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Tue, 28 Sep 2021 09:00
An investigative journalist looks into Theranos, and is shocked by his discoveries. Elizabeth Holmes tries to fend off the potentially devastating story.
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To listen to American scandal one week early and add free, join Wondry Plus in the Wondri app. Download the Wondri app in your Apple or Google Play mobile app store today. It's February 2015 and a Monday morning in Manhattan. John Kerry Roo climbs the stairs of a subway station alongside a crush of other commuters. When he steps out into the city streets in Midtown, he's greeted by bumper to bumper traffic and crowds of people hurrying into skyscrapers. Kerry Roo buttons up his coat, the cold wind blowing through his mop of brown hair. Then he slips into the crowd and begins hurrying to his office in a building that also reaches toward the grey winter sky. Kerry Roo has a lot of work ahead of him. For years, he's been a reporter at the Wall Street Journal. He's a highly respected journalist and he's recently finished an investigative piece about Medicare fraud. That story was all consuming, but now that it's behind him, it's time to get back to work, to find his next great feature story. Kerry Roo steps into the newsroom of the Wall Street Journal. It's a beautiful, chaotic scene. Reporters type furiously on their keyboards, while interviewing sources for their stories. Phones ring in every direction. Up above, flat screen TVs are tuned to news about the markets and politics. Kerry Roo has been in this building a thousand times, but he'll never get tired of the newsroom, or the important work of holding people in power accountable for their actions. A moment later, Kerry Roo reaches his messy desk. He barely has a chance to take off his coat when his phone rings. Oh, this is John. John, Saddam Clapper, got a minute? Adam, good timing. I'm just starting to look for my next story. At some point, I was hoping to talk with my favorite physician slash blogger slash consultant. You know, you were a huge help for the Medicare series. Well, it was my player, but you know, I might be the gift that just keeps on giving. Oh, is that right? What do you got? I'm all ears. Kerry Roo reaches into his bag and fishes out a notebook and pen. Well, and you read the feature in the New Yorker last week, Elizabeth Holmes and Thernos, a pioneer who dreams big, drops out of college, builds a revolutionary piece of technology. Yeah, yeah, those compelling story. But John, didn't you notice? I mean, the whole Thernos story is full of holes. Oh, maybe. John, I think you're as curious about it as I am. What do you think? Talk to me. Well, there are some pretty big claims there. They don't have any peer reviewed data. That's right. And then Holmes. She, um, she studies chemical engineering for just a few semesters. But she's ready to become the next Edison. Yeah, that bothered me too. So I raised some questions about Thernos on my blog. And wouldn't she know how to group a people contacting me? Oh, is that right? Who? I can't tell you just yet. I got to check with them first. But they might be willing to talk with you. They've got some information you're going to want to hear. It could be, yeah, that's big. How big? John. Big. Carrie RuPaul's is, let's the word sink in. Well, Melissa, if this is for real, and they want to talk, send them my way, please. Of course. But there's one more thing. Please be delicate with this one. The people I'm connecting with there. Gosh, they're scared. Carrie Ru hangs up and leans back in his chair. More often than not, tips like this don't turn into anything serious. But he trusts Clapper's judgment. And as Carrie Ru turns to his computer and begins researching Elizabeth Holmes, he starts to get that electric tingle curiosity. This story is different. And if his gut reaction is right, there's something behind Thernos's success. Something dark. American Scandal is sponsored by the new ABC drama Alaska Daily. When an indigenous woman goes missing in Alaska, it sparks new questions about other missing and murdered indigenous women. And that's where the thrilling new ABC drama Alaska Daily begins, and where it's headed, will have you on the edge of your seat. Two time Academy Award winner Hilary Swank stars as Eileen, a veteran reporter who joins a team of local journalists working to bring the truth to light. From Academy Award winning screenwriter Tom McCarthy, Alaska Daily premieres Thursday, October 6th on ABC, and streams next day on Hulu. If you're into true crime, the Generation Y podcast is essential listening. We started this podcast over 10 years ago to dissect some of the craziest and most notable murders, crimes, and conspiracy theories together. And