Founder of now defunct clinical laboratory testing company was supposed to report to prison April 27, but a last-minute legal challenge has delayed that judge’s order
Anatomic pathologists and clinical laboratory leaders who are following the continuing saga of Theranos and Elizabeth Holmes may be interested to learn that the former CEO’s attorneys are making last-minute legal moves to delay her prison sentence while she appeals her guilty verdict. At the same time, Holmes appears to be on a mission to revamp her public image.
Apparently, the twists and turns in Holmes’ never-ending story are not yet over when it comes to Theranos, its maligned clinical laboratory technology, and the company’s convicted founder.
On May 7, The New York Times (NYT) profiled Holmes in a massive, 5,000-word story that attempted to portray her as a flawed businessperson who now prefers a simpler life with her partner and two young children.
“I made so many mistakes and there was so much I didn’t know and understand, and I feel like when you do it wrong, it’s like you really internalize it in a deep way,” disgraced Theranos founder Elizabeth Holmes recently told The New York Times. Anatomic pathologists and clinical laboratory directors impacted by the revelation that Theranos hide the fact that its blood testing technology was faulty may not sympathize with Holmes’ position. (Photo copyright: Stuart Isett/Fortune Global Forum.)
Legal Team Secures Last-Minute Delay in Holmes’ Surrender
Holmes admitted to the news outlet that the deep voice she used in public, along with her black turtleneck sweaters, were part of a character she created.
“I believed it would be how I would be good at business and taken seriously and not taken as a little girl or a girl who didn’t have good technical ideas,” Holmes told the NYT. “Maybe people picked up on that not being authentic, since it wasn’t.”
However, on April 26, the 9th Circuit Court of Appeals stayed her surrender date until that court rules on Holmes’ latest bid to stay free while she appeals her conviction, The Washington Post reported.
Just days earlier on April 10, a district court judge ruled that Holmes would not stay free while her appeal progresses. The 9th Circuit announcement curtailed the district court ruling. It is not known when the 9th Circuit will issue a decision in the matter.
New York Times Reports on Holmes’ Change in Personality
The somewhat odd New York Times profile of Holmes varied between reflections on her past crimes and on her current personal life, where she is known as “Liz.”
“In case you’re wondering, Holmes speaks in a soft, slightly low, but totally unremarkable voice—no hint of the throaty contralto she used while running her blood-testing startup Theranos, now defunct,” the NYT reported.
Holmes still lives in California with her partner, Billy Evans (whose parents own a luxury hotel chain), and their two children: a son who is almost two years old and a daughter born in February. She works at home for a rape-crisis hotline.
Balwani’s Role in Theranos Again Publicly Debated
In the NYT interview, Holmes talked about being raped while a student at Stanford University and about alleged abuse from her Theranos business partner and former lover, Ramesh “Sunny” Balwani.
Balwani, Theranos’ former President and Chief Operating Officer, began his 12-year, 11-month prison sentence on April 20 in a Southern California facility for his role in defrauding Theranos investors, KTVU TV reported. Balwani has also appealed his conviction on the 12 fraud charges.
Holmes reiterated to the NYT past statements she made in court that Balwani allegedly exerted social and sexual control over her when they both worked at Theranos and were in a romantic relationship.
“She lived by entrepreneurial tenets that she said Balwani told her she needed to follow in order to succeed,” the NYT reported. “These included not sleeping for more than five hours, going vegan, getting to the office daily by 5 a.m., no alcohol.”
“[I] deferred to [Balwani] in the areas he oversaw because I believed he knew better than I did,” including on clinical lab activities at Theranos, Holmes said.
Balwani’s attorneys dismissed Holmes’ allegations, as they have in the past.
Clinical laboratory professionals can reasonably make two broad observations from the continuing saga of Theranos and Elizabeth Holmes:
Justice for healthcare crimes is often deferred for those who have influence and money.
Holmes’ image overhaul may be a last-ditch effort to sway public opinion about her, in the event that she receives a new jury trial as a result of her appeal.
Dark Daily will continue to keep you updated on further developments in this case.
