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In this episode of American Greed, it's a crime for our times.

It's largely a cautionary tale about the culture of Silicon Valley. The rise and

fall of Elizabeth Holmes and her billion -dollar blood -testing startup

Theranos. She was the next big thing, what everyone had been waiting for.

The next Steve Jobs or the next Bill Gates, but of health care. I must say,

are an extraordinary woman.

Is she a genius founder with a noble mission?

In my mind, I've always thought the true legacy of Silicon Valley is to build

great products that can make a difference in the world.

Or a brazen fraud with a reckless disregard for human life. I knew she was

putting patients' lives in jeopardy. And she was saying things like, make it

till you make it. You do not do that with patients.

The jury has spoken.

Theranos founder Elizabeth Holmes has officially been found guilty of four

charges in her criminal fraud trial. Elizabeth Holmes had promised to change

world. Now she is almost certainly going to prison.

American Greed has the inside story of the tall tales spun for starry -eyed

investors. People are going to make a killing on Theranos. The lies, the

the threats.

It's terrifying.

You're like, is this person tailing me? And the explosive defense raised a trial

when Holmes herself takes the stand.

Holmes says she's the victim of a decade of sexual and emotional abuse at the

hands of her former boyfriend and business partner, Sonny Balwani. He, of

course, denies all of this, calls the allegations deeply offensive and

personally devastating.

Some people say that.

This was a case of money versus humanity.

But there's really a lot more going on here.

By the time Elizabeth Holmes stands trial in the late summer of 2021, she is

walking Rorschach test.

Young women dress up like her outside the courthouse and applaud the quote

-unquote girl boss.

The homies, the Elizabeth girls fandom is alive and thriving

and they're all over social media.

Their reasoning is, well, male villains have become icons. Look at the Wolf of

Wall Street and Jordan Belfort. So why can't Elizabeth Holmes become a female

icon?

Others see the Steve Jobs wannabe, accused of 11 counts of fraud against

investors and patients, as the symbol of everything wrong with Silicon Valley.

The hubris, greed, and duplicity. But when she takes the stand in her own

defense, there's another persona.

Victim. She points a finger in the direction of her former second -in

and secret boyfriend, Ramesh Sunny Balwani.

Holmes says Balwani was a menacing presence at Theranos, who called the

and cast a shadow over her life.

Will the jury buy her story?

We have not seen an Elizabeth Holmes like this, that breaks down, that cries,

that is emotional.

But at the end of the day, these abuse allegations really have nothing to do

with what she's being charged with.

I grew up in a family that was very focused on the belief that we're all

for a reason and we're here to try to make this world a better place.

Holmes grows up a child of privilege in Washington, D .C. Her mother is a

congressional staffer, and her father is a former Enron executive.

Though they're well off, the Holmes family seems obsessed with what they

have, according to one -time neighbor and former family friend, Joseph Fuse.

These kids are raised with the idea that even though we live in what most people

would think of as a very nice upper -middle class, Why? It's not good

Because it's not what the Fleischmanns had.

Elizabeth's parents, he says, like to remind people that the Holmes bloodline

descended from the famed Fleischmann yeast family.

And we're not just supposed to be in a home most Americans would think is

luxurious. We're supposed to be in an estate. We're better than this.

At nine years old, little Elizabeth proclaims to her parents that she wants

be a billionaire.

She certainly had encouragement.

from them to at least start in this direction.

And there's no doubt in my mind that for Elizabeth, the notion of becoming this

family champion and restoring them to grandeur is part of who Elizabeth is.

And she's got no time to waste.

Right after high school graduation, the overachiever jets off to Beijing to

study Mandarin as part of a Stanford University summer program.

Amid all the other 18 -year -old strivers, One person in the program

He's a 37 -year -old man named Ramesh Sunny Balwani. He's a software engineer,

seasoned veteran of Silicon Valley startups, and is already worth $40

Yet he and the soon -to -be freshman click.

I was studying at a program in Beijing University in China, and he was there.

She was very famous in the Stanford Chinese program because...

The entire department knew about her Chinese, her skills, and so that's how

I first met her, I'm like, oh, you must be the Elizabeth Holmes.

Elizabeth Holmes arrives at Stanford University in 2002 with an ambition so

it's almost childlike.

She wants to become the Thomas Edison of biomedical engineering.

