The downfall of Elizabeth Holmes: Is the young billionaire going to jail? | 60 Minutes Australia

The downfall of Elizabeth Holmes: Is the young billionaire going to jail? | 60 Minutes Australia
The promise was a health care revolution. The reality was a bloody lie. When Elizabeth Holmes claimed she’d invented a device that with a pinprick of blood could diagnose hundreds of medical conditions, she became the darling of Silicon Valley. Holmes, along with her business partner and ex-lover Sunny Balwani, then set about duping investors to bankroll their multi-billion dollar company, Theranos. But what the couple didn’t count on was the courage of two of their own staff who knew the blood machine didn’t work, and knew they had to tell the world. Now Holmes and Balwani have been found guilty of fraud and could face decades in jail.

The promise was a healthcare revolution
the reality was a bloody lie
when elizabeth holmes claimed she’d
invented a device that with a pin prick
of blood could diagnose hundreds of
medical conditions she became the
darling of silicon valley
holmes along with her business partner
and ex-lover sonny balwani then set
about duping investors to bankroll their
multi-billion dollar company theranos
but what the couple didn’t count on was
the courage of two of their own staff
who knew the blood machine didn’t work
and knew they had to tell the world
now holmes and balwani have been found
guilty of fraud and could face decades
in jail
you have anything you want to say it may
well be one of the biggest medical
swindles in history and elizabeth holmes
may be one of the biggest fraudsters of
our time
do you have any reaction to your guilty
verdict it’s an extraordinary reckoning
for the former darling of silicon valley
who unashamedly modeled herself on
apple’s steve jobs
i’d like to welcome elizabeth holmes the
real treat the incredible elizabeth
holmes
holmes is now facing jail but at her
height her swagger was unassailable her
self-belief bought by everyone there are
people in this world who revolutionize
our lives coco chanel steve jobs bill
gates walt disney and elizabeth holmes
mark my words
and in ramesh sunny balwani her then
secret lover and business partner she
had a trusty lieutenant
together they turned their medical
startup theranos
into a 9 billion juggernaut promising
the holy grail of healthcare
non-invasive cheaper faster and more
reliable blood tests theranose
means being able to see
the onset of disease
in time to be able to do something about
it so you could do this in
helicopters and battlefields in patients
homes and doctors offices it just
sounded like this technology had no
limits and i found elizabeth to be
extremely charismatic
and i so i knew that this was something
that i had to be a part of
science graduates tyler schultz and
erica chung were two young guns
elizabeth and sunny hired
the pair joined theranos believing they
would be part of a healthcare revolution
it’s a bit of a heartbreaking tale right
because there was so much potential
there was so many possibilities of what
could have come out of this
very quickly erica and tyler were given
access to the inner sanctum of theranos
and its secret weapon
a mini lab known as the edison a
miniaturized testing device that holmes
created and claimed could diagnose up to
200 diseases from a single fingerprick
but no matter how many tests they ran
the machine failed to deliver reliable
results
inconceivably that did not stop
elizabeth holmes from spreading it to
the world people don’t even know
that they have
a basic human right to be able to get
access to
information about themselves
and their own bodies that can
change their lives
do you think there’s any doubt that
elizabeth knew her edison contraption
was a failure or was she just you know
faking it until she made it there’s no
doubt that she knew
like
she supposedly invented the thing right
and then i was fresh out of college my
first job day one working with it it was
obvious that it didn’t work it
there’s no possible way she didn’t know
absolutely not
[Music]
what appalled the young scientists was
the decision by elizabeth holmes and
sunny balwani to roll out the machine to
be used on real people with real
diseases
knowing the test results could not be
trusted
that galvanized this remarkable pair
into a dangerous course of action that
would shape their lives for the next 10
years
they risked everything to become
whistleblowers to expose the
extraordinary and shameless lies putting
patients in jeopardy
we can’t stand for this we can’t stand
for letting people
treat people this way um
and and just get away with it with no
consequence was the patient side that
drove you to become a whistleblower
wasn’t it yes yes it was really to say
we can’t
be using this faulty technology on
patients like this is
this is wrong these are
tests that have huge
impacts on people’s lives and the way
they behave it’s not like a vitamin d
test or something you know we’re talking
about infectious diseases
of course tyler never considered one day
he would blow the whistle on elizabeth
holmes when he was first introduced to
her in 2011.