As a Theranos insider and whistleblower, Tyler Schultz was able to provide information about the ongoing failures in medical laboratory testing at the once-high-flying Theranos to regulators and at least one journalist
What’s it like to be a whistleblower in a high-profile clinical laboratory? Few clinical laboratory workers will ever know. But former Theranos employee Tyler Shultz does know, after helping to expose the Silicon Valley blood-testing startup’s deceptions.
The 31-year-old Shultz reportedly celebrated the news of former Theranos CEO Elizabeth Holmes’ conviction on four charges of defrauding investors with champagne, joy, and a healthy dose of vindication, according to NPR.
“This story has been unfolding for pretty much my entire adult life,” Tyler Shultz (above), whistleblower in the Elizabeth Holmes fraud trial, told NPR from his parents’ home in Silicon Valley. “All of a sudden, it was just a weight was lifted. It’s over. I can’t believe it’s over,” he added. A former employee of now defunct clinical laboratory company Theranos, Shultz is CEO at Flux Biosciences, a company he co-founded. (Photo copyright: Deanne Fitzmaurice/NPR.)
Shultz Interns Briefly at Theranos
In 2011, Shultz was a biology major at Stanford University—where Elizabeth Holmes herself briefly attended—when his grandfather, former US Secretary of State George Shultz, a Theranos board member, introduced him to Holmes.
According to NPR, the younger Shultz was so impressed by the charismatic Holmes that he asked her if he could intern with Theranos after his junior year. Following his internship, he accepted a full-time position as a research engineer with Theranos, a stint that lasted only eight months. Shultz quit Theranos the day after he emailed Holmes in 2014 to alert her to failed quality-control checks and other troubling practices within the company’s clinical laboratory.
According a 2016 profile of Shultz in The Wall Street Journal (WSJ), his email to Holmes resulted in a “blistering” reply from then-Theranos President and COO Ramesh “Sunny” Balwani, who “belittled Shultz’s grasp of basic mathematics and his knowledge of laboratory science.”
Yet, Shultz told NPR, “It was clear that there was an open secret within Theranos that this technology simply didn’t exist.”
After leaving Theranos, Shultz became a key source for the WSJ’s 2015 exposé of Theranos. Using an alias, he also contacted state regulators in New York about the Theranos Edison blood-testing device’s shortcomings. In response, Theranos responded with threats of lawsuits and intimidation, the WSJ reported.
In an interview with CBS News, Shultz said, “I am happy that she was found guilty of these crimes and I feel like I got my vindication from that, and I feel good about that.”
Whistleblowers Were Critical to WSJ’s Investigation
Former WSJ reporter John Carreyrou, who authored the newspaper’s investigative series into Theranos, credits the Theranos whistleblowers for blowing the cover on the clinical lab company’s deceptions.
“I would not have been able to break this story without Rosendorff, Tyler, and Erika,” Carreyrou told NPR, referring to Shultz and two additional Theranos whistleblowers: one-time Theranos Laboratory Director Adam Rosendorff and laboratory associate Erika Cheung. “Tyler and Erika were corroborating sources, and that was absolutely critical.”
In the interview with CBS News, Tyler described the damage his role as a Theranos whistleblower caused to his relationship with his grandfather, former Secretary of State and Theranos board member George Shultz. Tyler said the elder Shultz did not believe his claims about Theranos’ regulatory deficiencies and the Edison device’s shortcomings until he neared the end of his life.
“That was extremely tough. This whole saga has taken a financial, emotional, and social toll on my relationships. The toll it took on my grandfather’s relationship was probably the worst. It is tough to explain. I had a few very honest conversations with him,” Shultz told CBS News.
While the elder Shultz never apologized to his grandson, Tyler said his grandfather ultimately acknowledged he was right.
“In one of my last conversations with him he told me a story about how he got Elizabeth invited during fleet week in San Francisco to go give a speech to United States Navy sailors. He said with tears in her eyes, she told the room about how she was so honored and humbled that her life’s work would be saving the lives of United States servicemen and women,” Shultz recalled in the CBS News interview.
