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Elizabeth Holmes exposed: The $9 billion medical ‘miracle’ that never existed | 60 Minutes Australia — Transcript

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0:00Elizabeth Holmes promised the world a
0:02medical revolution. At 19, she claimed
0:05to have invented a miniaturized machine
0:08that with a single drop of blood could
0:10map our health. Her boast was serious
0:13diseases like cancer would be prevented
0:16before they happened. And it was not
0:18only a wow moment for patients.
0:21High-profile investors poured a fortune
0:24into Elizabeth Holmes company, Theronos.
0:27Their money guaranteed she became
0:30Silicon Valley's first self-made female
0:33billionaire. But her invention was an
0:36invention. It didn't work. Elizabeth
0:39Holmes is no visionary. She's a
0:41fraudster who's risked people's lives
0:44and if convicted faces 20 years.
0:48It's finding what you're born to do.
0:51When you really give everything to that,
0:54then you can realize great things.
0:57Holmes was making the greatest promise
0:59of all that she could save lives through
1:02a revolutionary blood testing device she
1:04had created
1:06and which she would make available to
1:08all through supermarkets and pharmacies.
1:12Theronos
1:13means being able to see the onset of
1:17disease in time to be able to do
1:20something about it.
1:22I'd like to welcome Elizabeth Holmes.
1:24It's the real treat. The incredible
1:26Elizabeth Holmes.
1:29[Music]
1:31California's Silicon Valley and some of
1:33the richest people in the world bought
1:36the dream.
1:37There are people in this world who
1:38revolutionize our lives. Koko Chanel,
1:40Steve Jobs, Bill Gates, Walt Disney, and
1:42Elizabeth Holmes. Mark my words.
1:46turning Therronos into a staggering $9
1:48billion juggernaut and making Holmes the
1:51Tech Valley's first self-made female
1:54billionaire.
1:55You founded this company 12 years ago,
1:57right?
1:58Tell them how old you were.
1:59I was 19.
2:03Celebrity commentators and cashed up
2:06investors couldn't get enough of this
2:08new kid on the block
2:10in Silicon Valley. She was the new
2:12darling. And a lot of that was because
2:14she was a woman entrepreneur, which is a
2:16very popular thing. It's been a man's
2:18world, you know, for so long.
2:22She would wear black turtlenecks like
2:24Steve Jobs
2:26and sold her little tail and uh
2:30everybody bought it for a while.
2:34The revolution promised by Elizabeth
2:37Holmes was to put preventative health
2:39care at our fingertips. Quite literally,
2:43all it would take would be one tiny drop
2:45of blood from a finger prick from which
2:48to run hundreds of blood tests using a
2:51groundbreaking miniaturized testing
2:53device, which would deliver more
2:54reliable, faster, and cheaper results.
2:58People don't like big needles being
3:00stuck into their arm. Part of it
3:02You're one of those people, right?
3:04Deeply so. Yes.
3:07Elizabeth's machine would wipe out the
3:09traditional way of doing things, larger
3:12volumes of blood drawn from the arm by
3:14big needles and costly and
3:17time-consuming lab analysis.
3:20The mission was to enable everyone to
3:22get blood tests as frequently as once a
3:25month to build a personal health profile
3:28and to catch diseases like cancer at
3:30their earliest. People don't even know
3:34that they have a basic human right to be
3:38able to get access to information about
3:41themselves and their own bodies that can
3:45change their lives. But as
3:48whistleblowers would expose, the
3:50Elizabeth Holmes revolution turned out
3:52to be an extraordinary fraud.
3:55A lie that put lives in jeopardy. Were
3:58you ever asked to falsify data or
4:01destroy data?
4:02Oh, just just get rid of these tests
4:04that you've run.
4:05Wiped out nearly a billion dollars of
4:08investors money.
4:09There was no money to be had. It all
4:11just evaporated. Any comment at all to
4:13the investors
4:14and may well end with homes behind bars
4:17for up to 20 years come her fraud trial
4:20later this month.