we'd love for you to join us. Follow the Generation Y podcast on Amazon Music or every Listen to Podcasts. From Wondery, I'm Lindsey Graham, and this is American Scam. By 2015, Elizabeth Holmes had grown to be a celebrity and an icon of the tech industry. She made magazine covers and was heralded as a visionary. President Barack Obama invited her to serve as a global ambassador for entrepreneurship, and Forbes magazine named her the youngest ever self made female billionaire. Yet for all of the public triumphs, Theronosis blood testing devices were still malfunctioning. That left Holmes and her team scrambling to keep the full truth from the public. This complex web of lies would attract the attention of John Kerryru, a doggy journalist, and the course of his investigation, he would speak with whistleblowers who were determined to speak up about their experiences with Theronosis. The investigation would reach far and wide, and soon it would pose an existential risk to Elizabeth Holmes company. This is Episode 3, The Race to Publish. It's February 26th, 2015, in Manhattan, and John Kerryru is clutching his cell phone, ready to make another call. He's already dialed the number a half dozen times without getting an answer, but he knows he needs to keep trying. Because if he gets through, he could uncover a treasure trove of information about Theronosis. It's been a busy couple of weeks, ever since Kerryru first heard from Adam Clapper, the doctor, and blogger. Clapper did eventually connect Kerryru with the potential sources, people who dissociated with Elizabeth Holmes and Theronosis. But as Kerryru dug into their backstories, he learned that they were tied up in lawsuits with Theronosis, making them poor sources for a potential expose. Soon, Kerryru learned about another potential source, a man who'd recently quit Theronosis after working as the company's lab director. Unlike the others, he wasn't tainted by litigation. And even though Kerryru's calls have all gone to voicemail, it's worth trying again. So Kerryru lists his cell phone and dials the sources number. After a few rings, a man's voice answers, and Kerryru introduces himself. Right away, the man clams up. He says he can't talk. Theronosis could sue him if they discovered he was talking to a reporter from the Wall Street Journal. Kerryru studies himself and thinks through his response. He's been down this road many times before. Informants are often jittery and afraid of retaliation. But there are ways to earn their trust and to work with them. So Kerryru calms his voice, and he says he completely understands. It's normal for whistleblowers to feel scared. There's a lot on the line. But he has an offer. The man can use a pseudonym if he'd like. There's a pause on the other end of the line. Then the man says, fine, he'll speak. But from here on out, he'll take the name Alan Beam. Kerryru agrees, and soon Beam starts telling him about his first days at their night. But he's not going to be a nurse. Back then, he had large hopes that the company would be revolutionary and it would transform healthcare. But that changed when Beam learned the truth about Theronosis blood testing device. It was a dud. The device, known as an Edison, often churned out error messages and failed quality control tests. Kerryru scribbles notes as fast as he can, his pulse, quickening. He can already tell that this is the beginning of a major story. And the information only gets more damaging. He explains that because the Edison devices didn't work, Theronosis began to use other company's equipment. But that created a new problem. Theronosis insisted only on drawing a small amount of blood, which was central to the Theronosis sales pitch. But if you rely on other company's machines, you have to use more than just a drop of blood. So the company had to come up with a workaround. Technicians diluted the samples so there was enough liquid to process. But that made the results inaccurate and sometimes badly so. According to Beam, Theronosis was not only misrepresenting what it was doing, but it was reporting test results that could potentially harm patients. Kerryru set down his pen and shock. This kind of deception is unbelievable. And so he asks Beam if he ever tried to intervene. Beam exhales. He explains that he tried to postpone the launch of Theronosis partnership with Walgreens, but Holmes wouldn't do it. Beam also spoke with Sunny Balwani, the chief operating officer, but he was a bully who used intimidation to crush any kind of dissent. Beam's warnings fell on deaf ears. Kerryru continues scribbling furiously in his notepad, as Beam reveals bombshell after bombshell. After speaking for an hour, the two end their call. As Kerryru hangs up, he feels a familiar rush of adrenaline. This isn't just a story about