How Theranos CEO Elizabeth Holmes Committed Massive Fraud

Infamous blood testing company Theranos is shutting down — look back at some of the top revelations about its demise

Troubled blood-testing startup Theranos is officially dissolving, according to a new report from The Wall Street Journal. Citing a letter to shareholders from Theranos CEO David Taylor, the report notes that the company will look to pay its unsecured creditors with any remaining cash after Theranos investors reportedly lost nearly $1 billion due to the company’s collapse.

Founded in 2004, Theranos was once a darling of the health and technology industries, raising more than $700 million from investors. However, The Wall Street Journal’s John Carreyrou first started exposing the fraud at Theranos in 2015. In May, Carreyrou delivered his long-awaited book about the onetime Silicon Valley darling’s meteoric rise to a $9 billion valuation and the precipitous fall that came after it was revealed that the blood-testing devices Theranos was pushing as revolutionary were nowhere near capable of backing up the significant hype.

Titled “Bad Blood: Secrets and Lies in a Silicon Valley Startup,” the non-fiction book features Carreyrou’s exhaustive reporting on Theranos and its founder and CEO, Elizabeth Holmes, as well as interviews with over 150 people, including more than 60 former Theranos employees.

Theranos had been on the verge of bankruptcy this spring and in June, the federal government indicted both Holmes and the company’s ex-president Ramesh “Sunny” Balwani on criminal fraud charges. The two former executives could face up to 20 years in prison apiece if convicted. Holmes previously agreed to a settlement with the SEC in a civil lawsuit that included a $500,000 fine.

Here are six of the most fascinating stories and quotes from “Bad Blood”:

1. Founder and CEO Elizabeth Holmes was obsessed with Steve Jobs and Apple

The book’s third chapter is called “Apple Envy” and it delves into Holmes’ reported obsession with the tech giant and its iconic co-founder, Steve Jobs. “To anyone who spent time with Elizabeth, it was clear that she worshipped Jobs and Apple,” Carreyrou writes.

According to the book, Holmes hired several former Apple employees, in part for their connection to the giant company, and she was fond of saying that Theranos’ blood-testing device would be “the iPod of health care.”

The book also notes that Holmes seemingly went out of her way to cultivate a similar “aura” to Jobs and took to wearing a black turtleneck most days, copying Jobs’ own style, in order to “dress the part.”

After Jobs died in 2011, Holmes even seemed to begin borrowing management styles from Walter Isaacson’s best-selling biography of the former Apple CEO. Carreyrou writes that Theranos employees “were all reading the book too and could pinpoint which chapter she was on based on which period of Jobs’ career she was impersonating.”

2. Theranos employees describe a paranoid atmosphere

Carreyrou reports that some Theranos employees suspected Theranos’ IT team of spying on them and reporting back to Holmes with their computer activity. Even worse, Carreyrou writes that Holmes’ “administrative assistants would friend employees on Facebook and tell her what they were posting there.”

3. Holmes described Theranos’ miniLab device as “the most important thing humanity has ever built”

That’s the show-stopping description Holmes assigned to the miniLab at her company’s 2011 Christmas party. The portable device, which she claimed could diagnose a wide range of diseases with just a few small drops of blood, was not introduced to the public until 2016, after the company had already been forced to void two years of results from its previous blood-testing device, the Edison, due to inaccuracy.

4. Holmes demanded loyalty and could turn on people “in a flash”

Carreyrou writes that Holmes “demanded absolute loyalty from her employees and if she sensed that she no longer had it from someone, she could turn on them in a flash.”

One former employee told Carreyrou that he assisted Holmes in some colleagues’ terminations, which would sometimes include putting together “a dossier on the person she could use for leverage.” In one instance, Holmes used the fact that “inappropriate sexual material” was found on a terminated employee’s work laptop as a public justification of his firing after the fact.

Sunny Balwani, Theranos’ former president and Holmes’ boyfriend, made similar demands for complete loyalty. Carreyrou reports that, following a rash of resignations at the company, Balwani gathered employees for an all-hands meeting at which he told them “anyone not prepared to show complete devotion and unmitigated loyalty to the company should ‘get the f— out’.”

5. The author alleges that Theranos had him followed

Carreyrou writes that he suspected Theranos of placing himself and Tyler Shultz, a former employee turned whistleblower, “under continuous surveillance for a year.”

Shultz — whose grandfather, former U.S. Secretary of State George Shultz, served on Theranos’ board — was apparently unbothered, telling Carreyrou, “‘Next time maybe I’ll take a selfie with you and send it [to Holmes] to save her the trouble of hiring [private investigators].”

6. Holmes tried to get Rupert Murdoch to kill The Wall Street Journal story about Theranos

In 2015, Murdoch led an investment round by pumping $125 million into Theranos, making him the company’s biggest investor. (Other big-name Theranos investors who have now lost at least $600 million total include current U.S. Secretary of Education Betsy DeVos, Mexican billionaire Carlos Slim and members of the Walton family of Walmart heirs.)

Eventually, when Holmes learned that Carreyrou was investigating Theranos, she turned to Murdoch, whose media empire includes the journalist’s employer, The Wall Street Journal. Carreyrou writes that Holmes tried to get Murdoch to kill the story, telling the billionaire “the information I had gathered was false and would do great damage to Theranos if it was published. Murdoch demurred, saying he trusted the paper’s editors to handle the matter fairly.”

In its review of “Bad Blood,” The New York Times called this “a good moment in American journalism.”

This is an updated version of a previously published story .

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