She's recommended to physician, inventor, and Stanford professor of

Phyllis Gardner.

She came to me twice. I always try to help students.

I will do anything I can.

Dr. Gardner listens patiently to Holmes' idea, a wearable device that would

simultaneously diagnose and treat disease.

She wanted to make a skin patch, and she wanted to sample the blood to test for

an infectious disease.

And then she wanted to deliver antibiotics through the patch.

Antibiotics are extremely, they're low potency. And a patch, you can't get

things through the skin easily.

And so how are you going to do this?

Gardner believes Holmes' idea would require a quantum leap in science. But

according to her, Holmes doesn't want to hear it.

I just couldn't help her. She wasn't, she didn't want help.

She thought she knew the world of microfluidics and engineering, but she

just 19 and had a class or two.

So let me tell you a little bit about the class.

Undeterred, Holmes pursues a more receptive mentor, Stanford engineering

professor Channing Robertson.

Years later, New Yorker journalist Ken Auletta will interview both Holmes and

Robertson. In describing Elizabeth Holmes, he said, how often in your life

you get to meet a Beethoven, someone who is a genius?

And he described her as a genius. He left his tenure position to join her,

became a member of her board, and was a devout believer in her. I have to tell

you that this is going to be a special year because this is the last time I'm

teaching the class. Elizabeth Holmes has charmed her first champion.

It seems Holmes has all she needs from Stanford.

At age 19, she drops out to start her fledgling company, which in 2003 she

Theranos, a combination of therapy and diagnosis.

And after Channing Robertson, Holmes gets her first financial pat on the back

2004. That's when Tim Draper, a well -known Silicon Valley venture

invests $500 ,000 in the fledgling company.

And she said, I'm going to transform health care as we know it.

Around this time, Holmes abandons the wearable idea and conjures a more

audacious vision.

One steeped in a personal origin story she will recount years later when she's

famous. Having a needle in your arm is something that has kept people from

taking care of themselves, right?

Absolutely, myself included. I'm absolutely terrified of it. Holmes'

fear of needles, she says, makes her fixate on a device that could perform

hundreds of blood tests from a finger prick.

Holmes calls her prototype the Edison, with a nod to the great inventor.

The idea of Theranos is a wonderful idea. We're going to make medicine

for people. We're going to make it more convenient. It would be wonderfully

disruptive. which is one of the things that Silicon Valley prides itself on.

And the investor class is all in.

By 2006, she's raised more than $40 million in venture capital, including

$6 million from media magnate Rupert Murdoch.

The cash is designed to give Theranos engineers a long runway to perfect the

Edison and someday bring it to market.

But there's one big problem, according to journalist John Carreyrou.

The idea is more science fiction than science.

When I started looking into Theranos, I learned early on by talking to

laboratory scientists at universities. And the consensus among these scientists

that I'd spoken to was that it wasn't possible.

And it wasn't possible because that size of a sample isn't enough to do all

those tests.

And the quality of the sample that you get from a finger is just not as pure.

It's polluted by tissue and cells that interfere.

The pie -in -the -sky idea becomes an albatross in the lab, and Theranos blows

through its initial investments.

By 2009, it's broke, with little to show for it.

Were you and Sunny Balwani ever engaged in a romantic relationship?

Yes. Unbeknownst to investors, Sonny Balwani has been advising Elizabeth

and secretly dating her. It will become an 11 -year romance with shocking

details revealed at Holmes' trial.

Holmes says when her relationship with Sonny first blossomed, she was

because she had been sexually assaulted at Stanford.

She testifies that after confiding in Sonny, he told her, I was safe now that

met him.

But it's not just emotional shelter Balwani offers.

He's a financial haven, too.

Long story short, I ended up giving a $12 or $13 or $14 million personal loan.

guaranteed a loan to the company.

The loan comes at a critical time when Theranos is on life support.

And just a few months after cutting this check, Balwani assumes the number two

position at Theranos, chief operating officer.

He became the guy managing things day to day, and he really became the heavy.

Up next.

Theranos goes live with patience.

Walgreens, they have decided that your way is the way to go. But is Holmes

recklessly dismissing warnings?

For eight years, Theranos has been toiling in obscurity and failure, but

Elizabeth Holmes has a positive label for it, stealth mode.

Just like her heroes, Holmes believes that success will be found right around

the corner after one more experiment, one more iteration, one more try.