a failed start up. It's bigger than that. Because if what Beam is saying is true, Theronosis could be the next N Ron, a tale of hubris and deception, one that could end with an incredible downfall. Two days later, John Kerryru steps through a park in Brooklyn, New York. The nearby trees are studded with frost, and Kerryru rubs his hands together, trying to stay warm. It's one of the city's coldest februaries on record, and Kerryru should be inside. But he made a promise. He's taking his sons to the park so they can play with their friends. And although his face is numb, Kerryru doesn't really mind. He's distracted by more important development in the Theronosis investigation. Alan Beam, his confidential source, may soon offer up a cache of incriminating records. While he was still at Theronosis, Beam grew concerned that something bad could happen to a patient who used the Theronosis blood test, and that he could be held personally responsible. So Beam tried to protect himself. He forwarded dozens of work emails to his personal email account. They included messages to Sunny Ballwani, in which he detailed his concerns with Theronosis. Kerryru was thrilled to learn about these emails. They could be exactly what he needs to help corroborate Beam's incredible accusations. So as he paces around the freezing park in Brooklyn, Kerryru decides to give Beam another call to check in. When Beam answers, Kerryru cussed the chase. He's hoping that Beam will send over those old work emails. There's a moment of silence, and then Beam announces that he has some bad news. The emails are gone. He was forced to get rid of them as part of his legal agreement with Theronosis. Kerryru shakes his head, watching his breath turn to steam. This is a disappointing turn of events. Trying to compose himself, he asks whether Beam double checked his emails trash, or whether he tried contacting his email provider for support. There are often ways to get back old deleted messages, but Beam apologizes and says he's sorry. Those emails are gone. Kerryru collapses onto a park bench trying to think of another plan. They need some way to corroborate his accusations. And so he asks Beam whether he has any other way to get these kinds of damning internal communications. Beam pauses, then says there might be someone worth talking to. A younger guy named Tyler Schultz, his grandfather is George Schultz, the former US Secretary of State, and a Theronose Board member. Beam doesn't know all the details, but it sounded like Tyler Schultz left the company on bad terms. He might be worth talking to. Kerryru nods, and with his fingers numb from the cold, he takes a note. Tyler Schultz could be a promising lead. He could also be another dead end. It's impossible to know when you're reporting the news. But either way, Kerryru is going to reach out to see what Schultz knows about the Elizabeth Holmes and Theronose. It's the spring of 2015 in Palo Alto, California. In a dark bedroom, Tyler Schultz closes the door and removes a cell phone from his pocket. He turns it over in his hands, marveling at the step he's about to take. The phone is a prepaid burner. Its number is untraceable. And today, Schultz is going to use it to contact an investigative reporter and blow the whistle on Theronose. Schultz dials the number for John Kerryru, his finger sweating. Hello, this is John. Hi, Mr. Kerryru. This is Tyler Schultz. You messaged me on LinkedIn? Yes, Tyler. Hi. I did not think I'd hear from you. That was about a month ago. Yeah, yeah. I don't know. Sorry. I didn't know what to do. Oh, don't worry. No, I didn't mean to guilt you. I'm just happy you called. Why did you? Well, I left Theronose only eight months after coming on board. My parents tried to get me just to walk away. Forget about the whole thing, but I don't know. I couldn't. Huh? Why? What's on your mind? Schultz gets out of bed and begins pacing the room. Well, Theronose's blood test. They're just not accurate. What happens if someone actually relies on one of those tests? And ends up getting hurt or dying? I just couldn't stop thinking about it. Yeah, it's a terrible possibility. A lot of people could suffer and not just the patients, but everyone in Theronose's orbit, including my grandfather. I mean, he's 94. What happens if he dies and Theronose is exposed? And he can't clear his name. That's the last the world ever knows of him. Well, it sounds to me like you want to help get out the truth before that can happen. Yeah, I guess so. Well, I'm with you. You want to go on the record? Schultz shuts his eyes, feeling anxious and jittery. No, no, no. No, not yet. Hmm. Well, by the look, I'm sure you've done your research. You know you can trust me. I'm a responsible journalist. Oh, it's not that I believe you. Yeah. I'm just happy with