucial insights into the company's operations, revealing that the proprietary Edison devices were unreliable. Instead of developing their own technology, Theranos had resorted to using third-party equipment, necessitating the dilution of blood samples—contradicting their promise of requiring only a single drop.

“The Edison devices didn't work, Theranos began to use other companies’ equipment. But that created a new problem.”—[12:45]

Beam further disclosed the internal pressure exerted by Sonny Balwani, Theranos's COO, who intimidated employees to suppress dissent. Carreyrou's notes swelled with damaging information, painting a harrowing picture of corporate malfeasance.

Impact of the Investigation and Public Response

As Carreyrou prepared to publish his findings, Elizabeth Holmes launched a strategic public relations campaign to counteract the emerging negative narrative. A pivotal moment occurred during a high-profile lab tour with Vice President Joe Biden, showcasing a fabricated state-of-the-art facility to solidify Theranos's credibility.

“Theranos is clearly the future of medicine.”—[28:15]

However, Carreyrou’s article, published in July 2015, exposed the discrepancies between Theranos's promises and its actual capabilities. The Wall Street Journal's coverage ignited widespread scrutiny, leading to legal threats and attempts by Theranos to destabilize the investigation by intimidating sources and mounting lawsuits.

Legal Challenges and Final Outcome

Despite Theranos's aggressive tactics, including attempts to influence Rupert Murdoch of News Corporation, the investigative efforts remained steadfast. Carreyrou and his editor, Mike Siconolfi, navigated internal pressures to expedite publication, adhering to journalistic integrity.

“We wait until all the pieces fall into place and Theranos has forgotten about us, and then we strike.”—[18:30]

The publication of the Wall Street Journal article marked the beginning of Theranos's rapid decline. Subsequent lawsuits from partners like Walgreens and charges from the Securities and Exchange Commission (SEC) for wire fraud against Holmes and Balwani culminated in Theranos dissolving in 2018. The criminal trial of Elizabeth Holmes commenced in September 2021, underscoring the severity of the fraud.

Key Insights and Conclusions

The Theranos scandal, as chronicled in this episode, underscores the perilous intersection of ambition, deception, and the quest for innovation. Elizabeth Holmes's rise and fall exemplify how unchecked ambition and a lack of transparency can lead to catastrophic consequences, not just for a company but for countless lives affected by fraudulent medical claims.

“For Elizabeth Holmes, this is a new beginning.”—[40:45]

The investigation highlights the critical role of diligent journalism in holding powerful entities accountable. John Carreyrou's relentless pursuit of the truth serves as a testament to the importance of integrity and courage in uncovering systemic fraud.

Notable Quotes

• Alan Beam:
  “The Edison devices didn't work, Theranos began to use other companies’ equipment. But that created a new problem.”—[12:45]

• Vice President Joe Biden:
  “Theranos is clearly the future of medicine.”—[28:15]

• Editor Mike Siconolfi:
  “La Matanza is how we win. We wait until all the pieces fall into place and Theranos has forgotten about us, and then we strike.”—[18:30]

• Elizabeth Holmes:
  “Theranos isn't done. We won't be taken down by a desperate man looking for a good quote.”—[35:33]

Conclusion

Episode three of the Theranos series, "The Race to Publish," meticulously traces the unraveling of one of Silicon Valley's most audacious scandals. From Elizabeth Holmes's meteoric rise to the relentless investigative journalism that exposed her deception, the episode offers a comprehensive look into how ambition and deceit can overshadow innovation. As Carreyrou's story unfolds, listeners are left contemplating the broader implications of unchecked corporate power and the essential role of transparency in safeguarding public trust.

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Next Episode Preview:
In the following episode, Lindsay Graham sits down with Charles Duhigg, bestselling author of The Power of Habit, to explore the tumultuous relationship between venture capitalists and tech companies, and whether powerful investors set the stage for fraud.

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Credits:
American Scandal is produced, hosted, edited, and executive produced by Lindsay Graham for Wondery. Written by Samantha Charlotte, with editing by Christina Malzberger, senior production by Gabe Riven, and executive production by Stephanie Jenz, Jenny Lauer Beckman, and Hernan Lopez.

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Recommended Reading:
For those interested in delving deeper into the Theranos scandal, it is highly recommended to read "Bad Blood: Secrets and Lies in a Silicon Valley Startup" by John Carreyrou.

Transcript

[Lindsey Graham]

Hi, this is Lindsey Graham, host of American Scandal. Our back catalog has moved behind a paywall. Recent episodes remain free, but older ones will require a Wondery plus subscription.