4:22Miss Wallace, please raise your right
4:23hand. Do you swear to tell the truth,
4:25the whole truth, and nothing but the
4:26truth? Thank you.
4:28How would you describe the rise and rise
4:31and then the fall of Elizabeth Holmes?
4:33Well, I think it is a commentary on
4:35Silicon Valley's culture. There's so
4:37much hyping, so much exaggerating in
4:39this culture that, you know, young
4:41entrepreneurs uh are basically bred to
4:45to behave this way.
4:47And as investigative journalist John
4:50Karoo found, there were plenty of people
4:52in the room willing to drink the
4:54Kool-Aid. All hoping to crack the
4:57unicorn club, the billiondoll startups
5:00emerging in Silicon Valley at the time.
5:03This was the unicorn boom and this was
5:062015 and uh things were getting really
5:10frothy in in Silicon Valley and uh
5:12people didn't want to miss the next
5:14Facebook and uh a lot of people wanted
5:17to to get on board this next rocket ship
5:19to uh to riches.
5:21When she first interviewed me, I have to
5:23say I was a bit starruck.
5:25Science graduate Erica Chung was not out
5:28to get rich. She just wanted a job. and
5:31Theronos with Ernest Elizabeth Holmes at
5:34the helm was the dream pick.
5:37I was really enthusiastic as sort of a
5:40young scientist to to work for a company
5:42that seemed to have a compelling vision
5:44and and a strong leader who seemed to
5:46back it as well.
5:49But Erica was shocked to find the
5:51Theronos dream was in fact a fairy tale
5:55peddled by Holmes and chief operating
5:57officer Romesh Sunny Balwani,
6:01Elizabeth's boyfriend at the time. For
6:04all the excitement, the little black box
6:07simply did not work. It could not do
6:11what the pair claimed.
6:14The reality of working at Theronos was
6:18that a lot of the things that were being
6:21said about the company were not actually
6:23what was going on behind closed doors.
6:26This new revolutionary device, it wasn't
6:29actually in existence. It hadn't quite
6:32been built yet.
6:34Worse, they were using a jerryrigged
6:36version of the machine to run patients
6:38blood tests. The results were often
6:41false or misleading, but this too was
6:44hidden from an unsuspecting public
6:46despite the significant health risks.
6:49I just wanted people to know that they
6:51were leveraging this faulty device to
6:53test on patients and that needed to be
6:55stopped.
6:58Rumors of Theronos bad practice were
7:01circulating,
7:03but it was journalist John Keroo from
7:05the Wall Street Journal who would be the
7:08first to start investigating after a tip
7:10off from a skeptical pathologist.
7:13things, you know, began to come into
7:15focus for me and and I realized that,
7:18you know, this was not just a a business
7:21fraud and a corporate fraud, but
7:23potentially a fraud that had big
7:25implications for the public health. And
7:26so I thought, well, this is a big story.
7:30For all the hope and hype, Elizabeth
7:32Holmes was now accused of being a fake.
7:35But as it would become clear, the
7:37consequences of her fraud were real and
7:40dangerous.
7:41This is inexcusable. now and forever.
7:52The remarkable story of healthc care
7:54startup company Theronos and its founder
7:57Elizabeth Holmes starts at Stanford
8:00University in 2003.
8:03This used to be my advisor's office. We
8:06got in
8:08at just 19 and after just two semesters
8:11studying chemical engineering, Holmes
8:14dropped out of university to become a
8:16medical technology entrepreneur.
8:18Another few classes in chemical
8:22engineering was not necessary for what I
8:24wanted to do.
8:26One of the first to hear her future
8:28business plans was Stanford University
8:31professor of medicine Dr. Phyllis
8:33Gardner.
8:34Unlike most who encountered Holmes, Dr.
8:37Gardner was not impressed.
8:41Did Elizabeth Holmes always have big
8:43dreams in your opinion?
8:45Absolutely. Her ambition was over the
8:48top. And unfortunately, the person who
8:51twice introduced her to me said, "She's
8:54just brilliant. She's brilliant." And
8:56when you're surrounded by Nobel
8:58laureates, you take that with a grain of
9:00salt, a boulder of salt.