my life. I've got a new job. I'm doing well. I don't want Theronose coming after me. I mean, Elizabeth Holmes likes to sue people, you know. Yeah, I've heard that. But Tyler, this can be confidential. I mean, that's certainly at first. Ultimately, though, I will probably need something on the record if we want to run a story. For a moment, Schultz weighs the decision. He meant what he said. He doesn't want people to get hurt. But Schultz also doesn't want to upend his own life. But maybe there's a middle way. It's then that Schultz remembers the paper trail. Before he left Theronose, he emailed Elizabeth Holmes, warning her about issues at the company. One day, he printed that email as well as the company's response and tucked the pages under his shirt before leaving the office. Schultz has evidence. And he also has his correspondence with the New York Department of Health, in which a state expert suggested that Theronose was cheating. So while Schultz isn't quite ready to be the face of the opposition, he still has plenty that he can share with John Kerryroom. And plenty that can put a stop to Theronose. What if your family was the victim of a home invasion where you woke up in the morgue, or you were seriously injured miles from help? What would you do? This is actually happening. Ask our listeners this very question, while we bring you captivating real life stories of trauma and perseverance. This is actually happening brings listeners extraordinary true stories from the people who lived them. You'll hear stories about conflict, turmoil, or threats that dramatically alter the course of someone's life. Each episode is an exploration of the human spirit and how survivors manage to overcome hardship and move on with their lives, even thriving afterward. The new season of this is actually happening is available ad free only with Wondry Plus. And if this new season isn't enough, you can listen to more than 120 exclusive episodes available only to Wondry Plus subscribers. Join Wondry Plus on Apple Podcasts or on the Wondry app. It's the spring of 2015 in Phoenix, Arizona. The door opens inside a Starbucks and John Kerryroom enters a notebook tucked under his arm. Kerryroom breathes in the smell of roasted coffee as he makes his way through the busy shop. It doesn't look like Kerryroom's source has arrived. So he orders a cup of coffee and heads over to a quiet table in the corner. As he waits for his interview, Kerryroom flips through the pages of notes. He's spoken with a number of Theranos's former employees and altogether their testimony paints a damaging portrait of the company and its technology. It appears that Theranos is at the center of a major fraud and with dozens of its wellness centers now operating in storefronts across the country, Theranos is putting patients lives at risk. Kerryroom is almost ready to publish his first story. But before he does, he needs to capture the human toll of Theranos's lies. That's why he's here at this Starbucks. He's about to meet with a woman who relied on one of Theranos's test results and suffered some painful consequences. A few minutes later, the front door of the coffee shop swings open and a perky middle age woman steps inside. Kerryroom smiles and rises, it's time to meet his newest source. He waves over at Maureen Glantz, a patient of one of the doctors who Kerryroom has spoken with. Glantz approaches the table and after some small talk, she begins sharing the mortifying details about her experience with Theranos. Glantz explains that she had some ringing in her ears. So she went to get a blood test from a Theranos machine. When the results came back, she was terribly worried. Theranos reported that Glantz had elevated levels of liver enzymes and glucose, among other issues. And with the ringing in her ear, her doctor worried that she might be having a stroke. So she went to the ER. Kerryroom looks up from his no pat concerned. He asks whether Glantz is okay. She shakes her head bitterly. She's okay, but that doesn't make her any less angry. She spent hours in the ER, ultimately getting a CT scan and an MRI. They wanted to take every precaution in case it really was a stroke. The doctors also ordered a new round of blood tests, but when those came back, the results were normal, but so were all the other tests. Kerryroom scribbles down the details in his notebook, then shoots Glantz a look of sympathy. He apologizes, saying it sounds like she had to go through quite a no or deal. And all because Theranos's test results were inaccurate. Did she have a good insurance plan that might have covered? Glantz shakes her head again. She explains that she pays for her own insurance and her plan has a high deductible. Altogether, she was on the hook for $3,000. All because Theranos's blood tests don't