[John Carreyrou]

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[John Carreyrou]

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[John Carreyrou]

Or on Apple Podcasts. It's February 2015, and a Monday morning in Manhattan. John Carreyrou climbs the stairs of a subway station alongside a crush of other commuters. When he steps out into the city streets in midtown, he's greeted by bumper to bumper traffic and crowds of people hurrying into skyscrapers. Caryroo buttons up his coat, the cold wind blowing through his mop of brown hair. Then he slips into the crowd and begins hurrying to his office in a building that also reaches toward the gray winter sky. Cary Roux has a lot of work ahead of him. For years he's been a reporter at the Wall Street Journal, he's a highly respected journalist, and he's recently finished an investigative piece about Medicare fraud. That story was all consuming. But now that it's behind him, it's time to get back to work to find his next great feature story. Carrie Roos steps into the newsroom of the Wall Street Journal. It's a beautiful, chaotic scene. Reporters type furiously on their keyboards while interviewing sources for their stories. Phones ring in every direction. Up above, flat screen TVs are tuned to news about the markets and politics. Carrie Roux has been in this building a thousand times, but he'll never get tired of the newsroom or the important work of holding people in power accountable for their actions. A moment later, Cary Roo reaches his messy desk. He barely has a chance to take off his coat when his phone rings. Hello, this is John. John, it's Adam Clapper. Got a minute? Adam, Good timing. I'm just starting to look for my next story. At some point. I was hoping to talk with my favorite physician slash blogger slash consultant. You know, you are a huge help for the Medicare series. Well, it was my pleasure. But you know, I might be the gift that just keeps on giving. Oh, is that right? What do you got? I'm all ears. Cary Roo reaches into his bag and fishes out a notebook and pen. Well, can you read the feature in the New Yorker last week? Elizabeth Holmes and Theranos. A pioneer who dreams big, drops out of college, builds a revolutionary piece of technology. Yeah, yeah, it was a compelling story. But John, didn't you notice? I mean, the whole Theranos story is full of holes. Well, Maybe. John, I think you're as curious about it as I am. What do you think? Talk to me. Well, there are some pretty big claims there. They don't have any peer reviewed data. That's right. And then Holmes, she studies chemical engineering for just a few semesters, but she's ready to become the next Edison. Yeah, that bothered me too. So I raised some questions about Theranos on my blog. And wouldn't you know it, a group of people contacted me. Oh, is that right? Who? I can't tell you just yet. I gotta check with them first. But they might be willing to talk with you. They've got some information you're gonna want to hear. It could be. It's big. How big, John? Big. Cariru pauses, lets the words sink in. Well, listen, if this is for real and they want to talk, send them my way, please. Course. But there's one more thing. Please be delicate with this one. The people I'm connecting with there, gosh, they're scared. Carrie Roux hangs up and leans back in his chair. More often than not, tips like this don't turn into anything serious. But he trusts Clapper's judgment. And as Cary Roo turns to his computer and begins researching Elizabeth Holmes, he starts to get that electric tingle of curiosity. This story is different. And if his gut reaction is right, there's something behind Theranos success. Something dark.

[Lindsey Graham]

American Scandal is sponsored by Audible. I bet you heard that it takes 10,000 hours of practice to become an expert, right? Who came up with that? Malcolm Gladwell in his book Tipping Point. It's an idea that becomes something of an axiom and brought criticism to Gladwell for oversimplifying complex social concepts. So what does he do? He writes a snarky follow up, Revenge of the Tipping Point. Overstories, Super Spreaders and the Rise of Social Engineering. Too bad the Audible title itself isn't 10,000 hours long, because there's more to imagine when you listen. As an Audible member, you choose one title a month to keep from their entire catalog. New members can try audible free for 30 days. Visit audible.com as or text as to 500.

[John Carreyrou]

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[John Carreyrou]