9:03She had no knowledge of medicine and a
9:06rudimentary knowledge of engineering and
9:08she was 19 and she really didn't want
9:11any expertise. She thought she knew it
9:14all.
9:16Well, you don't at 19. I'm sorry.
9:20But right from the start, Elizabeth
9:22Holmes knew the power of PR. I believe
9:27the individual
9:30is the answer to the challenges of
9:33healthcare.
9:34She didn't bother proving her so-called
9:36groundbreaking blood testing device
9:39could do all she promised through peer
9:41reviews or releasing extensive data.
9:44Let's take these tests and make them
9:47accessible.
9:48Instead, she gathered a war council to
9:51her board, reing in their fame and
9:54credibility. So, it includes three
9:56former US cabinet secretaries, two
9:58former US senators, a retired Navy
10:00admiral, and a retired Marine Corps
10:02general, including George Schultz, Henry
10:05Kissinger. How did you make that happen?
10:10The board was George Schultz, Jim
10:14Mattis, Henry Kissinger, and a bunch of
10:16four-star generals. And someone said,
10:19"This is like a board that's going to
10:20take over the world." And uh but what
10:23does it have to do with medical
10:25advancements? Nothing. And so everyone
10:28was duped. Silicon Valley really had egg
10:31on its face uh over this thing. But
10:34initially, like so many smalltime
10:37investor Eene Lepra was impressed after
10:40she was advised to sink a hard-earned
10:43$100,000 into Theronos. Was there
10:47something about the nature of what
10:49Elizabeth Holmes was hoping to do,
10:51promising to do that attracted you to
10:53this type of investment? Was there
10:55anything altruistic about it?
10:57Not for me. I was looking to make money,
11:00but I worked for a venture capitalist at
11:02the time and um he said it would be
11:07equivalent to Apple uh and to get as
11:10many shares as I could.
11:13No matter there was no evidence. The
11:15money flowing into Theronos was huge,
11:18almost a billion dollars. At one time,
11:22Rbert Murdoch was the single biggest
11:24investor, buying $125 million worth of
11:28shares.
11:30Coincidentally, as the proprietor of the
11:32Wall Street Journal, he was also
11:35investigative journalist John Karoo's
11:37boss. At the time, Karou exposed Holmes'
11:40spin as lies.
11:43to invest that sort of money without any
11:45real data, any peer reviews. I mean, did
11:48that surprise you?
11:49As it relates to to Murdoch, he kind of
11:51uh operates from the gut. Um uh and and
11:56mostly he's been right. Uh as for the
11:58other investors, certainly, you know,
12:00they should have done more due
12:02diligence. I think it was a a deliberate
12:04choice of Elizabeth's to focus on uh
12:08what I would call uncharitably the dumb
12:10money, the uh uh billionaires and their
12:13family offices as opposed to the uh
12:16sophisticated Silicon Valley venture
12:18funds who I don't think they would have
12:20fallen for for the same lies.
12:22What do you think of the investors who
12:24lined up to to give her nearly a billion
12:27dollars worth of money?
12:28Older white men, right?
12:32I'm telling you, I've said it. Brains
12:35going south.
12:36They weren't thinking with their brains
12:37is what you're saying.
12:38Uhhuh.
12:41I don't know. And they believed her. And
12:43she could be charming.
12:46She could be. I'm sure. It just didn't
12:49charm me, but she could be charming to
12:52older men. Giving people the right to
12:56obtain a laboratory test will by
12:59definition
13:00begin the process of enabling them to
13:03engage in their health.
13:06Miss Holmes, you are magnificent.
13:09With Elizabeth's charm offensive in full
13:11flight, results back in the lab were
13:14going from bad to worse. According to
13:16former lab associate Erica Chung,
13:19they were producing really wildly
13:23inaccurate and imprecise results on a
13:25consistent basis across many different
13:27types of blood tests. You know, tests
13:30like hepatitis C or your thyroid test or
13:36tests that would be predictive of
13:37cancer. It's telling us very clearly we
13:40need to stop testing patients. Every
13:43person should have the ability to get
13:45that type of test.