work. Kerryroom takes a final note and considers the weight of this story. Because of Theranos, Glantz didn't just endure a frightening health scare. She had to deal with the financial consequences too. And while ultimately she survived, other patients with incorrect test results might not be so lucky. Kerryroom thanks her for her time. He can feel Glantz's anger at the inconvenience, at the cost, and the frightening emotional rollercoaster Glantz was put through. All because of an inaccurate test. And while it seems like it's just one person and maybe only a thousand dollars, if you multiply at times a scale of Theranos's ambition, it's a catastrophe waiting to happen. Kerryroom is ready to publish. His investigation of Theranos will reveal how the Silicon Valley darling is putting people's lives at risk and how its reckless behavior has to stop. It's July 23rd, 2015 in Newark, California. A lock turns slowly in a heavy metal door. And when it opens, Elizabeth Holmes stands in the doorway, alongside the vice president of the United States, Joe Biden. A bright, gleaming light washes over them as the two gaze at what appears to be a state of the art blood testing lab. With a flourish, Holmes welcomes in a small group of people. It includes Biden, his entourage, and local print and TV journalists. Together they step into a modern looking space filled with polished equipment and bustling lab technicians. Holmes describes a place as Theranos's newest facility. And when she glances over her shoulder, she can tell that her presentation is already having its desired effect. The vice president seems like he might be enjoying himself. And Holmes is too. Getting a photo op with Joe Biden is a huge deal. And maybe with this tour, he might give Theranos his stamp of approval. And that kind of support couldn't come soon enough. Holmes recently caught wind of a potentially devastating investigation from a reporter named John Kerryru. He seems to have cultivated a number of inside sources, including Tyler Schultz. Theranos has tried to contain the fallout. Its lawyers have gone after Schultz, threatening to bankrupt him and his family as punishment for speaking with the reporter. The legal team has also gone after another former employee, as well as multiple doctors who Kerryru has spoken with. And it's not just legal action Theranos is planning. With its technology still far from perfect, Holmes had to do something to shore up Theranos's reputation. That's why the tour today is so important. Biden's support could help blunt any future attacks and make Theranos more immune to criticism. So Holmes continues the tour, showing off a range of high tech equipment. It all seems to be going well, until she catches one of Biden's haids, staring at a stack of Theranos devices. Holmes hearts, skips a beat. She wonders if this aid is an expert in clinical labs. Maybe his trained eye could figure out what's going on here. Because the truth is the lab is a fake. It was created just for the vice president's tour. And that's not the only thing that's wrong. Theranos doesn't even have a real lab director. They replaced Alan Beam with a figurehead, a dermatologist with very little lab experience. Her concern growing, Holmes decides his time for another captivating presentation, something to distract her guests from the fake lab. And so as they continue the tour, she employs her usual soaring language. She explains that this lab is state of the art, that Theranos is on the forefront of a medical revolution, one that will lower the cost of care and provide medical services to millions. The vice president narrows his eyes as he surveys the lab. For a moment, Holmes feels panicked, it's hard to tell what Biden is thinking. Maybe he can sniff out the rules too. But then Biden turns back with a big grin. He says he's very impressed. Theranos is clearly the future of medicine. Hearing Biden's praise, Holmes melts with relief. Finally, a small victory after so many hurdles. The vice president's approval will do a lot to bolster her public image. And with any luck, it'll help her turn the tide. But Holmes knows the work doesn't end there. If Theranos is going to survive the scrutiny of the press and John Kerryrue of the Wall Street Journal, she'll have to do more to win over the public's opinion and prove that Theranos is here to stay. Five days later, John Kerryrue steps into the newsroom of the Wall Street Journal in Manhattan. He sets down his briefcase, grabbed a cup of coffee, and starts paging through today's edition of the journal. As far as he's concerned, it's the very best way to start the morning. But as his eyes scan the paper's first section, he stops. There, prominently placed in his own newspaper, is an op ed written by none other than Theranos CEO Elizabeth Holmes. In