his formidable grandfather george
schultz the former u.s secretary of
state who served under three presidents
wanted him to meet elizabeth whom he
considered brilliant
we think that
there’s going to be a revolution in
preventive medicine unaware she was
peddling a fantasy the then 91 year old
george schultz had just accepted
holmes’s invitation to join the theranos
board i don’t think he had a reason to
not believe elizabeth he didn’t have the
skill set to really question her
by getting him on board she was able to
essentially use his network to assemble
an extremely powerful board of directors
i mean you believed her so it’s not a
stretch is it to think that your
grandfather and people of his uh vintage
and level of understanding believed her
yeah that’s exactly right
and i’m sure it also didn’t hurt that
she was young
thin blonde blue-eyed
um i think she was able to woo a lot of
older men just by
uh
yeah i don’t know just by kind of
showing them some affection it sounds a
bit icky really it is
i i can understand why your grandfather
fell victim to to elizabeth holmes but
what did she want from him so i think
one of the biggest things he got out of
him was transfer of credibility people
believed what he had to say
and she needed that
it certainly helped her raise nearly a
billion dollars from high-flying
investors like rupert murdoch who like
so many trusted elizabeth at face value
elizabeth was a goddess people
worshipped the ground she walked on
but like the wizard of oz behind the
curtain nothing was quite as it seemed
and then you go and you talk to the
scientist and she’s a total joke you
cross the threshold from the carpeted
world into the tiled world
and all of a sudden it’s just like
nothing works we’re on a sinking ship
and we cannot bail out water fast enough
the toughest part is trusting yourself
enough to realize and recognize that the
truth will prevail one way or another
both erica and tyler initially took
their concerns about false test results
to the top
but elizabeth holmes and sunny balwani’s
response was to attack
they basically called me arrogant
ignorant patronizing reckless
they said i had no understanding of math
science or statistics they attacked me
personally and
i felt like
you know what more could i do this is
not somewhere that where i can work and
make a difference
speaking up is easy but having to deal
with the doubt of other people having to
deal with the retaliation having to deal
with the rejection
all of these factors make it very very
challenging and very difficult to just
do something so simple of saying hey i
don’t think this looks right or hey we
shouldn’t be doing this
tyler experienced that in the most
personal way when trying to warn his
grandfather of the deceit george schultz
instead sided with elizabeth holmes i
basically said you can be the board
member who says elizabeth does not have
my complete support
you can be the board member that says
elizabeth lied to me she lied to
patients she lied to doctors she lied to
investors what was it like to be in that
position where your grandfather chose to
believe elizabeth
over you i was devastated
and i told him i said
you’re choosing a criminal over your own
family
it’s still not easy to get those words
out and it wasn’t easy for me to tell
him that but that’s what he was doing
[Music]
in direct contrast to his grandfather
tyler and erica felt they needed to do
more
but it wasn’t until they spoke to
investigative journalist john kariu from
the wall street journal in 2015 that the
extraordinary fraud was exposed
they couldn’t in good conscience
continue
to not say anything they felt the need
to speak up
and they felt that lives were in danger
and that the longer this went on
the worse it would get
when i spoke to the wall street journal
reporter i bought her burner phone with
cash because i thought that that would
guarantee no one would ever ever be able
to discover that i was a source
and man was i wrong
um they they told me they figured me out
in about five minutes
it was that obvious for all your cloak
and dagger i mean you must have felt
like the criminal buying a burner phone
i did i did feel like the criminal
buying a burner phone
but that was nothing compared to the
betrayal tyler felt when he discovered
his grandfather had tipped off theranos
lawyers to a visit tyler had planned
with him
it marked the start of a campaign by the
company of intense bullying and
intimidation
following suspicions tyler had spilled
the beans on the theranos sham
and to my surprise there were actually
two lawyers in her in his house that he
did not tell me about
and they basically
ambushed me and
um
that kind of started this
this horrible period in my life where it
felt like within two to three days i was
going to be
in a courtroom getting sued by a nine
billion dollar company
and
i ended up spending around five hundred
thousand dollars in legal fees to
protect myself so five hundred thousand
dollars in legal fees just for trying to
do the right thing yeah
it was worth it
i guess
that’s what i tell myself
both you and tyler
for all of your being mild-mannered
scientists i think you’re made of steel
yeah you had to be so strong yeah it
definitely takes a lot of strength to do
something like this like whistle blowing
should really be a last resort
but it looked like it would all come to
nothing when a shock development late
last year threatened to derail the
entire case from what you witnessed from
what you observed do you believe that
sonny barwani was the puppeteer
for the first time in a long time erica
chung has her life back
for the past 10 years she has been a
critical player in the biggest scandal
to rock california’s silicon valley
the spectacular fall of theranos the 9
billion startup company that promised to
revolutionize healthcare
as a theranos scientist turned
whistleblower erica took the stand in
march to testify against her former boss
ramesh sunny balwani
following her testimony against ceo
elizabeth holmes late last year
what was it like to be in the courtroom
with elizabeth holmes there
i think going in i i was
scared because i didn’t know how i was
going to react and now i had to
basically do my duty which was to give a
voice particularly to a lot of people
who were voiceless in this circumstance
specifically the patients
and to to tell the truth and answer the
questions
alongside erica fellow whistleblower
tyler schultz was driven to speak out
against the company because investors
and patients were being lied to about a
miracle mini lab which promised to run
hundreds of blood tests from just one
drop of blood
he witnessed it fail over and over it
just fell short of elizabeth’s
pitch in every conceivable way
and then it wasn’t even accurate it
didn’t even work
the greatest fear for tyler and erica
was that patients lives were being put
at risk something erica wanted to make
clear at trial
it was an immense amount of pressure and
uh stress that kind of came with it
but once the actual trial happened and i
was on the stand
it
was nice because i realized well when
you tell the truth from the onset you
just have to keep doing that and answer
the questions to your guilty verdicts
here
in january the verdict came down against
elizabeth holmes while she was acquitted
of defrauding patients holmes was found
guilty of fraud against investors she’ll
be sentenced in october
just over a week ago in a separate trial
former business partner and ex-boyfriend
sunny balwani was confirmed as holmes
partner in crime
found guilty on all 12 charges of
defrauding both investors and patients
he’ll be sentenced in november
do you think she should dirty job
i think at this point yes i i think that
she should
face some sort of time considering all
the damage caused do you hold him
equally responsible yes
and jail time too yeah
yeah i think they were both equally uh
culpable in the circumstance
[Music]
but a curveball at elizabeth’s trial
late last year threatened to derail the
entire case
she accused her ex-lover sonny balwani
of coercive control
and sexual abuse claiming that made her
subservient and affected her business
judgment
from what you
witnessed from what you observed do you
believe that sonny barwani was the
puppeteer
from what i witnessed in my own personal
opinion no
no
i think they both were
definitely the key decision makers in
that company
and definitely held a lot of power
but i don’t think that he
was the puppeteer
what do you make of those claims that
she made against sonny
i mean
it’s like i
like i don’t hold sonny in high regard
obviously
[Music]
um so i believe that he’s probably
capable of
those types of things
at the same time
elizabeth is a pathological liar
so
i have no i have no way of knowing i
have no way of knowing if it is the case
does it absolve her of
her responsibility and how she acted
during those theranos years i don’t
think so the people that knew elizabeth
back in you know 2013 14 15
know that she was
she was in control every room she walked
into she had control of that room
if she needed something she got it
tyler’s grandfather theranos board
member george schultz died aged 100 in
february last year
while he finally conceded tyler was
right to blow the whistle on elizabeth
holmes he could never bring himself to
apologize for putting the con woman
ahead of his grandson
did you ever repair your relationship
with your grandfather
it was repaired to some extent but i
think the damage was is definitely there
i was telling him my concerns in like
2014 i spoke to the wall street journal
in 2015 i went on the record in 2016.
and it wasn’t until 2018 that he finally
said
you know maybe this woman’s been lying
to me and tyler was right
could you tell us more about both of
your roles at terenos what did your work
entail
to expose the theronos sham came at a
huge cost to both tyler and erica
but inherently honest and clearly
courageous these friends really had no
choice but to do the right thing
they were
by far the worst years of my life
and it’s consumed pretty much my entire
adult life i first met elizabeth when i
was 20 years old and i’m 31 now at this
point i’m really just trying to take
the the worst years of my life and i’m
trying to turn them into a positive
so now as you reflect on it any regrets
about being a whistleblower oh no
regrets at all no regrets at all um
absolutely none
uh yeah if i mean i wish it didn’t work
out this way but that’s not what
happened and i would do it all over
again i would definitely blow this all
over again
hello i’m tara brown thanks for watching
60 minutes australia
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