Elizabeth Holmes & The Theranos Deception | 60 Minutes Archive

60 minutes rewind elizabeth holmes was  just 19 years old when she dropped out of   stanford university with a dream of creating a  company that would revolutionize blood testing   she founded the startup theranose it boasted  her technology could take a pinprick worth   of blood from the finger and perform hundreds  of laboratory tests it was she claimed quote   the most important thing humanity has ever built  added zenith theranos was worth nearly 10 billion   dollars and elizabeth holmes became the youngest  self-made female billionaire in the world she   was also as the wall street journal uncovered at  the center of a massive multi-year fraud you're   about to hear from insiders how the theranose  deception hoodwinked gullible investors and   worse endangered unsuspecting patients our work  is in being able to make testing more accessible   elizabeth holmes built her company theranose on  this invention she named the edison a miniaturized   blood analyzer that would disrupt the 60 billion  lab testing industry dominated by giants labcorp   and quest diagnostics holmes called her invention  the ipod of healthcare and it made her a celebrity   she graced magazine covers and was  praised by politicians and the press alike   you founded this company 12 years ago  right tell them how old you were i was 19. she sold her vision with grandiose claims that  her blood tests would cost a fraction of current   prices homes biotech startup was backed by an  illustrious board packed with national security   heavyweights like henry kissinger and james mattis  the current defense secretary the board was filled   with friends of george p schultz the former  secretary of state who helped end the cold war   he introduced his grandson tyler to holmes dazzled  tyler schultz became a believer and joined the   company soon after getting his degree in biology  from stanford university when you met her and   you heard about elizabeth holmes vision what did  you think i was totally sold on it tyler schultz   began working at theranos in september 2013. it  was a pivotal moment as the company announced a   partnership with walgreens the deal would put an  edison machine in every store elizabeth holmes   claimed the edison performed all the tests big  lab machines like these could from cholesterol to   cancer all from a painless finger prick but tyler  schultz says the edison he saw just didn't work   was it a sophisticated piece of machinery no there  were components that would kind of fall off in the   middle of testing that you would have to then  fish out they had doors that wouldn't close they   would get too hot and then they would get too  cold when i was there we could not complete any   test accurately on the devices that we were  manufacturing in 2000 doug matchy joined   theranos in 2012 after getting his doctorate in  biochemistry his job was to adapt blood tests for   the edison tests which holmes told investors were  ready to use on patients but elizabeth holmes had   told walgreens in 2010 that it had developed this  device that was capable of running any blood test   from a few drops pricked from a finger in real  time and less than half the cost of traditional   labs was that true no certainly not do you think  she was lying to walgreens i do yeah are you a   clinical lab specialist no erica chung was fresh  out of berkeley with a degree in molecular and   cell biology when she went to work at theranos  she was just 22 but even the novice lab tech   suspected something was very wrong when she saw  faulty test results sent to walgreens patients   when did you think i probably shouldn't be doing  this pretty pretty soon in the process especially   when we started to pick up more patient samples  and when those samples were retested she says   there were often contradictory results did you  ever alert the patient no we didn't let them   know hey we re-ran your patient sample and we're  not actually positive about what the diagnosis is   this is someone's health information exactly  this isn't an app crashing this isn't   you know someone's food delivery coming late  it's just a different ball game it's not the   only game elizabeth holmes was playing theranos  employees told us they were instructed to stage   fake demonstrations for investors who visited  company headquarters it was kind of a show all   they would see was their blood getting collected  they didn't see what was going on behind closed   doors about how it was processed they would get  their finger pricked with a small amount of blood   then they'd be let out of the room they'd go  have a meeting go have lunch whatever and at   which point an engineer would run in the room grab  the cartridge bring it out to the lab so was the   edison doing the testing no absolutely not who was  doing the testing it was scientists at the bench   by hand by hand yeah it was a bait and switch  for investors that kept the money rolling in   theranos raised nearly 900 million  dollars from those investors   who now say they were swindled by elizabeth  holmes and company president ramesh sunny bolwani   the pair claimed in investor documents obtained by  60 minutes that theranos technology was validated   by the fda pharmaceutical companies and was  deployed on the battlefield by the u.s military   in afghanistan those claims were fabricated and in  one public appearance after another holmes pitch   became even more fantastic and reckless we've  done some work with people at hopkins who have   developed and demonstrated that in blood you can  see the onset of pancreatic cancer 17 years before   a tumor forms we called johns hopkins medicine  they told us they never collaborated with theranos   and doug mache says test data he compiled for the  food and drug administration was falsified there   was so much pressure from above to get good  looking results that are going to be able to   pass fda guidelines that people were pressured  into making things disappear the bad results   bad results that's deceptive yeah for sure did  you ever go to your boss and say this isn't right   absolutely all the time but you know he was under  a lot of pressure from the people above him and he   was trying to do his best to make to make everyone  happy this invention is going to be way up