13:46But Elizabeth was not listening.
13:48Desperate for her technology to catch up
13:50with her vision.
13:51Your health is really important to us
13:53the kids.
13:53Of all those taken in by the Theronos
13:56mania, it would be patients who had the
13:58most to lose
13:59because nothing is more important than
14:01the health of those you love.
14:03It was just a big fraud.
14:07And if you can perpetrate a fraud, smile
14:10about it. go to White House deadtors.
14:13That to me is just no conscience.
14:16This notion that she was faking it until
14:19she could make it. Do you think that she
14:22ever believed herself in what she could
14:26do?
14:26Possibly.
14:28Probably.
14:30I mean, it's almost like in another
14:33fantasy world,
14:35an egoism that I can't describe.
14:39I don't have that. I I doubt you have
14:42that. Fake it till you make it. Excuse
14:45me. On patience. I don't think so.
14:49What is your view of that? That they're
14:50happy to to go live with a system that's
14:54still being tested and is actually
14:56failing.
14:56Yeah. It's unconscionable. It's
14:57unethical. Um it's immoral is, you know,
15:00all the words you can think about to
15:02describe that.
15:03And in Australia, why the Elizabeth
15:06Holmes miniature black box was never
15:08going to work. She could never do what
15:10she claimed she could do.
15:22Founder and CEO of startup company
15:24Theronos, Elizabeth Holmes was promising
15:27to make possible the impossible in the
15:30name of preventative medicine.
15:33The issue comes that she tried to
15:35essentially take an entire pathology lab
15:37and squish it into a little black box
15:38and promise to be able to do all those
15:40tests all the time for people. Um, and
15:44it takes years and years to develop a
15:46single one of those tests up to the
15:48standard where it can be accurate. So,
15:50it was, you know, ambitious doesn't
15:52quite capture it, but it was incredibly
15:54ambitious.
15:56Medical scientist Dr. Darren Saunders
15:58from Sydney University has keenly
16:00followed the rise of Elizabeth Holmes
16:03and her promise that this mini lab could
16:05run hundreds of blood tests of just one
16:08drop of blood. His expertise in the
16:11field made him incredulous right from
16:13the start.
16:14Over the last 11 years, we've reinvented
16:19the traditional laboratory
16:20infrastructure.
16:21It's quite a weird thing to watch happen
16:23because you you feel like shouting the
16:25emperor is not wearing any clothes,
16:26right? And as a scientist, it was I
16:28think frustrating is the word I'd use.
16:29Incredibly frustrating because you felt
16:31like taking these people aside and
16:32going, "Look, there's there's nothing
16:33going on here. Why are you spending so
16:34much money on something that there's
16:36there's no proof that it exists?"
16:38That was the phrase I always used. It
16:40was exactly that. The emperor has no
16:42clothes. And that is the perfect
16:47metaphor for what it was like.
16:51Across the world, Dr. Phyllis Gardner
16:54was equally disturbed. As a professor at
16:57Stanford University, she knew Elizabeth
16:59Holmes as a student there. Up until that
17:01point, the way that they had had to draw
17:03blood is
17:03before she famously dropped out and
17:06acquired the Steve Jobs attire
17:09so dehumanizing that um it's an
17:12incredibly emotional process. So,
17:14and before her voice changed.
17:17Well, it's wonderful to be here. I
17:19started this company because
17:21And what about the deep voice? Did you
17:23have the deep voice when you were
17:24dealing with her?
17:25No, I was shocked when I heard her voice
17:27because I'd met her before. I certainly
17:31that is a voice you don't forget in a
17:34woman. Oh hello
17:39yes
17:40the right to protect
17:43the health and wellbeing
17:45carefully crafted or otherwise
17:47corporations were lining up to embrace
17:49Elizabeth Holmes. Her success was sealed
17:53when in 2013 in a multi-million dollar
17:57deal, Theronos was launched in pharmacy
17:59chain Walgreens.