“He said he could not believe that anybody could get in front of these men and women who are willing to put their lives in front of our country and lie directly to their face as convincingly as she lied,” he added.
George Shultz died in February 2021.
Jury’s Ruling on Defrauding Patients
In an interview with CNBC, Shultz said his one disappointment with the verdict was that Holmes was not found guilty of defrauding patients. Calling the patients “the real victims,” Shultz said, “I did what I did. I stuck my neck out to protect those patients, not to protect Betsy DeVos’ $100 million investment.” (The jury voted Holmes guilty on three counts of wire fraud and one count of conspiracy to commit fraud against Theranos’ investors, but not guilty on conspiracy to defraud and commit wire fraud against Theranos patients.)
Tyler Shultz was listed as a potential witness in the Holmes trial but was not called to take the stand. He—along with many clinical laboratory directors and pathologists who have closely followed the Holmes trial—will now await news of Holmes’ sentencing. Holmes could face up to 20 years in prison for each guilty verdict, but she’s likely to receive a lighter sentence.
The trail of Ramesh Balwani is expected to begin sometime in March. That trial can be expected to produce additional revelations about the problems of Theranos and how and why management is alleged to have knowingly reported inaccurate clinical laboratory test results to thousands of patients.
Split verdict could still mean considerable prison time for the one-time high-flying Silicon Valley entrepreneur
In a trial generating unprecedented interest among clinical laboratory scientists, former Theranos CEO Elizabeth Holmes was found guilty in federal court this week on four charges of defrauding investors.
Holmes faces up to 20 years in prison as well as a fine of $250,000 plus restitution for each count, though sentencing experts predict a much lighter sentence for the 37-year-old whose birth of her first child caused one of multiple delays in the start of the three-month-long trial.
“I suspect she may get five to seven years in prison,” Justin Paperny, Founder of federal prison consultancy White Collar Advice, told Fortune. However, Paperny said Holmes will be unlikely to be eligible for early release in federal prison beyond a 15% reduction in prison time for good behavior.
“There is no real mechanism to really aggressively advance your release date in federal prison,” Paperny told Fortune.
Holmes was acquitted on four counts, while the jury failed to reach a decision on three counts. Judge Edward J. Davila of the US District Court, Northern District of California, who presided over the trial, will sentence Holmes at a later date. Holmes is expected to be allowed to remain free on bail until sentencing.
The graphic above, taken from a CNBC live report, shows the jury’s verdicts in all 11 charges, including those on which the jury did not arrive at a verdict. (Photo copyright: CNBC.)
Trial Delays Due to Pandemic, Holmes’ Pregnancy
According to ABC News, Holmes “expressed no visible emotion as the verdicts were read.” She did not respond to questions about the verdict as she left the courtroom and walked to a nearby hotel where she has stayed during seven days of jury deliberations.
“The jurors in this 15-week trial navigated a complex case amid a pandemic and scheduling obstacle,” US Attorney of the Northern District of California, Stephanie Hinds, told reporters Monday evening, according to ABC News. “I thank the jurors for their thoughtful and determined service that ensured verdicts could be reached. The guilty verdicts in this case reflect Ms. Holmes’ culpability in this large-scale investor fraud, and she must now face sentencing for her crimes.”
The decision followed an often-delayed trial in which the prosecution put 29 witnesses on the stand, most of whom reinforced the government’s contention that Holmes defrauded investors and patients as she worked to bring to market Theranos’ “revolutionary” Edison finger-prick blood-testing device. The prosecution also presented emails, text messages, and other documents that it said were evidence of Holmes’ deceptions.
Dark Daily covered all of this in multiple ebriefings, including the potential that the four CLIA-laboratory directors who held the top laboratory position in Theranos’ lab during Holmes’ tenure as CEO might be held accountable for their actions or inactions on some level.