$35 connection charge applies from Wondery I'm Lindsey Graham and this is American scandal. By 2015, Elizabeth Holmes had grown to be a celebrity and an icon of the tech industry. She made magazine covers and was heralded as a visionary. President Barack Obama invited her to serve as a global ambassador for entrepreneurship, and Forbes magazine named her the youngest ever self made female billionaire. Yet for all of the public triumphs, Theranos blood testing devices were still malfunctioning. That left Holmes and her team scrambling to keep the full truth from the public. This complex web of lies would attract the attention of John Carreyrou, a dogged journalist. In the course of his investigation, he would speak with whistleblowers who were determined to speak up about their experiences with Theranos. The investigation would reach far and wide, and soon it would pose an existential risk to Elizabeth Holmes Co. This is episode three, the Race to Publish. It's February 26, 2015, in Manhattan, and John Carreyrou is clutching his cell phone, ready to make another call. He's already dialed the number a half dozen times without getting an answer, but he knows he needs to keep trying, because if he gets through, he could uncover a treasure trove of information about Theranos. It's been a busy couple of weeks, ever since Carirou first heard from Adam Clapper, the doctor and blogger. Clapper did eventually connect Keriroo with the potential sources, people who'd associated with Elizabeth Holmes and Theranos. But as Kiriru dug into their backstories, he learned that they were tied up in lawsuits with Theranos, making them poor sources for a potential expose. Soon, Kiriru learned about another potential source, a man who'd recently quit Theranos after working as the company's lab director. Unlike the others, he wasn't tainted by litigation. And even though Caririru's calls have all gone to voicemail, it's worth trying again. So Kiriru lifts his cell phone and dials the source's number. After a few rings, a man's voice answers and Keriroo introduces himself. Right away, the man clams up. He says he can't talk. Theranos could sue him if they discovered he was talking to a reporter from the Wall Street Journal. Kariroo steadies himself and thinks through his response. He's been down this road many times before. Informants are often jittery and afraid of retaliation. But there are ways to earn their trust and to work with them. So Kariroo calms his voice and he says he completely understands it's normal for whistleblowers to feel scared. There's a lot on the line. But he has an offer. The man can use a pseudonym if he'd like. There's a pause on the other end of the line. Then the man says, fine, he'll speak. But from here on out, he'll take the name Alan Beam. Kerry Roo agrees. And soon Beam starts telling him about his first days at Theranos. Back then, he had large hopes that the company would be revolutionary, that it would transform healthcare. But that changed when Beam learned the truth about Theranos blood testing device. It was a dud. The device, known as an Edison, often churned out error messages and failed quality control tests. Caryroo scribbles notes as fast as he can, his pulse quickening. He can already tell that this is the beginning of a major story. Bean continues. And the information only gets more damaging. He explains that because the Edison devices didn't work, Theranos began to use other companies equipment. But that created a new problem. Theranos insisted only on drawing a small amount of blood, which was central to the Theranos sales pitch. But if you rely on other companies machines, you have to use more than just a drop of blood. So the company had to come up with a workaround. Technicians diluted the samples so there was enough liquid to process, but that made the results inaccurate and sometimes badly so. According to Beam, Theranos was not only misrepresenting what it was doing, but it was reporting test results that could potentially harm patients. Carrie Roof sets down his pen in shock. This kind of deception is unbelievable. And so he asks Beam if he ever tried to intervene. Beam exhales. He explains that he tried to postpone the launch of Theranos partnership with Walgreens, but Holmes wouldn't do it. Beahm also spoke with Sonny Balwani, the chief operating officer. But he was a bully who used intimidation to crush any kind of dissent. Beahm's warnings fell on deaf ears. Kriyru continues scribbling furiously in his notepad. As Beam reveals bombshell after bombshell. After speaking for an hour, the two end their call. As Kaeiru hangs up, he feels a familiar rush of adrenaline. This isn't just a story about a failed startup. It's bigger than that. Because if what Beam is saying is true, Theranos could mean the next Enron. A tale of hubris and deception. One that could end with an incredible downfall. Two days later, John Kerrerou steps through a park in Brooklyn, New York. The nearby trees are studded with frost, and Carrero rubs his hands together, trying to stay warm. It's one of the city's coldest February's on record, and Kerry Roo should be inside. But he made a promise. He's taking his sons to the park so they can play with their friends. And although his face is numb, Kiriru doesn't really mind. He's distracted by more important development in the Theranos investigation. Alan Beam, his confidential source, may soon offer up a cache of incriminating records. While he was still at Theranos, Beam grew concerned that something bad could happen to a patient who used Athananos blood test and that he could be held personally responsible. So Beam tried to protect himself. He forwarded dozens of work emails to his personal email account. They included messages to Sonny Balwani in which he detailed his concerns with Theranos. Carreyrou was thrilled to learn about these emails. They could be exactly what he needs to help corroborate Beem's incredible accusations. So as he paces around the freezing park in Brooklyn, Kariroo decides to give Beam another call to check in. When Beam answers, Kriroo cuts to the chase. He's hoping that Beam will send over those old work emails. There's a moment of silence, and then Beam announces that he has some bad news. The emails are gone. He was forced to get rid of them as part of his legal agreement with Theranos. Kariro shakes his head, watching his breath turn to steam. This is a disappointing turn of events. Trying to compose himself, he asks whether Beam double checked his emails trash or whether he tried contacting his email provider for support. There are often ways to get back old deleted messages, but Bheem apologizes and says he's sorry those emails are gone. Kaeriru collapses onto a park bench, trying to think of another plan. They need some way to corroborate his accusations. And so he asks Beam whether he has any other way to get these kinds of damning internal communications. Beam pauses, then says, there might be someone worth talking to. A Younger guy named Tyler Schultz. His grandfather is George Shultz, the former US Secretary of State and a Theranos board member. Beem doesn't know all the details, but it sounded like Tyler Schultz left the company on bad terms. He might be worth talking to. Cary Rou nods, and with his fingers numb from the coal, he takes a note. Tyler Schultz could be a promising lead. He could also be another dead end. It's impossible to know when you're reporting the news, but either way, Kerry Roux is going to reach out to see what Schultz knows about Elizabeth Holmes and Theranos. It's the spring of 2015 in Palo Alto, California. In a dark bedroom, Tyler Schultz closes the door and removes a cell phone from his pocket. He turns it over in his hands, marveling at the step he's about to take. The phone is a prepaid burner. Its number is untraceable, and today Schultz is going to use it to contact an investigative reporter and blow the whistle on Theranos. Schultz dials the number for John Carreyrou, his fingers sweating. Hello, this is John. Hi, Mr. Carreyroo. This is Tyler Schultz. You messaged me on LinkedIn. Yes. Tyler, hi. I did not think I'd hear from you. That. That was about a month ago. Yeah. Yeah, I don't know. Sorry. I didn't know what to do. Oh, don't worry. No, I didn't mean to guilt you. I'm just happy you called. Why did you? Well, I left Theranos only eight months after coming on board. My parents tried to get me just to walk away, forget about the whole thing, but I don't know. I couldn't. Huh. Why? What's on your mind? Schultz gets out of bed and begins pacing the room. Well, Theranos's blood tests, they're just not accurate. What happens if someone actually relies on one of those tests and ends up getting hurt or dying? I just couldn't stop thinking about it. Yeah, it's a terrible possibility. A lot of people could suffer, and not just the patients, but everyone in Theranos orbit, including my grandfather. I mean, he's 94. What happens if he dies and Theranos is exposed and he can't clear his name? That's the last the world ever knows of him. Well, it sounds to me like you want to help get out the truth before that can happen. Yeah, I guess so. Well, I'm with you. You want to go on the record? Schultz shuts his eyes, feeling anxious and jittery. No, no, no, no. Not yet. But Look, I'm sure you've done your research. You know, you can trust me. I'm a responsible journalist. Oh, it's not that I believe you. Yeah, I. I'm just happy with my life. I've got a new job. I'm doing well. I don't. I don't want Theranos coming after me. I mean, Elizabeth Holmes likes to sue people, you know. Yeah, I've heard that. But, Tyler, this can be confidential. I mean, certainly at first. Ultimately, though, I will probably need something on the record if we want to run a. For a moment. Schultz weighs the decision. He meant what he said. He doesn't want people to get hurt. But Schultz also doesn't want to upend his own life. But maybe there's a middle way. It's then that Schultz remembers the paper trail. Before he left Theranos, he emailed Elizabeth Holmes, warning her about issues at the company. One day, he printed that email as well as the company's response and tucked the pages under his shirt before leaving the office. Shultz has evidence. And he also has his correspondence with the New York Department of Health in which a state expert suggested that Theranos was cheating. So while Shultz isn't quite ready to be the face of the opposition, he still has plenty that he can share with John Carreyrou and plenty that can put a stop to Theranos.

