Good ethics mandates that I view the Theranos trial in a fair and balanced manner. And, I am sure that Elizabeth Holmes, said to be residing in a Silicon Valley mega-million-dollar mansion as the guest of an influential person, has her fine points. However, as the trial proceeds, the evidence against her has become more damning. It will be interesting to see what the defense will do short of calling upon the heavens to rain lightning bolds to destroy the files in the prosecutor’s office.
Last week, we reported on Betsy DeVos losing a ton of money on what is shaping up to be a monumental fraud. This week, it was revealed that now, 98-year-old Henry Kissinger (who became a Theranos board member) lost $6 million of his own money on the deal. However, those headlines are somewhat sensational.
Both Kissinger and DeVos are wealthy, and since the dawn of time, investors of wealth have made mistakes falling for bad deals. Also, let’s face it: the chances of DeVos or Kissinger walking into a local Walgreen’s to get a Theranos blood test were remote at best. They invested in what they believed, not what they knew. However, there were people who knew a lot, and believed Theranos to be a fraud but no one listened.
The Art of Deception
Holmes knew that Theranos needed to land a big fish. The fish was Walgreens. But what does one use for bait when Holmes and her COO Ramesh Balwani allegedly knew the technology could not work?
Walgreens speaks the language of science. Or at least, the language of pharmaceuticals. In a “gutsy” move, Theranos sent Walgreens “reports” that extolled the virtues of their technology, claiming to run 300 tests from a drop of blood. The reports prominently featured the swiped logos of Pfizer and Schering-Plough. For the record, Schering-Plough was acquired by Merck Pharmaceuticals in 2009.
On the stand this week under cross examination was Constance Cullen who was director of Schering-Plough’s bioanalytical lab.
According to business writer Tim De Chant (November 3, 2021):
“Cullen and other Schering-Plough scientists evaluated three different tests, for which Theranos charged them $279,000 for test materials…Cullen and her colleagues met with Holmes and other Theranos employees at the company’s Palo Alto headquarters (she said)…’I was dissatisfied, quite honestly. There was insufficient technical detail for us to be able to evaluate the technology.”
De Chant detailed Holmes as being “cagey” and trying to re-direct questions away from the actual science.
Cullen continued:
“Almost exclusively Ms. Holmes was the one answering the questions irrespective of to whom the questions were being asked.”
Theranos changed the language on the Schering-Plough report, and that is what Walgreens saw. It was faked.
Circling back around to the DeVos family trust that invested about $100 million, it was revealed that the DeVos family trust saw a report (according to De Chant) “featuring the unauthorized Pfizer logo, which Holmes had emailed to investors.”
The reports of the pharmaceutical companies “endorsing” the Theranos technology were false, as well as the reports we reported on recently that said the government had endorsed the Theranos technology. That was also untrue.
Another investor saw a report that included a binder with the Johns Hopkins logo. The research arm of the prestigious university did not endorse the technology either though Holmes made it appear that way.
Nevertheless, Walgreens, believing the endorsements to be real, and Ms. Holmes arguments as to the potential of the technology to make the chain huge profits, invested in the Theranos technologies for their retail stores. They were duped out of millions.
Unethical or Worse?
The case is slowly being led down the path of the basic question: who is Elizabeth Holmes? The defence will paint her as a manipulated young woman (now, with a newborn). Is it possible she was bordering on sociopathic behavior in her drive to be like her idol Steve Jobs? Could she be a woman who lacked conscience?
As we have tried to unfold this scam from various perspectives, we have run up against those who will claim that Holmes was no different than any other failed Silicon Valley entrepreneur. While that could be at least a defensible argument, I must again warn that Elizabeth Holmes was playing with people’s lives. The Theranos technology was failing and the blood tests were either totally fudged or were extrapolated so that one or two tests were projected for all 300 that were promised. Best case scenario, the Theranos lab took samples, ran them through conventional machinery and were reporting the results as though the analysis was being conducted on a Theranos machine.
So far, Theranos has the look of a company build on a foundation of no oversite and lies, a need for more and more money and a rationalization that one day the technology would work. In other words, all of the elements of fraud. The “charming Ms. Holmes” is closer to facing the witness stand with each passing week. If the defense has a major surprise, now might be the best time to unwrap it.
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