it, she boasts that the FDA has recently approved a Theranos test for herpes. Her article makes it sound like Theranos is an ally of government regulators. Kerryrue stares at the article and discussed. This is an obvious ploy and a clever act of war. At the Wall Street Journal, there's a clear boundary between the editorial division and the news division. The editorial staff have no idea that Kerryrue is working on a big investigative piece about Theranos. And Holmes seems to have taken advantage of the situation. Her article makes her look like a saint in one of the most respected papers in the country. That's an obvious PR maneuver, one that seems intent to set up a defense and pressure the paper to not publish Kerryrue's story. With this morning's paper in hand, Kerryrue hurries to the office of his editor, Mike Sikonolfi. Kerryrue steps into his editor's office and comes face to face with Sikonolfi, a slim, bookish man with a wave of dark hair. Hey Mike, you got him in it? Not really, I'm on deadline. I'm sorry, but this can't wait. His editor stops next hails as he looks up. All right, John, what's going on? You see the paper this morning? John, I see the paper every morning. Well, did you see this? Kerryrue opens the paper to Holmes op ed and hands it across the table. No? God, I missed this. Yeah, and that's not all. She recently gave a land tour to Joe Biden. Apparently, it was very well received. It's public relations, cool. And no kidding. Kerryrue leans forward with a determined look. Listen, Mike, my story's done. I filed my draft a week ago. We have to move on it, because right now, as we speak, Theronosis intimidating my sources. We're trying to crush this story. The building of PR defense, we have to be them to the punch. Ah, well, it's an explosive story. And that's why it has to go through the usual process. We need to make it ball approved. Mike, it's too slow. No, no, it's just the way it's going to be. I haven't even finished my edits. Then it goes to page one and standards and legal. You know they need to go through it too. I could take months. In the meantime, Theronosis could get all my sources to turn. The story can fall apart. You know it. Sikonolfi leans back in his chair with a sly grin. John, I need to remind you about La Matanza, the ancient ritual, the fishermen with their spears in the Mediterranean, standing there for hours perfectly still waiting. So still and so long that the fish don't even realize the hunters are still there. And it's at that moment, the fishermen strike. Jesus, Mike. La Matanza every time. That's how we win. La Matanza is how we win. We wait until all the pieces follow into place and Theronosis has forgotten about us. And then we strike. Kerry Roo shakes his head. Shh. All right, fine. Well, look, La Matanza has to happen before October 21st. Why, what's that? Elizabeth Holmes has slated to give a talk at the journal's technology conference Laguna Beach. Man, if that happens, the paper's going to feel a lot of pressure to kill the story. Well, it's over two months away. So we just got to get back to work. We'll break this thing. I promise. Kerry Roo nods and walks out of his editor's office. This isn't ideal. He's still worried that Theronosis will somehow get ahead of him, find a way to sink the story. But that just means Kerry Roo needs to keep pushing forward, finding more sources, uncovering more lies, and working on the fullest version of the story that will expose Theronosis. It's late September 2015, and Elizabeth Holmes is hurrying through a skyscraper in Midtown Manhattan. The towering building houses news corporation, the global media can glamor it in one of the most powerful companies in America. News Corp also happens to be the parent company of the Wall Street Journal. That's why Holmes is here today. She's on her way to a meeting with news corps leader, Rupert Murdock. Holmes met the media mogul back in 2014 at a gala in Silicon Valley. She made a quick impression on Murdock and convinced him to invest $125 million in Theronosis. That made him the company's largest investor. The two have met several times since, and with Murdock's sizable investment in Theronosis, Holmes believes he may be willing to pull the plug on the Wall Street Journal's investigation of her company. It's in his own self interest. Soon, Holmes reaches the outside of a large office, and then an assistant leads Holmes into a large room with wide windows. Standing in the center is Rupert Murdock, the aging media Titan. Holmes and Murdock are on good terms, and so he greets her warmly, asking how things are going. But Holmes hesitates. Part of her wonders if she's making the right decision, trying to get Murdock to intervene in one of his newspaper stories. It's a serious request. And the last thing she