I think the rise and fall of Theranos is the biggest scientific hoax of recent times. The story is fascinating in a sick and twisted way, and the ending has yet to be written.
Theranos was a company founded in 2003 by Elizabeth Holmes, a 19-year-old Stanford dropout. Her idea was to use a small amount of blood collected from a single finger to diagnose everything from the common cold to HIV with a machine just slightly larger than a microwave.
In theory, it was a good idea. In practice, it would never work. However, that didn't stop Holmes.
**Holmes shows off his "nanotainer". It's a container with a blood sample that is used to pass through her diagnostic machine, which then spits out the results of hundreds of complex diagnostic tests.
To understand the scam, first get to know the woman. To say she's interesting and eccentric is an understatement. Elizabeth Holmes went from college dropout to tech billionaire and back to bankruptcy in just over a decade. She now faces millions of dollars in fines and up to 20 years in prison.
One of her most unusual qualities is her low baritone voice. To me, she sounds a bit like Kermit the Frog. Decide for yourself. Those who knew her before theranos came along say she didn't always sound so good.
Another fact is that she almost never blinks. She stares at me with eyes so wide open that even the staunchest skeptic would believe in the existence of aliens.
Another strange thing I'll talk about is her obsession with Steve Jobs. She adores him so much that the vast majority of her closet is black, and most of it is black turtlenecks.
Back to the fraud part:Her company eventually raised $700 million from venture capitalists and private investors. Its peak valuation in 2014 was $10 billion. Like I said, it's a great idea and would make people a lot of money if it worked.
But it didn't work as expected, a fact carefully hidden from investors and potential customers. Theranos employees who knew about the system's limitations couldn't talk freely because they had all signed non-disclosure agreements that punished them severely if they blew the whistle.
** The Theranos blood-testing device was called "Edison".
The downfall of Theranos began in 2015, when The Wall Street Journal's John Karelou, who was a member of the group's board of directors, said that the company's blood-testing devices were not "Edison". John caryrou reported on the company. Something didn't feel right to him, so he started digging deeper. What he uncovered was a web of lies and fraud.
The company was getting more and more money from investors when, in reality, Edison could only perform a few of the most basic blood tests. Even then, they didn't do a good job.
Without the knowledge of investors and patients, other, more complex tests that the machines were supposed to perform were outsourced to established labs.
The Wall Street Journal article sparked investigations by the Securities and Exchange Commission (SEC), the Centers for Medicare and Medicaid Services (CMS), state attorneys general, private attorneys, and others.
When the truth was discovered, Holmes' net worth plummeted from $4.5 billion to almost nothing. The multibillion-dollar corporation was eventually forced to close its doors due to bankruptcy.
In March 2018, she and former company president Sunny Balwani were charged with "massive fraud" by the SEC. Part of the indictment against them said the company reported $100 million in annual revenue in 2014, while the actual figure was closer to $100,000 dollars.
Holmes ultimately paid a $500,000 fine, gave up her 18.9 million shares of stock in the company, relinquished control of the company and was barred from serving as an officer or director of any public company for 10 years.
In June 2018, the state of California indicted Holmes for wire fraud and ****ing conspiracy. Her trial was supposed to begin in August 2020, but was delayed due to the COVID - 19 pandemic. It has now been rescheduled for a March 9, 2021 start date. Holmes was quoted as saying, "Success is not a matter of spontaneous combustion. You must ignite yourself." And she did. She burned herself and her company completely.