[Lindsey Graham]

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[John Carreyrou]

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[Lindsey Graham]

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[John Carreyrou]

It'S the spring of 2015 in Phoenix, Arizona. The door opens inside a Starbucks and John Carreyrou enters, a notebook tucked under his arm. Carreyroo breathes in the smell of roasted coffee as he makes his way through the busy shop. It doesn't look like Cariru's source has.

[Lindsey Graham]

Arrived, so he orders a cup of.

[John Carreyrou]

Coffee and heads over to a quiet table in the corner. As he waits for his interviewee, Caririru flips through the pages of notes. He's spoken with a number of Theranos former employees, and altogether, their testimony paints a damaging portrait of the company and its technology. It appears that Theranos is at the center of a major fraud, and with dozens of its wellness centers now operating in storefronts across the country, Theranos is putting patients lives at risk. Cary Roo is almost ready to publish his first story, but before he does, he needs to capture the human toll of Theranos lies. That's why he's here at this Starbucks. He's about to meet with a woman who relied on one of Theranos test results and suffered some painful consequences. A few minutes later, the front door of the coffee shop swings open and a perky Middle aged woman steps inside. Kerry Roof smiles and rises. It's time to meet his newest source. He waves over at Maureen Gluntz, a.

[Lindsey Graham]

Patient of one of the doctors who.

[John Carreyrou]