18:01We have an operational plan that will
18:04allow us to become within 5 miles of
18:08every person's home through the
18:10Walgreens that we've opened and are
18:12continuing to open nationally.
18:15It was all about access and ease.
18:18Customers could get an intore blood test
18:21off a simple finger prick, which would
18:23cost next to nothing. They'd even get
18:25their results back within 4 hours.
18:29That was the promise. The truth was
18:31another matter. According to former
18:33Theronos lab associate Erica Cha, you
18:37know, this thing that was supposed to be
18:38five would all of all of a sudden show
18:40up to be 60. And then you would run it
18:43and it would show up to be, you know,
18:45four. And it was just the degree of
18:46inaccuracy was just way too high to be
18:50acceptable to start running on on
18:51patients.
18:52So I got my Theronos test done on like
18:5529th of July and then 31st of July I got
18:59a test done by another lab and it was
19:02different.
19:04Unaware of the wildly unreliable
19:07results, Palav Sharta himself, a
19:10physician turned medical technology
19:12entrepreneur, went to Walgreens for a
19:15Theronos blood test. The results were
19:18surprisingly bad for this
19:20healthconscious medicalico. They showed
19:22he was pre-diabetic.
19:26Luckily, Paliv's own doctor was
19:29suspicious of the diagnosis and ordered
19:31another blood test from another lab.
19:34That was the moment when I felt cheated
19:36because I
19:38there was a little bit of a pride hurt
19:39because I'm from the industry.
19:42If you had not got a second opinion, a
19:45second test, what course of action would
19:47you have taken? At age 35, I would have
19:52been started on anti-diabetic medication
19:57and no medication is
20:01comes without side effects. So I
20:06I I get emotional thinking about
20:11how big a deal it was for me. If you
20:14followed the Theronos model, you would
20:17have been on medication for a disease
20:20you don't have.
20:21Yes, absolutely. Uh this is inexcusable
20:26now and forever.
20:28Was it a fact that there were illnesses
20:30that might not have been picked up that
20:32there people who might have been
20:34suffering from life-threatening diseases
20:37and they just did didn't know it because
20:39they got a false result?
20:41Yeah. The devices were so unreliable
20:43that you really couldn't trust it with
20:45any test.
20:47The groundbreaking Therronos technology
20:49was a charade. Instead, Theronos was
20:53secretly using traditional commercially
20:55available blood analyzers.
20:58Because those machines require larger
21:01amounts of blood to run their tests,
21:03staff were ordered to dilute the small
21:06blood samples collected by Finger Brick,
21:09rendering those results unsafe. They
21:12were doing the tests on standard
21:14equipment and they were diluting the
21:17blood, which invalidates a lot of the
21:20results. So I knew there was fraud going
21:24on and I from very early on. But still,
21:28the marketing myth continued.
21:31And you make a decision to do something,
21:32you do it, and that's it.
21:34A previously non-existent lab was
21:36created, filled with as many of the
21:38black boxes the company could find.
21:42Then vice president, Joe Biden, was
21:45invited to inspect.
21:46This is sort of the laboratory of the
21:48future.
21:48Unaware the devices didn't work and that
21:51he along with the world was being
21:54conned.
21:55to learn that she created a fake lab to
21:59show Joe Biden. I mean, what an
22:01audacious act of deception.
22:04Well, she was audacious. I would grant
22:06you that and everything she did. I do
22:09think there's some, this is my opinion,
22:12that there's some sociopathy involved
22:16and the ability to
22:21lie
22:23and without caring is not normal
22:28from my perspective
22:31as a medical doctor. She was trying uh
22:34to uh overpromise and then hope that her
22:37engineers and her biochemists would
22:39catch up um and that when they
22:41eventually did and that her machine
22:43worked, no one would be the wiser. The
22:45problem is she was nowhere near ready.
22:49Elizabeth Holmes was revered as the
22:52superwoman scientist come to rescue and
22:55revolutionize the US health system.
22:58But the true heroes of the Theronos tale
23:01are the courageous whistleblowers who
23:03helped investigative journalist John
23:05Karoo from the Wall Street Journal
23:08expose the sham.
23:12Off their testimonies, he went on to
23:14write the award-winning Bad Blood and is
23:16hosting a podcast called Bad Blood: The
23:20Final Chapter. These are people who
23:22wanted to do good. These are people who
23:24couldn't sleep at night because they
23:25were worried that patients were relying
23:28on on false results.
23:30Did that strike you as well?
23:32They couldn't in and good conscience
23:34continue uh to not say anything. They
23:37they felt the need to speak up. Um and
23:39they felt that lives were in danger and
23:41that the longer this went on, the worse
23:43it would get.
23:45Erica Chung was one such hero. When her
23:48concerns were ignored by Theronos, she
23:51left in disgust. but still feared for
23:54its customers. Erica alerted regulators
23:57to what was going on behind closed
23:59doors.
24:00You were being extraordinarily brave.
24:02Yes,
24:03you clearly felt compelled to get
24:05someone else in
24:07even though it was scary and it was
24:08nerve-wracking and at that time Theronos
24:11was at least threatening to sue me and
24:13they were following me to sort of
24:15intimidate me and to not speak up
24:17against them. Uh
24:20it it's just that they needed to stop
24:22doing this thing, right? They needed to
24:24stop testing on patients and that the
24:27truth needed to be uncovered.
24:30This is what happens when you work to
24:32change things and first they think
24:34you're crazy, then they fight you and
24:36then all of a sudden you change the
24:38world.
24:39Elizabeth Holmes came out fighting, but
24:42regulators acted against her, closing
24:46down Theronos laboratories and banning
24:48medical testing after they found massive
24:51fraud that put patients in serious
24:54jeopardy. The company, once valued at $9
24:58billion, was now worth zero.
25:01And that was good, right? Like the
25:03mission was finally accomplished. By
25:05that point, I was able to finally sleep
25:07at night and and realize that, you know,
25:10my my work was done.
25:14In further legal action, Elizabeth and
25:17ex-boyfriend Sunonny Balwani are now in
25:19the midst of a delayed criminal trial
25:22for defrauding investors, patients, and
25:24doctors, and could be jailed for up to
25:2720 years if convicted.
25:31Hol's trial has been pushed back to the
25:33end of this month. First by co and then
25:36news she was expecting her first child,
25:39a son who was born in July.
25:42To get pregnant
25:45when you're undergoing a trial
25:50is the height of irresponsibility in my
25:53mind. What about the baby? Well, do you
25:56think this was a planned pregnancy or do
25:59you think it was an accident?
26:00I definitely think it was. I mean, I was
26:03predicting it because it's the best way
26:05to garner her sympathy to try to keep
26:08herself out of prison.
26:11I think she needs to go to prison for a
26:13while. I think 25 years sounds good.
26:17Those closest to the Theronos dream,
26:20including investor Eileen Leper, still
26:22believe Elizabeth Holmes should face the
26:25harshest sanctions because beyond money,
26:28so much was at stake. Everybody knows it
26:32was all a sham. So why would you get a
26:35slap on the wrist? You know, if it was
26:37just money, that's one thing. But it's
26:39it's people's lives, their medical
26:41situations.
26:43That's not okay with anybody.
26:48Hello, I'm Tara Brown. Thanks for
26:50watching 60 Minutes Australia. Subscribe
26:53to our channel now for brand new stories
26:56and exclusive clips every week. And
26:59don't miss out on our extra minutes,
27:01segments, and full episodes of 60
27:04Minutes on now.com.au
27:07AU and the 9 Now

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This page contains the full transcript of Elizabeth Holmes exposed: The $9 billion medical ‘miracle’ that never existed | 60 Minutes Australia by 60 Minutes Australia, generated from the public captions YouTube serves with the video. The transcript has 3,801 words across 636 segments, with the original timestamps preserved so you can click any line to jump to that moment in the embedded player.

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