there   with the discovery of antibiotics day-to-day  operations were run by company president sunny   balwani balwani is a millionaire software engineer  with no training in the biological sciences   but he did have a powerful connection to elizabeth  holmes sonny balwani was her secret boyfriend some   people are here because of the mission the cause  some people are hopefully here for the science   balwani was also home's enforcer firing employees  on the spot and berating scientists for failed   tests after a year and a half machi quit i  saw that there was potentially fraud taking   place there was far too much illegitimate things  going on there i talked to sunny decided i didn't   want to be there anymore and i left tyler schultz  was also becoming disillusioned i had a personal   relationship with elizabeth she was close to  my family and i felt like she was deceiving   my family and the public and almost every media  outlet including us here at cbs bought into   the theranos myth a healthcare pioneer is being  compared to visionaries like bill gates and steve   jobs do you think she wanted to be the next steve  jobs she just really idolized him so she wore the   black turtleneck i think she created a world where  she was steve jobs for a little bit as her wealth   and reputation sword elizabeth holmes took on  the trappings of power she bragged bulletproof   windows were installed in her office and she  traveled with a full-time security detail theranos   employees told us they were closely watched  and required to sign non-disclosure agreements   all reinforced they said by a threatening  team of lawyers and private investigators   that's why when tyler schultz alerted authorities  in the spring of 2014 he used a fake name   why did you come up with an alias i knew how  seriously theranos protected their trade secrets   i knew they would not take it well if they knew  that i was talking to regulators in his email to   new york state department of health regulators  schultz outlined questionable lab practices and   said he believed test results were being switched  i just said this happened in my laboratory and   i just want to know if this is okay and they  responded and said no this is cheating this is   not how it's supposed to be done tyler schultz was  ready to resign but first he sent elizabeth holmes   an email about his concerns he got a response  from sonny balwani that i was arrogant ignorant   patronizing reckless and i was lacking the basic  understanding of math science and statistics   that if i had any other last name that i would  have already been held accountable to the   strongest extent tyler schultz quit in april 2014  and soon after erica chung did too by february   2015 the theranose fairy tale was about to unravel  publicly the story will continue after this at the wall street journal pulitzer prize-winning  reporter john kerry roo who has written a book   about the theranos saga got a call it was  a tipster casting doubt about the edison   theranos and its charismatic founder elizabeth  holmes she is a pathological liar she wanted to be   a celebrated tech entrepreneur she wanted to be  rich and famous and she wouldn't let anything get   in the way of that what kind of job did the board  do in holding homes accountable this is one of   the most epic failures in corporate governance in  the annals of american capitalism they did nothing   to verify that her scientific claims were true  careyroo's first article appeared in october 2015   and revealed theranos did less than 10 percent of  its tests on edison machines what do you think is   going on here homes struck back this is what  happens when you work to change things and   first they think you're crazy then they fight  you and then all of a sudden you change the world   but skeptics were no longer buying the theranos  deception what i'm showing you now is the result   of hundreds of engineers and scientists work  holmes repeatedly insisted she would present   proof at a major industry conference that her  technology worked you can see the tray dropping   into the detection module there it was proof that  never came and the evidence that you presented   fell far short of that in 2016 after a series  of surprise inspections federal regulators shut   down the company's laboratory saying it posed  immediate jeopardy to patient health and safety   nearly one million theranose test results  were invalidated when she started using   this technology on the blood samples taken  from consumers in walgreens stores that was   an unauthorized medical experiment  there's no other way to put it   theranos was on the brink of collapse big  name investors found their stock was worthless   education secretary betsy devos and her family  and media mogul rupert murdoch each lost more   than a hundred million dollars walgreens sued  theranos and settled for less than a quarter of   their 140 million dollar investment why do you  think this was outright fraud as opposed to any   other silicon valley startup that just wasn't able  to deliver on lofty goals well because she raised   money hundreds of millions of dollars on the  basis of this technology not only being ready   and working but being commercially rolled out  you're also lying to the public you're lying to   patients you're lying to doctors you're lying to  regulators most people would call that fraud as   well the securities and exchange commission  called it massive fraud when they charged   elizabeth holmes and sonny balwani in march holmes  settled the sec case without admitting guilt   and paid a half a million dollar fine balwani who  left theranos two years ago calls the sec charges   unwarranted and is fighting them at its height  how much was theranos worth 10 billion there   was a period of several months where it was more  valuable than uber more valuable than airbnb more   valuable than spotify and how much is it worth  now zero elizabeth holmes remains ceo of theranos   she would not comment for our story but last month  she wrote to investors asking them to put in even   more where the company would soon run out of  cash a federal criminal investigation is ongoing

Channel: 60 Minutes

Views: 2,228,108

Keywords: 60 Minutes, CBS News, Elizabeth Holmes, Theranos

Id: jIqF95qiQSs

Length: 14min 3sec (843 seconds)

Published: Mon Jan 03 2022