Carrie Roo has spoken with. Gluntz approaches the table, and after some small talk, she begins sharing the mortifying details about her experience with Theranos. Gluntz explains that she had some ringing in her ears, so she went to get a blood test from a Theranos machine. When the results came back, she was terribly worried. Theranos reported that Gluntz had elevated levels of liver enzymes and glucose, among other issues. And with the ringing in her ear, her doctor worried that she might be having a stroke. So she went to the er. Kaeriru looks up from his notepad, concerned. He asks whether Gluntz is okay. She shakes her head bitterly. She's okay. But that doesn't make her any less angry. She spent hours in the er, ultimately getting a CT scan and an mri. They wanted to take every precaution in case it really was a stroke. The doctors also ordered a new round of blood tests, but when those came back, the results were normal and so were all the other tests. Cary Roos scribbles down the details in his notebook, then shoots Gluntz a look of sympathy. He apologizes, saying it sounds like she had to go through quite an ordeal and all because Theranos test results were inaccurate. Did she have a good insurance plan that might have covered it? Glunce shakes her head again. She explains that she pays for her own insurance and her plan has a high deductible. Altogether, she was on the hook for $3,000, all because Theranos blood tests don't work. Keriroo takes a final note and considers the weight of this story. Because of Theranos, Glunce didn't just endure a frightening health scare, she had to deal with the financial consequences too. And while ultimately she survived, other patients with incorrect test results might not be so lucky. Carrie Roo thanks her for her time. He can feel Gluntz's anger at the inconvenience, at the cost, and the frightening emotional rollercoaster Glentz was put through, all because of an inaccurate test. And while it seems like it's just one person and maybe only $1,000, if you multiply it times the scale of Theranos ambition, it's a catastrophe waiting to happen. Cary Roo is ready to publish. His investigation of Theranos will reveal how the Silicon Valley darling is putting people's lives at risk and how Its reckless behavior has to stop. It's July 23, 2015, in Newark, California. A lock turned slowly in a heavy metal door. And when it opens, Elizabeth Holmes stands in the doorway alongside the Vice President of the United States, Joe Biden. A bright gleaming light washes over them as the two gaze at what appears to be a state of the art blood testing lab. With a flourish, Holmes welcomes in a small group of people. It includes Biden, his entourage, and local print and TV journalists. Together, they step into a modern looking space filled with polished equipment and bustling lab technicians. Holmes describes the place as Theranos newest facility. And when she glances over her shoulder, she can tell that her presentation is already having its desired effect. The Vice President seems like he might be enjoying himself. And Holmes is too. Getting a photo op with Joe Biden is a huge deal. And maybe with this tour, he might give Theranos his stamp of approval. And that kind of support couldn't come soon enough. Holmes recently caught wind of a potentially devastating investigation from a reporter named John Carreyrou. He seems to have cultivated a number of inside sources, including Tyler Schultz. Theranos has tried to contain the fallout. Its lawyers have gone after Schultz, threatening to bankrupt him and his family as punishment for speaking with the reporter. The legal team has also gone after another former employee, as well as multiple doctors who Cariru has spoken with. And it's not just legal action Theranos is planning. With its technology still far from perfect, Holmes had to do something to shore up Theranos reputation. That's why the tour today is so important. Biden's support could help blunt any future attacks and make Theranos more immune to criticism. So Holmes continues the tour, showing off a range of high tech equipment. It all seems to be going well until she catches one of Biden's aides staring at a stack of Theranos devices. Holmes heart skips a beat. She wonders if this aide is an expert in clinical labs. Maybe his trained eye could figure out what's going on here. Because the truth is, the lab is a fake. It was created just for the Vice President's tour. And that's not the only thing that's wrong. Theranos doesn't even have a real lab director. They replaced Alan Beam with a figurehead. A dermatologist with very little lab experience. Her concern growing, Holmes decides it's time for another captivating presentation. Something to distract her guests from the fake lab. And so, as they continue the tour, she employs her usual soaring language. She explains that this lab is State of the art that Theranos is on the forefront of a medical revolution, one that will lower the cost of care and provide medical services to millions. The vice president narrows his eyes as he surveys the lab. For a moment, Holmes feels panicked. It's hard to tell what Biden is thinking. Maybe he can sniff out the ruse, too. But then Biden turns back with a big grin. He says he's very impressed. Theranos is clearly the future of medicine. Hearing Biden's praise, Holmes melts with relief. Finally, a small victory after so many hurdles. The vice president's approval will do a lot to bolster her public image, and with any luck, it'll help her turn the tide. But Holmes knows the work doesn't end there. If Theranos is going to survive the scrutiny of the press and John Carreyrou of the Wall Street Journal, she'll have to do more to win over the public's opinion and prove that Theranos is here to stay. Five days later, John Carreyrou steps into the newsroom of the Wall Street Journal in Manhattan. He sets down his briefcase, grabs a cup of coffee, and starts paging through today's edition of the Journal. As far as he's concerned, it's the very best way to start the morning. But as his eyes scan the paper's first section, he stops there. Prominently placed in his own newspaper is an op ed written by none other than Theranos CEO Elizabeth Holmes. In it, she boasts that the FDA has recently