needs is to give a prominent investor reason to doubt Theronosis. But Carrie Rue's investigation could soon be published and tarnish Theronosis's image. The threat is too real and too imminent, so Holmes can't risk taking a soft approach. She tells Murdock that she has a problem. A Wall Street Journal reporter, John Carrie Rue, has collected false information from disgruntled former employees. He has a notebook full of lies. But given his reputation, he could do serious damage of his story is published. Murdock nods, saying he understands Holmes's plight. He went through his own scandal a few years back and was dragged through the mud by reporters. It's a bitter fight, but he survived, and she will too. Holmes swallows hard and repeats her concerns. She argues that Carrie Rue's false reporting poses an enormous threat. The story has to be killed. Murdock has the power to make the right decision. But Murdock shakes his head. He says he trusts his editors to do their jobs. He's not going to intervene. Then with the pat on Holmes the shoulder, he tells her that everything is going to work out. She just needs to have faith. Holmes manages to muster a smile. But inside, she sees by a feeling of complete terror. Theronosis tried to silence its former employees. They tried to get ahead of the Wall Street Journal to sabotage the reporting, but somehow Holmes and her allies weren't able to put out the fire. Murdock was her last option to put an end to the Wall Street Journal story. Theronosis secrets are about to become public. The Wall Street Journal It's October 8, 2015 in Manhattan. An elevator door opens, and John Kerry Rue steps out onto the sixth floor newsroom of the Wall Street Journal. Beside him, it is Jerry Baker, the paper's editor in chief. As they walk toward a conference room, the two veteran journalists share a knowing glance. They're about to sit down with Theronosis legal team in a meeting that could produce fireworks. The journal is on the verge of publishing Kerry Rue's investigation of Theronosis and despite all the company's best efforts, including legal threats and intimidation of sources, the storied newspaper doesn't have any intention to cave. Theronosis threatened to sue the Wall Street Journal and demanded a meeting with the editors. Baker, the editor in chief, believes in fairness. And so he granted the request. This is the meeting they agreed to. Kerry Rue and Baker enter the conference room where they find several stone faced lawyers. One of them is Heather King, who sets a tape recorder on the table. I hope you don't mind, but I brought a tape recorder because we keep diligent records, unlike some of you in this room. Kerry Rue raises his eyebrows as he takes a seat. Hi, well, we're off to a good start. Miss King, what would you like to discuss? We're here because we have a duty to prevent Miss Holmes and her company from suffering grievous form. And we have a duty to get the truth to the public. But you failed in that responsibility. Miss King, I have to disagree. Mr. Kerry Rue, you're reporting is reckless. You're more interested in a good piece of drama than the facts. Trauma, you know. Look, I've done my reporting and I've only followed the facts. You're going to deny them all. There's nothing you're willing to concede. No, there is. We will admit that the company has not run all of its blood tests on Theranos devices. And, please, have used third party technology. Oh, OK. Well, that explains why you took that line off your webpage. The lawyer's exchange confused looks. I'm sorry. What are you talking about? The Theranos webpage. It used to say, many of our tests require only a small drop of blood. That's verbatim. It used to be on the website and now it's not. Because from what I've learned, when Theranos uses these other company's machines, they need more than a small drop of blood. And that's why test results have been false. Mr. Kerry Rue, that deletion I assure you was just for marketing accuracy. Suddenly, the room gets tense. Kerry Rue can tell that King has made a gaff. Admitting Theranos can no longer stand by its most coveted claim that its tests only depend on a single drop of blood. Gentlemen, look, this talk is just going in circles. The truth is we're not here to kill your article. We'd simply like you to push it back. I'm sorry. We can run it, but you want us to delay it. Yes, not indefinitely. Just long enough so we can arrange a demonstration, proof, that our technology works. Well, how soon can we get it down? And some assurance that there wouldn't be any slight of hand. I promise you it would be entirely above board. But it might take us a few weeks to organize. What do you say to that? Just a few weeks? Kerry Rue exchanged the glances with his editor in chief. Holmes is set to appear at the