Details of Charges and Guilty Verdicts against Holmes
According to the Mercury News, the jury returned guilty verdicts on four counts facing Holmes:
Count 1: Guilty of conspiracy to commit wire fraud against Theranos investors. This charge accused Holmes and Chief Operating Officer Ramesh “Sunny” Balwani, of “knowingly and intentionally” soliciting payments from investors with false statements about Theranos’ technology, its business partnerships, and its financial model.
Count 6: Guilty of wire fraud in connection with a 2014 investment of $38,336,632 made by PFM Health Sciences of San Francisco. Brian Grossman, PFM’s Chief Investment Officer, testified that his team was told Theranos had brought in more than $200 million in revenue, “mostly from the Department of Defense.” In realty, 2011 revenue came in at $518,000 and the company had no revenue in 2012 or 2013, according to Theranos’ former head of accounting.
Count 7: Guilty of wire fraud in connection with an October 2014 investment of $99,999,984 made by a firm associated with the family of former Education Secretary Betsy DeVos. Managing Director, Global Private Equity at Ottawa Avenue Private Capital, Lisa Peterson testified Holmes claimed Theranos’ technology was in use “on military helicopters,” and sent a report with a Pfizer logo touting the “superior performance” and accuracy of Theranos’ machines. The logo and follow-up questioning, Peterson said, led her to conclude that the report was prepared by Pfizer, which was false.
Count 8: Guilty of wire fraud in connection with an October 2014 investment of $5,999,997 from a company involving Daniel Mosely, the long-time lawyer for former US Secretary of State Henry Kissinger. Mosely testified he also was led to believe Pfizer had approved Theranos’ technology. In a letter to Kissinger, he called the report “the most extensive evidence supplied regarding the reliability of the Theranos technology and its applications.”
The illustration above shows Elizabeth Holmes being kissed on her head by her father after being found guilty in federal court on four charges of defrauding investors while CEO of now defunct blood-testing laboratory Theranos. (Graphic copyright: Vicki Behringer/ABC News.)
The jury of eight men and four women began deliberations on December 20 after closing arguments in the nearly four-month-long trial in San Jose, California. Holmes originally faced 12 counts of wire fraud and conspiracy to commit wire fraud. One count was dropped during the trial.
During a blistering three-hour closing argument, Assistant US Attorney Jeffrey Schenk hammered home the prosecution’s contention that Holmes choose to deceive investors and patients rather than admit failure in her quest to revolutionize healthcare by delivering a blood-testing device capable of running up to 200 laboratory tests using a finger-prick of blood.
“Ms. Holmes made the decision to defraud her investors, and then to defraud patients,” Schenk told jurors, according to CNBC. “She chose fraud over business failure. She chose to be dishonest with investors and with patients.”
The defense team put three witnesses on the stand, with Holmes emerging as a surprise witness in her own defense. She maintained she never intended to defraud anyone and instead relied on experts within her company for the claims she made about Theranos’ blood-testing device. During her seven days of testimony, she also alleged emotional, physical, and sexual abuse by Balwani. Balwani has denied in legal filings Holmes’ abuse allegations.
Holmes Wanted to “Change the World,” Defense Claims
In his closing argument, defense attorney Kevin Downey maintained Holmes’ intent was not to deceive but to “change the world.”
“At the end of the day, the question you’re really asking yourself is, ‘What was Ms. Holmes’ intent?'” Downey told jurors, according to Business Insider, “Was she trying to defraud people?”
The jury’s answer: “Yes.”
Clinical laboratory directors and pathologists will soon learn the price Holmes will pay for her deceptions when she is sentenced in coming weeks. Meanwhile, the start of Balwani’s fraud trial has been postponed to February 15, according to Bloomberg News.
Six-episode show is based on popular ABC Radio podcast “The Dropout,” which focused on the three-year investigation that brought down clinical laboratory test developer Theranos
While former Theranos CEO Elizabeth Holmes awaits the start of her August 31 criminal fraud trial in a federal court in Northern California, one streaming video service is lining up a star-studded cast to tell the story of the Silicon Valley executive’s fall from grace and the demise of her clinical laboratory blood-testing company.