I think her great strength was selling the vision, you know, getting investors

excited in the vision.

She has great charisma, great charm, and she's a great saleswoman.

And thanks to her parents' connections, Holmes has another advantage that many

Silicon Valley founders lack.

Easy access to billionaires, including Oracle founder Larry Ellison.

She was able to get Larry Ellison to invest money. And I think once she had

Ellison involved, I think it became a lot easier. Because from Ellison, she

George Shultz, and then she's off to the races.

With a former secretary of state on her team, the evangelizer -in -chief

recruits a board stacked with the who's who of Pentagon and Capitol Hill heavy

hitters.

George Shultz really was the architect of the board. He then reached out to

Henry Kissinger and James Mattis, the Marine General, and Bill Frith, the

Senate Majority Leader, Republican Majority Leader, and Sam Nunn, the

Democratic Senator from Georgia.

Virtually none of them had any experience in medicine or science. So

not equipped to stress test her claims. They believed what they were told.

The board raises no questions when Holmes hints that Theranos is about to

huge deal with the Pentagon.

The ability to take a technology like this and put it in flight, specifically

a medevac, has the potential to change survival rates.

But no such deal is in the works.

Theranos even refuses to share its financial statements with investors,

the famous names on the board to deflect questions.

And now you have a person who can tell investors they can't see audited

financials and they can't see things because he has Larry Ellison involved.

And who are you to think you're brighter than he is?

For three years, Theranos has been in talks with Walgreens, the drugstore

with annual sales of around $140 billion.

Holmes imagines a future of consumer -driven medicine where patients can walk

into a Walgreens and order their own blood tests.

For us, the individual has to be at the center of getting information about

their own health because it's the only way in which people can then begin to

take control of their health.

The landmark $140 million partnership is made public in September 2013,

and Theranos kisses stealth mode goodbye.

Walgreens, they have decided that your way is the way to go. It's the first

most people have heard of Theranos, and the company needs to move fast to get

its device ready to go live and test real patients in Walgreens stores.

New scientists must be brought on board.

At that point, I was super impressed.

I was like, wow, I'm an entry -level worker coming into this startup.

Erica Chung is 23 at the time, fresh out of UC Berkeley with a degree in

molecular biology.

Just one month after the big deal is announced, Chung finds herself in the

Theranos conference room with Sonny Balwani.

He said, okay, you're going to interview with Elizabeth.

And at that point, I think...

It's like embarrassing to admit now, but also it makes sense considering the

time I was starstruck.

Elizabeth offers Chung a job and she takes it. She'll be testing the accuracy

Theranos' proprietary device.

A hush -hush vibe pervades the lab.

They kind of created that ambience. Like we were part of a sort of governmental

agency or the CIA or something sort of top secret or that there was a lot to

protect here.

But the more Chung learns about Theranos, the more she wonders why

so protective.

I was primarily working with Edison devices, and my job was to run a bunch

tests to make sure the device was working. There were so many issues with

device that almost every day it was telling me, this machine is not

accurate results.

Chung naturally shares these unsettling results with colleagues via email.

And then all of a sudden, Sonny would respond to them out of nowhere.

He wasn't cc'd, he wasn't bcc'd, but all of a sudden they were responding to the

emails that we were writing.

Things that we had said in certain contexts would be reiterated to us, like

things that we would say in private with one another.

They are monitoring our emails, like we can't even trust whether they're

recording conversations that we are having.

We are being treated as we could potentially be traitors.

Up next, the stakes are raised when Chung works with real -life patients.

It's a nightmare.

Every day, you're just like, this is wrong. I feel sick. Like, I can't do

In September of 2015, Elizabeth Holmes dropped by CNBC Studios to talk

about Theranos' origin story.

But where did the original idea come from? Meaning, what was it that inspired

you to even do this?

It came from losing my family members and people that I loved.

Early detection of disease.

Holmes claims it will save lives.

And in Arizona, Theranos lobbyists work to change the law so patients can enter

the Walgreens and order any test they want without a doctor's order.

To build a health care system in which early detection and prevention become a

reality. That is why we work to pass this law.

It's why we believe Arizona's law can and should serve as a model for the

for direct access testing.