approved a Theranos test for herpes. Her article makes it sound like Theranos is an ally of government regulators. Carrie Roof stares at the article in disgust. This is an obvious ploy and a clever act of war at the Wall Street Journal. There's a clear boundary between the editorial division and and the news division. The editorial staff have no idea that Carrie Roux is working on a big investigative piece about Theranos. And Holmes seems to have taken advantage of the situation. Her article makes her look like a saint in one of the most respected papers in the country. That's an obvious PR maneuver, one that seems intent to set up a defense and pressured the paper to not publish Carrero's story. With this morning's paper in hand, Carreyrou hurries to the office of his editor, Mike Siconulfi. Cary Roos steps into his editor's office and comes face to face with Siconulfi, a slim, bookish man with a wave of dark hair. Hey, Mike, you got a minute? Not really. I'm on deadline. I'M sorry, but this can't wait. His editor stops and exhales as he looks up. All right, John, what's going on? You see the paper this morning? John I see the paper every morning. Well, did you see this? Cariru opens the paper to Holmes op ed and hands it across the table. No. God, I missed this. Yeah, and that's not all. She recently gave a lab tour to Joe Biden. Apparently it was very well received. Public relations coup. Yeah, no kidding. Kerry Roux leans forward with a determined look. Listen, Mike, my story's done. I filed my draft a week ago. We have to move on, because right now, as we speak, Theranos is intimidating my sources. They're trying to crush this story. They're building a PR defense. We have to beat them to the punch. Well, no, it's an explosive story, and that's why it has to go through the usual process. We need to make it bulletproof. Mike, it's too slow. No, no, it's just. It's the way it's gonna be. I haven't even finished my edits. Then it goes to page one. Standards and Legal, you know, they need to go through it too. That could take months. In the meantime, Theranos could get all my sources to turn. The story could fall apart. You know it. Sycanolfi leans back in his chair with a sly grin. John, I need to remind you about La Batanza. The ancient ritual. The fishermen with their spears in the Mediterranean, standing there for hours, perfectly still, waiting so still and so long that the fish don't even realize the hunters are still there. And it's at that moment the fishermen strike. Jesus, Mike. La Matanza. Every time. That's how we win. La Matanza is how we win. We wait until all the pieces fall into place and Theranos has forgotten about us, and then we strike. Carreyrou shakes his head. All right, fine. But look, La Matanza has to happen before October 21st. Why? What's that? Elizabeth Holmes is slated to give a talk at the Journal's technology conference in Laguna Beach. Man, if that happens, the paper's gonna feel a lot of pressure to kill the story. Well, it's over two months away, so we just gotta get back to work. We'll break this thing, I promise. Carrie Roux nods and walks out of his editor's office. This isn't ideal. He's still worried that Theranos will somehow get ahead of him, find a way to sink the story. But that just means Kairiru needs to keep pushing forward. Finding more sources, uncovering more lies, and working on the fullest version of the story that will expose Theranos. It's late September 2015, and Elizabeth Holmes is hurrying through a skyscraper in midtown Manhattan. The towering building houses News Corporation, the global media conglomerate and one of the most powerful companies in America. News Corp. Also happens to be the parent company of the Wall Street Journal. That's why Holmes is here today. She's on her way to a meeting with News Corp's leader, Rupert Murdoch. Holmes met the media mogul back in 2014 at a gala in Silicon Valley. She made a quick impression on Murdaugh and convinced him to invest $125 million in Theranos. That made him the company's largest investor. The two have met several times since. And with Murdoch's sizable investment in Theranos, Holmes believes he may be willing to pull the plug on the Wall Street Journal's investigation of her company. It's in his own self interest. Soon, Holmes reaches the outside of a large office. And then an assistant leads Holmes into a large room with wide windows. Standing in the center is Rupert Murdoch, the aging media titan. Holmes and Murdoch are on good terms, and so he greets her warmly, asking how things are going. But Holmes hesitates. Part of her wonders if she's making the right decision, trying to get Murdoch to intervene in one of his newspaper stories. It's a serious request, and the last thing she needs is to give a prominent investor reason to doubt Theranos. But Carrie Roux's investigation could soon be published and tarnish Theranos image. The threat is too real and too imminent, so Holmes can't risk taking a soft approach. She tells Murdoch that she has a problem. A Wall Street Journal reporter, John Carreyrou, has collected false information from disgruntled former employees. He has a notebook full of lies, but given his reputation, he could do serious damage if his story is published. Murdoch nods, saying he understands Holmes plight. He went through his own scandal a few years back and was dragged through the mud by reporters. It's a bitter fight, but he survived. And she will, too. Holmes swallows hard and repeats her concerns. She argues that Carrie Roo's false reporting poses an enormous threat. The story has to be killed. Murdaugh has the power to make the right decision. But Murdoch shakes his head. He says he trusts his editors to do their jobs. He's not going to intervene. Then, with a pat on Holmes shoulder, he tells her that everything is going to work out. She just needs to have faith. Holmes manages to muster a smile. But inside, she's seized by a feeling of complete terror. Theranos has tried to silence its former employees. They've tried to get ahead of the Wall Street Journal to sabotage the reporting. But somehow Holmes and her allies weren't able to put out the fire. Murdoch was her last option to put an end to the Wall Street Journal story. Theranos secrets are about to become public.

[Ryan Reynolds]

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[Lindsey Graham]

$45 upfront payment equivalent to $15 per month.

[John Carreyrou]

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[Lindsey Graham]

Only taxes and fees, extra speed slower above 40 gigabytes of details.

[Elizabeth Holmes]

Why get all your holiday decorations delivered through Instacart? Because maybe you only bought two wreaths but have 12 windows. Or maybe your toddler got very eager with the Advent calendar. Or maybe the inflatable snowman didn't make it through the snowstorm. Or maybe the twinkle lights aren't twinkling. Whatever the reason, this season, Instacart's here for hosts and their whole holiday haul. Get decorations from the Home Depot, CVS and more through Instacart and enjoy free delivery on your first three orders, service fees and terms apply.

[John Carreyrou]

It's October 8, 2015, in Manhattan. An elevator door opens and John Carreyrou steps out onto the sixth floor newsroom of the Wall Street Journal. Beside him is Jerry Baker, the paper's editor in chief. As they walk toward a conference room, the two veteran journalists share a knowing glance. They're about to sit down with Theranos legal team in a meeting that could produce fireworks. The Journal is on the verge of publishing Carreyrou's investigation of Theranos. And despite all the company's best efforts, including legal threats and intimidation of sources, the storied newspaper doesn't have any intention to cave. Theranos threatened to sue the Wall Street Journal and demanded a meeting with the editors. Baker, the editor in chief, believes in fairness, and so he granted the request. This is the meeting they agreed to. Carrie Roux and Baker enter the conference room where they find several stone faced lawyers. One of them is Heather King, who sets a tape recorder on the table. I hope you don't mind, but I brought a tape recorder because we keep diligent records, unlike some of you in this room. Carrie Roux raises his eyebrows as he takes a seat. All right, well, we're off to a Good start. Start, Ms. King. What would you like to discuss? We're here because we have a duty to prevent Ms. Holmes and her company from suffering grievous harm. And we have a duty to get the truth to the public. But you failed in that responsibility, Ms. King. I have to disagree. Mr. Cary Rou. Your reporting is reckless. You're more interested in a good piece of drama than the facts. Trauma? Yeah. Look, I've done my reporting, and I've only followed the facts. You're going to deny them all? There's nothing you're willing to concede? No, there is. We will admit that the company has not run all of its blood tests on Theranos Devices. Employees have used third party technology. Oh, okay. Well, that explains why you took that line off your webpage. The lawyers exchange confused looks. I'm sorry, what are you talking about? The Theranos webpage. It used to say many of our tests require only a small drop of blood. That's verbatim. It used to be on the website and now it's not. Because from what I've learned, when Theranos uses these other companies machines, they need more than a small drop of blood. And that's why test results have been false. Mr. Carreyrou, that deletion, I assure you, was just for marketing accuracy. Suddenly, the room gets tense. Cariru can tell the King has made a gaffe, admitting Theranos can no longer stand by its most coveted claim that its tests only depend on a single drop of blood. Gentlemen, look, this talk is just going in circles. The truth is, we're not here to kill your article. We'd simply like you to push it back. I'm sorry. We can run it. But you want us to delay it? Yes. Not indefinitely. Just long enough so we can arrange a demonstration. Proof that our technology works. Well, how soon could we get a demo and some assurance that there wouldn't be any sleight of hand? I promise you, it would be entirely above board, but it might take us a few weeks to organize. What do you say to that? Just a few weeks. Carrie Roux exchanged glances with his editor in chief. Holmes is set to appear at the Wall Street Journal's tech conference in less than two weeks. This would put the story at risk. So Baker, the editor in chief, shakes his head and says he's sorry. The paper is willing to push back publication a few days, but only if Elizabeth Holmes is willing to sit down for an interview. Otherwise, they're going to print. The room is silent as the lawyers exchange looks. Then they nod, gather their belongings, and walk out. It takes a moment to sink in, but then the truth hits carry room. This meeting was a victory. Theranos didn't have any other trick up its sleeve. And in a matter of days, the entire world will know the truth. Eight days later, the skies in Palo Alto are blanketed with clouds. Inside Theranos headquarters, Elizabeth Holmes walks by herself, surveying the empty office. She studies the expensive furniture, the sleek design, everything intended to make Theranos look like a Silicon Valley dream. But it's a dream that's now been shattered. Yesterday, the Wall Street Journal published its from the journalist John Carreyrou. The article made devastating accusations accusing Theranos of lies and criminality. When Holmes read the story, she was awash in shame and humiliation, kinds of feelings she thought she'd outgrown. She was supposed to be an incredible success, a pioneer like Steve Jobs who would change the world. And for a brief flicker of time, it seemed like Holmes had achieved her wildest ambitions. She made the covers of magazines, befriended global leaders, made herself into a billionaire. But now it's all come crashing down, and she has to face this very ugly and public spectacle where employees have gathered in the company cafeteria, and in a minute, Holmes is going to have to try to explain what exactly happened. If she's a good enough leader, maybe she'll convince them to stay, to remain believers in her vision. A moment later, Holmes reaches the doors of the cafeteria and takes a deep breath. Then she steps through. All eyes turn to her as Holmes enters the cool, dimly lit room. She puts on a steely expression and steps onto the stage. Holmes begins by greeting her team. She acknowledges that by this point, everyone has seen the news and there's something she has to say. But before she goes on, she pauses. All at once, it's clear her employees don't look angry. They look terrified. They need this company, and they need Holmes to be strong. She has a moment of emotional clarity. It's not time to fold. It's not time to surrender. Not now, when they've come so far. So Holmes straightens her back and tells her employees that the article in the Wall Street Journal may be explosive, but it's full of lies, misinformation spread by bitter ex employees. Holmes shakes her head. She says this sort of thing is bound to happen when you're working to change the world. Apple faced this kind of opposition. So too did Google. Now it's Theranos time. In this excruciating spotlight, Holmes tells her employees to remember the name John Carreyrou, the journalist who tried to smear them all. But Theranos isn't done. They won't be taken down by a desperate man looking for a good quote. They're stronger than that. They're smarter, better, and they will prevail. Holmes then steps down from the stage as slowly, like a wave cresting over the ocean, her employees begin to chant. As Holmes leaves the cafeteria, her employees are cursing the journalist John Carreyrou over and over, getting louder, more boisterous and united in fury. The employees have taken her side. They won't be beaten down by John Carreyrou or his hatchet job. And this is not the end of Theranos. Far from it. For Elizabeth Holmes, this is a new beginning. Elizabeth Holmes did not back down in the face of John Carreyrou's accusations. She publicly fought back against the investigation, claiming that Carreyrou's reporting was inaccurate and that his sources, including former employees, were badly mistaken. But it wasn't enough to protect Theranos. In November 2016, Walgreens sued the company seeking the return of their $140 million investment. In June 2018, the securities and Exchange Commission charged Elizabeth Holmes and Sunny Balwani in what the agency described as an elaborate years long fraud. Facing multiple federal and civil suits, Theranos dissolved later that year. September 8, 2021 marked the first day of Elizabeth Holmes federal criminal trial. She and Sonny Balwani were both charged with wire fraud. Holmes lawyers argued that while Theranos failed as a business, Holmes is innocent of fraud. This episode was produced while the trial was still ongoing. Holmes was once heralded as a maverick, a powerful female entrepreneur in the male dominated world of tech. And her company, Theranos promised that it would revolutionize medicine. Yet Holmes downfall helped shine a light on one of the dark sides of Silicon Valley, where exaggeration over promises and a good story can be worth billions. Even if that story rests on a foundation of lies. From wondering this is episode three of Theranos from American Scandal. On the next episode, I sit down with Charles Duhigg, the bestselling author of the book the Power of Habit and a journalist who covers the tech industry. We'll look at the troubled relationship between venture capitalists and tech companies and we'll discuss whether powerful investors help set the stage for fraud.