This six-part series is being produced by Hulu, an on-demand video streaming service offering live and on-demand content. Back in 2019, it announced that it would produce the “The Dropout,” a limited series chronicling Holmes’ rise and fall from Founder and CEO of $9 billion tech company Theranos to criminal defendant.
Hulu says the series will launch this fall, so pathologists and medical laboratory managers have time to set their recorders to capture what may be a compelling story of hubris that took investors and the news media on a wild ride. The Theranos publicity machine was so effective that many hospital CEOs went to their clinical laboratory administrators and told them to delay equipment purchases because Theranos would be able to do the same medical laboratory tests at just pennies on the existing lab-cost dollar.
Holmes’ carefully-crafted public image as Theranos’ CEO drew comparisons to the late Apple CEO Steve Jobs, Business Insider noted. This has made her a popular topic not only among clinical laboratory scientists but also Hollywood moviemakers.
“The Dropout” took its inspiration from the ABC Audio podcast of the same name, hosted by ABC Chief Business, Technology and Economics correspondent Rebecca Jarvis. The ABC Audio podcast’s description provides a glimpse into the direction the miniseries will take.
“Money. Romance. Tragedy. Deception. The story of Elizabeth Holmes and Theranos is an unbelievable tale of ambition and fame gone terribly wrong. How did the world’s youngest self-made female billionaire lose it all in the blink of an eye? How did the woman once heralded as ‘the next Steve Jobs’ find herself facing criminal charges—to which she pleaded not guilty—and up to 20 years in jail? How did her technology, meant to revolutionize healthcare, potentially put millions of patients at risk? And how did so many smart people get it so wrong along the way?” the ABC Audio website states.
The Hulu series originally was to star “Saturday Night Live” cast member Kate McKinnon as Holmes but was recast with Amanda Seyfried in the starring role. According to Variety, the series will include a notable lineup of guest stars including:
Naveen Andrews will play former Theranos President and COO Ramesh Balwani, whose own criminal fraud trial is expected to begin early next year.
A release date for the limited series has not yet been announced, Town and Country reported.
Elizabeth Holmes (above), former CEO of now defunct company Theranos, faces 11 counts of fraud for alleged false claims that the clinical laboratory testing company had created a revolutionary finger-prick technology capable of performing a wide range of clinical laboratory tests. Among the charges are two counts of conspiracy to commit wire fraud and nine counts of wire fraud, for which Holmes could serve up to 20 years in jail if found guilty of all charges, according to court documents. She has pleaded not guilty. (Photo copyright: The Wall Street Journal.)
The ‘Real World’ Wall Street Journal Investigation of Theranos and Holmes
Dark Daily has reported extensively on the Holmes/Theranos saga, including the recent development that Holmes’ repeatedly-delayed trial would be pushed back from mid-July to August 31 because Holmes is due to give birth in July.
Theranos’ alleged deceptions first were brought to light in a series of 2015 investigative reports in The Wall Street Journal (WSJ). Then-WSJ investigative reporter John Carreyrou alleged Theranos had not disclosed publicly that the vast majority of its tests were not being done with proprietary technology, but instead with traditional machines purchased from Siemens AG and other companies.
And for those looking for even more drama centered around the Theranos saga, a feature film starring Jennifer Lawrence as Elizabeth Holmes, titled, “Bad Blood,” remains “in development” according to People magazine. Though the project was announced in 2016, filming has yet to begin.
Meanwhile, clinical laboratory scientists will soon get to watch the next “real world” chapter in the Holmes’ saga play out in federal court later this summer. They will also have multiple opportunities in the coming years to be “entertained” by the Theranos scandal on big and small screens.
By analyzing ancient poop, researchers have discovered how much the human microbiome has changed over the past millennium, what may have brought about the change, and how those changes formed today’s human microbiome
Two thousand year-old human poop has yielded new insights into the evolution of the microbial cells (microbiota) inhabiting today’s human gut—collectively known as the human microbiome—that could help pathologists and clinical laboratories better understand diseases that may be linked to gut bacteria.
A recent study conducted by an international team of scientists reveals that the gut bacteria of today’s humans may have been altered by the onset of modern processed foods, sanitation, and the use of antibiotics.