There was a certain patina of credibility that this company had

in a Walgreens. You had elected officials here in Arizona doing press

conferences. Elizabeth, I want you to know I appreciate the partnership and

investment Theranos has made in Arizona, and I look forward to working with you

in the years to come. So I think a lot of times people's immediate reaction

well, this has got to be legitimate.

Merle Ellsworth, a retired dentist in Phoenix, walks into his local Walgreens

for a prostate cancer screening test run by Theranos.

His initial result looks like cancer.

To have a number that high would indicate that something was multiplying

rapidly within me.

His doctor wants to verify the result, and Ellsworth ends up taking three

Theranos tests.

Results are all over the map.

Some indicate cancer, some are normal. The fourth test uses the time -tested

venous blood draw.

This one is accurate, indicating he does not have cancer.

What people were being told was not at all what they were getting.

Erica Chung says when patients give that small finger prick sample of blood,

they think the test is going to be performed right there at the drugstore

Edison device.

That wasn't actually what was going on in reality.

They were just sort of collecting the vial of blood at a Walgreens, sending it

over to a main laboratory that we had in Palo Alto, and then having people like

me basically run it on a whole wide variety of devices.

Because its own device is so unreliable, prosecutors say Theranos secretly takes

patient samples and tests them on machines made by other companies.

But for those samples to work, these third -party machines must be modified.

and the samples diluted, which can give inaccurate results.

But there were many instances that we knew we made a mistake, and they would

let us tell patients, you need to come in for a redraw, because they didn't

people to realize the errors that were going on internally.

Lab errors can have tragic consequences.

At Holmes' trial, a woman with a history of miscarriages testifies that a

Theranos blood test told her she was about to miscarry again.

She says she considered preemptively terminating the pregnancy to spare

any more pain, but she sought a second opinion.

She shudders to think what would have happened if she hadn't taken another

Her daughter is now six years old and healthy.

For Erica Chung, her first job out of college is forcing her to deal with

most people will never have to confront.

Things like healthy people being told they have cancer or HIV.

It's incredibly stressful.

And the fact that you see yourself working for this company that is lying

patients is a nightmare.

Every day, you're just challenging yourself of, like, this is wrong. I feel

sick. Like, I can't do this.

Erica repeatedly warns her superiors, including Sunny Balwani, that the device

isn't working.

But Holmes is busy with photo shoots.

The summer of 2014 is her coming -out party. It's the myth of the founder.

Female edition.

It was all about achieving that perfect calibration between masculinity and

femininity. In order to realize the world in which prevention is a reality.

You had the deep voice and you had sort of a deep sex black turtleneck. But you

also had, you know, the red lipstick and the really vampy blonde bob and

piercing huge blue eyes that just penetrated you whenever you spoke with

To evaluate multi -site precision, or in our case, multi -device precision.

She just spoke with such assurance, such a belief. Let me tell you what is

really happening here.

For years, people have wondered if her voice is genuine.

People are fascinated by the deep voice. Like, why does she have a deep voice?

Some point to an NPR interview from 2005 where the voice, and maybe the facade,

seems to crack.

Just for a second.

No, it hasn't. Well, if I use traditional words to describe what we're

it's hard because people then associate it with conventional processes.

And at trial, Holmes hints that Sonny might be a modern -day Pygmalion

responsible for her transformation.

She says Sonny told her to kill her old self and become a new Elizabeth and to

act like a man.

In one text exchange shown to the jury, Sonny writes, you are speaking with

everyone in your giddy voice.

Excessive use of awesome.

And later, appearing to drive the point home, he writes, I have molded you.

Up next, if Elizabeth Holmes is just a character, how long can she keep up the

act? A lot of it was like this constant drive for perfection.

And that's dangerous.

In her public image, Holmes is seemingly monastic, wearing nothing but black

turtlenecks, consuming little more than green juices, and not dating.

In reality, the home she and Sonny Balwani share in Atherton is the type of

house that gets its own highly produced narrated short film when it hits the

market.

This home is a classic example of French provincial architecture.

They fly pride.

And a team of security guards shuttle her and Sonny, codenamed Eagle One and

Eagle Two, into black SUVs.

I've always believed that, you know, everywhere there's a glass ceiling,

an Iron Lady right underneath it. The press is fawning. And Elizabeth

believes her own PR. She texts Balwani, total confidence in myself, best

business person of the year.

In 2014, Rupert Murdoch invests another $100 million.

The Walton family of Walmart fame invests $150 million.

And the DeVos family puts $100 million into Theranos.

Forbes magazine estimates her personal net worth at $4 .5 billion, and

valuation climbs to $9 billion.

What you've managed to do has caught a lot of people by surprise. It definitely

has people who are willing to jump in and bid up the valuation for your

Ken Auletta is a big -name journalist with The New Yorker and has given the

tour of Theranos.

And it was amazingly elaborate.

If you just looked at that.

It was really impressive.

There's an article this week you've got to read. It's in The New Yorker, and it

is by Ken Auletta. His article, published in late 2014, is largely

So it's a real threat to the existing infrastructure of needle testing.

He says now that Holmes lied to him. But Auletta does sound some notes of

caution. I think there are questions about it, and I think the company is

secretive. I mean, I took the test twice in a drugstore in Palo Alto.

I insisted on seeing the machine it went into. So I said, what happens to the

nanotainer? How do you ascertain what my blood tests reveal?

And she gave me this convoluted answer. And six times I went back to her, and

six times it was gobbledygook.

And that's when I described in the profile I wrote, her answers to the

are sometimes comically opaque.

As Holmes explains to Auletta...

A chemistry is performed so that a chemical reaction occurs and generates a

signal from the chemical interaction with the sample, which is translated

result. The fact that any time you would ask her very pointed questions about

the science and technology, that she would sort of back off and not want to

discuss it or find some sort of workaround.

I mean, that's a big indicator sometimes of like, well, maybe the person doesn't

know. At a Fortune magazine forum, Holmes struggles to answer an easy

How can you run all of these tests with such a small amount of blood? And why

hasn't anybody done this before?

Over the last 11 years, we've reinvented the traditional laboratory

infrastructure. We went through redeveloping every test that

is run in a traditional laboratory to be able to operate on these tiny volumes

of blood or other fluids.

One point seems clear.

You can create a new reality when you do it that way. And so that's how we've

approached it.

Well, you've definitely created a new reality.

A new reality with zero tolerance for bad news, according to Erica Chung.

Every time I would go closer and closer to the top level leadership, the more

and more pushback I got in terms of like, well, this isn't a problem with

Edison devices. This is a problem with you. And maybe you need to reconsider

what you're doing.

Text messages between Sonny and Elizabeth show they believe the fault

their employees, not their technology.

Talking about her staff, Elizabeth writes, this is where our problems are.

In another thread, Sonny echoes, most disappointing how bad these people are.

Sonny had essentially said, you need to decide if you want to work here and

basically test patient samples without question. And in my mind, I knew 100 %

that I could not.

And so I left the company and I quit.

And I think I was severely depressed after that.

It's very challenging to come out of a situation like that and wonder, you

what happened.

What explains the refusal of Holmes, Balwani, and board members to

clear problems?

Ken Auletta has a few possible explanations.

The first word that comes to mind when I think of Elizabeth Holmes is zealot. I

started to see...

as a vehicle for making a change in the world. These are people who really

believed they were doing God's work.

And by God's work, I mean they believed they were advancing a social good. No

person should have to walk away from getting a medical service because they

can't afford it. And so we're going to do whatever it takes.

I think the other factor that helps explain The board's tendency to

applaud her was greed.

People are going to make a killing on Theranos. And I think that was very

alluring to them.

I must say, you are an extraordinary woman.

Thank you for being here. Thank you. I'm very humbled.

Up next, employees discover it's not easy to put their Theranos experiences

in the rearview mirror.

It's terrifying.

You're driving in your car. You're like, is this person tailing me?

Want more greed? Follow us on Instagram, connect on Facebook, and listen to the

American Greed Podcast wherever you get your podcasts.

We'll be right back.

The halo effect surrounding Elizabeth Holmes doesn't charm everyone, and some

those skeptics are about to have their day.

In addition to being a former neighbor and family friend of Elizabeth Holmes,

Joseph Fuse is also an attorney and biotech entrepreneur in his own right.

He and his father, Richard Fuse, hold many patents on medical devices.

My father's the creative one, there's no doubt.

He is brimming with, always brimming with new ideas.

In 2011, Elizabeth Holmes accuses Fuse Pharma of stealing one of Theranos'

ideas.

Diffuses vehemently deny the charge and defend themselves against Theranos'

outside counsel, David Boyce.