[Lindsey Graham]

If you're enjoying American Scandal. You can unlock exclusive seasons on Wondery plus, binge new season first and listen completely ad free when you join Wondery plus in the Wondery app, Apple Podcasts or Spotify. And before you go, tell us about yourself by filling out a [e-mail] survey.

[John Carreyrou]

If you'd like to learn more about Theranos, we recommend the book Bad Secrets and Lies in a Silicon Valley Startup by John Carreyrou. A quick note about our reenactments in most cases we can't know exactly what was said, but all our dramatizations are based on historical research. American Scandal is hosted, edited and executive produced by me, Lindsey Graham for Airship. Audio editing by Molly Bach Sound design by Derek Behrends Music by Lindsey Graham this episode is written by Samantha Charlotte. Edited by Christina Malzberger. Our senior producer is Gabe Riven. Executive producers are Stephanie Jenz, Jenny Lauer Beckman and Hernan Lopez. For Wondering.

[Lindsey Graham]

For years, American Scandal has taken you deep inside the biggest controversies and shocking events in US History. And now you can listen to exclusive seasons on Wondery Plus. Go beyond the headlines with jaw dropping stories and immersive reporting that unveils the complex truth behind these scandals. In our exclusive season, the Hare Krishna Murders dive into the twisted world of a rogue sect of Hare Krishnas. When devotees mysteriously disappear, the trail leads to a dark web of deceit, greed and even murder. Or explore the sordid tale of Enron as we reveal the shocking depths of corporate fraud that led to one of the biggest bankruptcies in American history. From political conspiracies to corporate corruption, these in depth investigations will keep you on the edge of your seat. Experience American Scandal like never before with exclusive seasons that you won't find anywhere else. And on Wondery, you can binge entire new seasons before they're publicly available. Start your free trial of Wondery plus and the Wondery app, Apple Podcasts or Spotify to start listening today and uncover the real story behind America's most notorious scandals.