Wall Street Journal's tech conference in less than two weeks. This would put the story at risk. So Baker, the editor in chief, shakes his head and says he's sorry. The paper is willing to push back publication a few days. But only if Elizabeth Holmes is willing to sit down for an interview. Otherwise, they're going to print. The room is silent as the lawyer's exchange looks. Then they nod, gather their belongings, and walk out. It takes a moment to sink in. But then the truth hits Kerry Rue. This meeting was a victory. Theronos didn't have any other trick up its sleeve. And in a matter of days, the entire world will know the truth. Eight days later, the skies in Palo Alto are blanketed with clouds. Inside Theronos's headquarters, Elizabeth Holmes walks by herself surveying the empty office. She studies the expensive furniture, the sleek design, everything intended to make Theronos look like a Silicon Valley dream. But it's a dream that's now been shattered. Yesterday, the Wall Street Journal published its expose from the journalist John Kerry Rue. The article made devastating accusations accusing Theronos of lies and criminality. When Holmes read the story, she was a wash in shame and humiliation, kinds of feelings she thought she'd outgrown. She was supposed to be an incredible success, a pioneer like Steve Jobs, who would change the world. And for a brief flicker of time, it seemed like Holmes had achieved her wildest ambitions. She made the covers of magazines, befriended global leaders, made herself into a billionaire. But now it's all come crashing down. And she has to face this very ugly and public spectacle. Her employees have gathered in the company cafeteria. And in a minute, Holmes is going to have to try to explain what exactly happened. If she's a good enough leader, maybe she'll convince them to stay, to remain believers in her vision. A moment later, Holmes reaches the doors of the cafeteria and takes a deep breath. Then she steps through. All eyes turn to her, as Holmes enters the cool, dimly lit room. She puts on a steely expression and steps onto the stage. Holmes begins by greeting her team. She acknowledges that by this point, everyone has seen the news. And there's something she has to say. But before she goes on, she pauses. All at once is clear. Her employees don't look angry. They look terrified. They need this company. And they need Holmes to be strong. She has a moment of emotional clarity. It's not time to fault. It's not time to surrender. Not now when they've come so far. So Holmes straightens her back and tells her employees that the article in the Wall Street Journal may be explosive, but it's full of lies. Misinformation spread by bitter ex employees. Holmes shakes her head. She says this sort of thing is bound to happen when you're working to change the world. Apple faced this kind of opposition. So too did Google. Now it's Theranos's time in this excruciating spotlight. Holmes tells her employees to remember the name John Careyrew, the journalists who tried to smear them all. But Theranos isn't done. They won't be taken down by a desperate man looking for a good quote. They're stronger than that. They're smarter, better, and they will prevail. Holmes then steps down from the stage. As slowly, like a wave cresting over the ocean, her employees begin to chant. As Holmes leaves the cafeteria, her employees are cursing the journalist John Careyrew over and over getting louder, more boisterous, and united and fury. The employees have taken her side. They won't be beaten down by John Careyrew or his hatchet job. And this is not the end of Theranos, far from it. For Elizabeth Holmes, this is a new beginning. The end of the day. Elizabeth Holmes did not back down in the face of John Careyrew's accusations. She publicly fought back against the investigation, claiming that Careyrew's reporting was inaccurate and that his sources, including former employees, were badly mistaken. But it wasn't enough to protect Theranos. In November 2016, Walgreens sued the company, seeking the return of their $140 million investment. In June 2018, the Securities and Exchange Commission charged Elizabeth Holmes and Sunny Ballwani in what the agency described as an elaborate, years long fraud. Facing multiple federal and civil suits, Theranos dissolved later that year. September 8, 2021, marked the first day of Elizabeth Holmes's federal criminal trial. She and Sunny Ballwani were both charged with wire fraud. Holmes's lawyers argued that while Theranos failed as a business, Holmes is innocent of fraud. This episode was produced while the trial was still ongoing. Holmes was once heralded as a maverick, a powerful female entrepreneur in the male dominated world of tech, and her company Theranos promised that it would revolutionize medicine. