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Elizabeth Holmes was only 19 when she left Stanford University with the dream of creating a business that would revolutionize blood tests. As we announced last May, Holmes founded the startup Theranos and touted that its technology could take a finger prick and perform hundreds of lab tests. According to her, it was "the most important thing that humanity has ever built".
At its peak, Theranos was worth nearly $ 10 billion and Elizabeth Holmes became the youngest billionaire of women in the world. Today, she and the president of her company have been accused by the US government of committing a "multi-million dollar plan" to defraud investors, doctors and patients.
You are about to hear insiders how the deception of Theranos has worked.
Elizabeth Holmes, founder of Theranos
Elizabeth Holmes on "CBS This Morning": "Our job is to make tests more accessible."
Elizabeth Holmes built her Theranos company on this invention that she named Edison. A miniaturized blood analyzer that would disrupt the $ 60 billion laboratory testing sector, dominated by giants LabCorp and Quest Diagnostics.
Holmes called her invention the iPod of health care and this made her a celebrity.
She honored magazine covers and was hailed by politicians and the press.
Bill Clinton: You started this business 12 years ago, tell them how old you were.
Elizabeth Holmes: I was 19 years old.
She sold her vision with grandiose statements that her blood tests would cost a fraction of current prices.
Elizabeth Holmes on TechCrunch Disrupt: What we do in terms of pricing, is saving hundreds of billions of dollars each year for Medicare and Medicaid.
The Holmes start-up specializing in biotechnology was supported by an illustrious board of directors composed of national security heavyweights such as Henry Kissinger and James Mattis, the current secretary of defense. The council was filled with friends of George P. Shultz, the former secretary of state who helped end the cold war.
He introduced his grandson Tyler to Holmes. Dazzled, Tyler Shultz became a believer and joined the company shortly after graduating in biology from Stanford University.
Norah O'Donnell: What did you think when you met her and heard about Elizabeth Holmes' vision?
Tyler Shultz: I've been totally sold for that.
Tyler Shultz started working at Theranos in September 2013. It was a crucial moment as the company announced a partnership with Walgreens. The agreement would put an Edison machine in each store.
"We have not left [patients] Know that we have relaunched your patient sample and that we are not really convinced of the diagnosis. "
Elizabeth Holmes said that Edison had performed all the tests that large lab machines could perform – from cholesterol to cancer – all from a painless sting.
But Tyler Shultz says that Edison that he saw was not working.
Norah O & # 39; Donnell: Was it a sophisticated machine?
Tyler Shultz: No. There were components that would fall in the middle of the tests that you would then have to fish. They had doors that did not close. They would be too hot. And then they would be too cold.
Doug Matje: When I was there, we were not able to perform any specific tests on the devices we were manufacturing.
Doug Matje joined Theranos in 2012 after completing his PhD in Biochemistry. His job was to adapt the blood tests for Edison. The tests, which Holmes told investors, were ready for use on patients.
Norah O'Donnell: But in 2010, Elizabeth Holmes told Walgreens that she had developed this device capable of performing any blood test from a few drops of a finger in real time, and less than half the cost of traditional labs. Was it true?
Doug Matje: No, no. Certainly not.
Norah O'Donnell: Do you think she was lying at Walgreens?
Doug Matje: Yes. Yeah.
Norah O & # 39; Donnell: Are you a clinical laboratory specialist?
Erika Cheung: No.
Norah O Donnell, the correspondent, walks with Erika Cheung, who was 22 when she started working at Theranos
CBS News
Erika Cheung graduated from Berkeley with a degree in Molecular and Cell Biology when she went to work at Theranos. She was only 22, but even the novice lab technician suspected that something was wrong at all when she saw faulty test results sent to Walgreen patients.
Norah O'Donnell: When did you think, "I probably should not do that?"
Erika Cheung: Enough– (LAUGH) Very soon in the process, especially when we started to take more patient samples.
And when these samples were re-tested, she said, there were often conflicting results.
Norah O & # 39; Donnell: Have you ever alerted the patient?
Erika Cheung: No. We did not tell them, "Hey, we've relaunched your patient sample and we're not really convinced of the diagnosis."
Norah O'Donnell: This is the health information of someone.
Erika Cheung: Exactly. This is not a broken app. This is not, you know, late food delivery. It's just a different ball game.
This is not the only game that Elizabeth Holmes was playing. Theranos employees told us that they were instructed to present false demonstrations to investors who visited the company's headquarters.
Erika Cheung: It was a kind of show. All they would see was that their blood was collected. They did not see what was going on behind closed doors about how he was being treated.
Doug Matje: They get their fingers pricked with a small amount of blood. Then they would come out of the room, they would go to a meeting, go to lunch, whatever, and at that moment, an engineer would run into the room, grab the cartridge and take it out to the laboratory. .
Norah O & # 39; Donnell: Did Edison do the testing?
Doug Matje: No, no. Absolutely not.
Norah O Donnell: Who was doing the tests?
Doug Matje: It was scientists on the bench.
Norah O Donnell: handmade.
Doug Matje: In the hand, yes.
Doug Matje, whose job was to adapt blood tests for Edison
CBS News
Theranos has raised close to $ 900 million from investors who now claim to have been scammed by Elizabeth Holmes and the company's president, Ramesh "Sunny" Balwani. The pair said in investor documents obtained at 60 minutes that Theranos technology had been validated by the FDA, pharmaceutical companies and that it was deployed on the battlefield by the US military in Afghanistan. These claims were fabricated.
And in one public appearance after another, the Holmes Throwing has become even more fantastic and reckless.
Elizabeth Holmes on PBS Revolutionaries: We have worked with people from Hopkins who have developed and demonstrated that pancreatic cancer can appear 17 years before tumor formation.
We called Johns Hopkins Medicine. They told us that they had never worked with Theranos. And Doug Matje says, the test data he's compiled for the Food and Drug Administration have been falsified.
Doug Matje: There was so much pressure coming from the top to get good results that will be able to pass the FDA guidelines that people should press for things to go away.
Norah O Donnell: The bad results.
Doug Matje: The bad results.
Norah O 'Donnell: It's misleading.
Doug Matje: Yeah. For sure.
Norah O & # 39; Donnell: Have you ever visited your boss and said, "This is not correct"?
Doug Matje: Absolutely. All the time. But, you know, there was a lot of pressure from people above him. And he was trying to do his best to make everyone happy.
Sunny Balwani: This invention will gain momentum, with the discovery of antibiotics.
Daily operations were conducted by the company's president, Sunny Balwani. Balwani is a millionaire software engineer with no training in biological sciences. But he had a powerful connection with Elizabeth Holmes. Sunny Balwani was his secret boyfriend.
Sunny Balwani: Some people are here because of the mission, the cause, some people are both here for science.
Balwani was also responsible for enforcing Holmes, laying off employees there and accusing the scientists of failing the tests. After a year and a half, Matje resigned.
Doug Matje: I saw that there was, you know, a potential fraud. There were too many illegitimate things. I spoke to Sunny, I decided that I did not want to be there anymore and I left.
Tyler Shultz, who alerted the authorities of Theranos practices in 2014