Considered one of the most aggressive litigators in America, Boyce is also a

Theranos board member and is partially compensated in Theranos stock.

I think of myself as a decent lawyer, but not against David Boyce. So I

handicapped our chances as not so good.

Over three and a half years of costly, brutal litigation, Fuse allies himself

with people who seem to know a lot about Elizabeth Holmes.

People like Phyllis Gardner. I was in the room with my father. My father calls

Phyllis. And literally within the first minute, I could hear Phyllis' voice

saying fraud through the phone.

The way I describe it, it's like a burr under my saddle. You founded this

company 12 years ago, right?

Tell them how old you were.

I was 19.

She was everywhere.

She'd pop up on CNN and everywhere, and you're just crazy.

And Phyllis had a lot to say.

And that made us feel a little centered again, because we had felt at that point

quite out of balance in this alternative universe.

I knew she was putting patients' lives in jeopardy.

And she was saying things like, bake it till you make it. You don't do that.

You do not do that with patients.

This little cabal.

that also formed as a result of that case, became a seed in her demise.

Fuse reaches out to John Carreyrou at the Wall Street Journal.

Carreyrou digs further, finding numerous insiders, including the former lab

director, Dr.

Adam Rosendorf.

It turned out, after talking to him, I learned very quickly that the company

lying. They went and they modified third -party machines made by companies like

Siemens and tried to adapt them to small finger stick samples.

And that created a host of problems. When you're diluting samples too much,

you're creating problems with accuracy.

Carrie Rue also interviews Erica Chung.

Honestly, it was like a breath for share. Like, okay, all right, I'm not

And so it was a relief.

Like, finally, the truth is going to get out there.

The relief doesn't last long.

Elizabeth and Sonny soon catch wind that former employees are talking to the

Wall Street Journal, and they launch a ferocious counterattack.

Elizabeth texts Sonny, this whole thing that we have to respond to liars is

ridiculous, and he assumes them to be true.

Sonny responds, which is why knocking the legs off one at a time is best way.

In trying to find the source of the leak, Sonny texts, I am narrowing this

to five people.

We'll nail this mother... Their crusade to silence Carrie Rue's sources leads to

action ripped from the script of a thriller.

Since quitting Theranos, Chung is lying low, temporarily staying with friends

while she starts another job.

She believes a private investigator is trailing her all over town, and her

suspicion is confirmed as she walks to her car one night.

The guy jumps out of his tinted window SUV, and it's like Erica, and he's like

gunning towards me, and he hands me this letter.

It's addressed to Erica at the apartment of the friend with whom she's been

living. And so I'm freaked out because at this point, they're not only sitting

outside of my new employment, they're also following me because there's no one

who knows this address, right? I'm just staying here temporarily.

The letter accuses Erica of defamation and sharing trade secrets.

The list of demands has seven points and threatens a lawsuit.

Erica, who has little money and resources at the time, says her stomach

when she sees the signature line.

Like, oh, great. What have I gotten myself into now?

On the stand, Holmes will be confronted by checks totaling more than $100 ,000

that Theranos paid to private investigators marked as payments for the

project.

It's terrifying.

You're driving in your car, and if you have someone that follows you for more

than six blocks, you're like, is this person tailing me?

And just this morning, the Wall Street Journal ran a pretty scathing article

about the company. On October 15, 2015, 10 months after Kerry Rue begins

digging, the Wall Street Journal breaks the first in a series of Kerry Rue's

excoriating exposés.

Ms. Holmes, welcome back to Mad Money.

Within hours, Holmes launches a righteous counter -defensive.

I personally was shocked to see that the journal would publish something like

this. Holmes and her supporters accused Carrie Rue of being a sexist bully, and

she plays the victim.

This is what happens when you work to change things. And first they think

crazy, then they fight you, and then all of a sudden you change the world. Off

camera is a different story.

She threatened me and the Wall Street Journal with litigation.

Her boyfriend, Sonny Balwani, threatened doctors who had spoken to me on the

record and tried to get them to recant.

Those are the actions of a bully.

Carrie Rue believes Holmes and Balwani got caught up in the culture of Silicon

Valley, where buggy beta versions of software can be released to the public

later perfected. And so I think she and Sonny didn't see it as a problem that in

the fall of 2013 they went live with blood tests that weren't perfected. They

figured they would iterate.

over time.

But while you can do that in the software industry where lives aren't at

you can't really get away with doing that in the healthcare industry.

In the fall of 2015, federal lab regulators sanctioned Theranos for

patients in immediate jeopardy.

Holmes is later banned from owning or running a lab for two years.

All you can do is learn from your mistakes.

In an interview with NBC's Maria Shriver, Holmes vows never to give up.

What I want to do is realize this mission. And at any point in time, I

whatever it takes to serve this company in the best way I can.

Do you think this company will survive?

Absolutely.

No doubt?

No doubt.

Two years later, Theranos shuts down for good.

And in the same year, more bad news for Holmes.

Theranos founder Elizabeth Holmes has been indicted on federal wire fraud

charges. The feds charge her and Balwani with multiple counts of fraud and

conspiracy to commit fraud against investors and patients.

Up next on American Greed. After they read the verdict and they took the jury

out, Elizabeth Holmes got up. She went over, embraced her parents. Her father

kissed her on her forehead and she walked out.

Anything to say, Elizabeth?

The big question hovering over the trial of Elizabeth Holmes, will she take the

stand in her own defense, is answered on November 19th.

You know, it was a surprise to pretty much everyone in the courtroom,

probably a surprise to the government. Just the shock value alone. I was in the

courtroom. I can tell you the jurors were riveted as she sat there very

confidently, often smiling, talking about the early days of Theranos. Under

questioning from her attorneys, a theme takes shape.

It's known as the Sangali defense.

You know, he was the older man who was controlling Elizabeth. He was

manipulating her. He was dominating her. And she was in his thrall.

The jury sees a handwritten note from Balwani to Holmes titled Non

It begins, Every morning I will force myself out of bed and spend 30 minutes,

never a minute less, to write what I want from my day.

Elizabeth writes a daily schedule.

Under Sonny's supervision, she says, that has her rising at 4 a .m. to thank

God. Dinner is broccoli and quinoa. I am never a minute late, she writes to

herself. I show no excitement.

My hands are always in my pockets or gesturing.

But the prosecution shows jurors emails they claim show that Holmes is very much

in control. When the finger stick machines are malfunctioning, yet Holmes

on a media tour. Balwani texts her, I am worried about overexposure without

solid substance, which is lacking right now.

Holmes later shoots back, that media is why we're getting AmeriCare, an

insurance company.

But ultimately, she had the final say.

If there was something that Sonny wanted to do that she disagreed with, it

didn't happen. She was in charge.

The jurors also see this NBC interview.

I'm the founder and CEO of this company. Anything that happens in this company

is my responsibility at the end of the day.

On January 3rd, 2022, after the four -month trial, the jury returns with its

verdict. Elizabeth Holmes found guilty.

Holmes defied until the end, taking the stand in her own defense, blaming

others, including her former business partner and boyfriend.

But unlike with some investors, she was not able to convince the jury that she

was blameless. A federal jury found that Theranos found her guilty on four

counts of fraud for misleading investors on what her blood testing company's

machines could do. The jury acquitted Holmes on all charges related to

defrauding patients.

And the jury was deadlocked on three charges involving early investors.

Elizabeth, do you have any reaction to your guilty verdict here? Elizabeth, any

reaction? Do you have anything you want to say?

The woman once hailed as the next Steve Jobs, now facing up to 20 years per

guilty count behind bars.

It's a big deal for Silicon Valley because if fake it till you make it, I

think they're going to be living by that anymore.

One lingering question.

Did Holmes believe her lies?

Ken Auletta says he would like to go with the most charitable interpretation

her motives.

but he cannot.

I'm more prone to believe that she was a zealot and she was blinded by her

zealotry. But if I'm intellectually honest, I have to deal with the fact

she lied about a number of things, just blatantly lied.

When she told me that 99 % of the blood tests she did were finger prick, that's

a conscious lie.

When she told me that she had a military contracts and revenue from the

military. That's just a lie.

And that's not zealotry.

Phyllis Gardner says that despite Holmes' public rhetoric about promoting

in science, the disgraced inventor doesn't live up to those lofty ideals.

Why did you do what you did to Erica Chung if you're such a champion of

Why did you treat the women at your work the way you did? Why did you treat

women patients the way you did? You're not a champion of women. She's not a

champion of women.

You're a liar.

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