Podcast Summary: "The Trial of Elizabeth Holmes"
On the Media | WNYC Studios | Released September 16, 2021

Hosts: Brooke Gladstone and Micah Loewinger
Contributor: John Carreyrou, Investigative Journalist

Introduction: Revisiting Theranos

In this episode of "On the Media," Senior Producer Leah Feder revisits the infamous case of Elizabeth Holmes and her biotech startup, Theranos. Drawing upon John Carreyrou's groundbreaking investigative work detailed in his book "Bad Blood," the episode delves into the rise and dramatic fall of Theranos, culminating in Holmes' criminal trial.

The Birth of Theranos and the Promise of Innovation

At the heart of Theranos' narrative is Elizabeth Holmes, who founded the company at 19 with the ambitious goal of revolutionizing blood testing. As Leah Feder narrates:

[00:53] Leah Feder: "A decade earlier, at the age of 19, Holmes had founded Theranos, a company built on the claim that its microfluidic technology could facilitate a move from deep vein blood to tests based on a single drop of blood."

Holmes envisioned making health information more accessible and actionable, positioning Theranos as a Silicon Valley marvel poised to disrupt the medical industry.

Media Spotlight and Rising Valuation

Theranos swiftly captured media attention, with Fortune magazine's iconic 2014 cover portraying Holmes as the quintessential tech visionary:

[01:15] John Carreyrou: "Theranos is valued greater than, say, Quest Diagnostics or LabCorp."

This portrayal bolstered Theranos' valuation, making it a darling of Silicon Valley and attracting significant investment.

Unraveling the Deception: Carreyrou’s Investigation

However, the facade began to crumble when John Carreyrou of The Wall Street Journal published a series of damning articles questioning the efficacy of Theranos' technology:

[01:41] John Carreyrou: "Two articles published in the Wall Street Journal investigated the efficacy and accuracy of the single finger prick blood test that put Theranos on the map."

These investigations revealed that Theranos had been falsifying results and misleading investors about the capabilities of its technology for years.

The Criminal Trial: Accountability and Consequences

Years after the initial expose, Elizabeth Holmes faced legal repercussions. The trial, which began in San Jose, California, held Holmes accountable for her actions, with potential penalties including up to 20 years in prison:

[02:13] Emily Saul: "The criminal trial of former Theranos CEO Elizabeth Holmes gets underway today in San Jose, California. Holmes faces up to 20 years in prison if convicted."

John Carreyrou contributed to a series of bonus episodes, "Bad Blood: The Final Chapter," offering in-depth coverage of the trial's progression and challenges, such as jury selection bias:

[02:50] Leah Feder: "None of them was picked. In the end, the selection process resulted in a jury that has a disproportionate number of older white men..."

Building a Network of Influence

Holmes strategically cultivated relationships with influential figures to lend credibility to Theranos. Carreyrou outlines her connections:

[03:07] John Carreyrou: "The first one was Channing Robertson, her engineering school professor when she dropped out of Stanford... Donald L. Lucas, a pretty well-known venture capitalist... George Shultz, the former Secretary of State..."

These alliances played a pivotal role in attracting investment and media attention, reinforcing the illusion of Theranos' legitimacy.

The Illusion of Innovation: Misleading Technology Claims

Despite claims of groundbreaking technology, Theranos relied heavily on existing commercial machines, manipulating them to appear proprietary:

[15:15] John Carreyrou: "They made the cups that went into the machines smaller, and they also, more importantly, diluted the blood so that there would be more volume..."

This deception extended to falsely presenting Theranos' devices as fully functional, innovative solutions when, in reality, they were flawed and unreliable.

Consequences for High-Profile Associates

Prominent board members, including George Shultz, faced reputational damage due to their association with Theranos. While few publicly admitted fault, sources indicate Shultz privately acknowledged his misjudgment:

[17:40] John Carreyrou: "George Shultz recently admitted to his family that he had been wrong all along... he had no idea that there had been that amount of lying."

Regulatory Actions and Downfall

Regulatory scrutiny intensified as discrepancies came to light. The Centers for Medicare and Medicaid Services (CMS) banned Theranos from operating laboratories, leading to the voiding of nearly a million blood test results. Additionally, the Securities and Exchange Commission (SEC) charged Holmes and Theranos with fraud:

[16:38] John Carreyrou: "Theranos and Elizabeth Holmes were banned by one of the health regulators, the Centers for Medicare and Medicaid Services, from running laboratories and had to shut down their laboratories."

Final Settlement and Future Implications

Elizabeth Holmes opted to settle the SEC charges without admitting or denying wrongdoing. She paid a substantial fine, relinquished most of her stock, and agreed to a decade-long ban from serving as a director in public companies:

[17:14] Emily Saul: "She paid a half million dollar fine and relinquished most of her stock. She also agreed to a ban from being a director in a public company for 10 years."

Conclusion: Lessons from the Theranos Scandal

The Theranos saga serves as a cautionary tale about the dangers of unchecked ambition, the importance of due diligence, and the critical role of investigative journalism in uncovering deception. As "On the Media" highlights, the intersection of charisma, influence, and the allure of innovation can sometimes obscure the truth, emphasizing the need for vigilance in both media consumption and investment.

Notable Quotes:

• Brooke Gladstone:

  "There's an opportunity to create a new paradigm being able to make actionable health information accessible to people everywhere at the time it matters most."
  [00:41]

• John Carreyrou:

  "Theranos is valued greater than, say, Quest Diagnostics or LabCorp."
  [01:15]

• Emily Saul:

  "The criminal trial of former Theranos CEO Elizabeth Holmes gets underway today in San Jose, California. Holmes faces up to 20 years in prison if convicted."
  [02:13]

• John Carreyrou:

  "She used the fact that she rolled out the finger stick tests in Walgreens stores as the validation that Theranos product was real."
  [11:12]

• John Carreyrou:

  "She did try to get a field test of the Theranos device in Afghanistan after she met Jim Mattis... the device was being used in the field in Afghanistan and was in medevac helicopters and was helping save the lives of soldiers in the field."
  [12:19]

This comprehensive summary encapsulates the key discussions and insights from the "The Trial of Elizabeth Holmes" episode, providing a clear and engaging overview for listeners and newcomers alike.