In “Reconstruction of Ancient Microbial Genomes from the Human Gut,” published in the journal Nature, the researchers wrote, “In this study, we establish that palaeofaeces [Paleofeces in the US] with well-preserved DNA are abundant sources of microbial genomes, including previously undescribed microbial species, that may elucidate the evolutionary histories of human microbiomes. Similar future studies tapping into the richness of palaeofaeces will not only expand our knowledge of the human microbiome but may also lead to the development of approaches to restore present-day gut microbiomes to their ancestral state.”
Ancient Poop Is a ‘Time Machine’ into the Human Microbiome
To perform the research for this study, scientists analyzed Deoxyribonucleic acid (DNA) from eight preserved, fossilized feces (coprolites) to gain insight into the gut bacteria of ancient communities. The samples used in the research were originally found in rock formations in Utah and Mexico and were preserved by dryness and stable temperatures. The coprolites were between 1,000 and 2,000 years old.
“These paleofeces are the equivalent of a time machine,” Justin Sonnenburg, PhD, Associate Professor, Microbiology and Immunology at Stanford University and co-author of the study, told Science. Tiny bits of food found in the coprolites indicated that the diet of the ancient people included:
The dried-out poop samples were first radiocarbon dated. Then, tiny fragments of the coprolites were rehydrated which allowed researchers to recover longer DNA strands than those found in previous, similar studies. This study compared the microbiome of the ancient populations to that of present-day individuals. The authors of the study suggest that during the past millennium, the human microbiome has lost dozens of bacterial species and has become less diverse.
Other research studies have linked lower diversity among gut bacteria to higher rates of modern diseases, such as diabetes, obesity, and allergies, Science noted.
“We really wanted to be able to go back in time and see when those changes [in the modern gut microbiome] came about, and what’s causing them,” Archeological Geneticist Christina Warinner, PhD, Assistant Professor of Anthropology at Harvard University and one of the authors of the study, told Science. “Is it food itself? Is it processing, is it antibiotics, is it sanitation?” Warinner is the Sally Starling Seaver Assistant Professor at the Radcliffe Institute, and a group leader in the Department of Archaeogenetics at the Max Planck Institute for Evolutionary Anthropology and affiliated with the faculty of biological sciences at the Friedrich Schiller University in Jena, Germany. (Photo copyright: The Game Changers.)
Ancient versus Modern Microbiome
The ancient microbiomes lacked markers for antibiotic resistance and included dozens of bacterial species that were previously unknown. According to the study, “a total of 181 of the 498 reconstructed microbial genomes were classified as gut derived and had extensive DNA damage, consistent with an ancient origin, and 39% of the ancient genomes offered evidence of being newly discovered species.”
The scientists also discovered that the gut bacteria of present-day people living in non-industrialized societies is more like that of the ancient people when compared to present-day humans living in industrialized societies. But there are still vast differences between the ancient and the modern microbiome.
For example, a bacteria known as Treponema is virtually unknown in the microbiome of current humans, even those living in non-industrialized societies. However, according to Kostic, “They’re present in every single one of the paleofeces, across all the geographic sites. That suggests it’s not purely diet that’s shaping things,” he told Science.
What Can Clinical Laboratories Learn from Ancient Poop?
The ancient poop study scientists hope that future research on coprolites from the past will reveal more information regarding when shifts in the microbiome occurred and what events or human activities prompted those changes.
Research on the human microbiome has been responsible for many discoveries that have greatly impacted clinical pathology and diagnostics development.
Microbiologists and other medical laboratory scientists may soon have more useful biomarkers that aid in earlier, more accurate detection of disease, as well as guiding physicians to select the most effective therapies for specific patients, a key component of Precision Medicine.
The findings of this study are another step forward in understanding the composition and functions of gut bacteria. The study of the microbiome could prove to be a growth area for clinical laboratories and microbiology labs as well. It is probable that soon, labs will be performing more microbiome testing to help with the diagnosis, and treatment selection and monitoring of patients.
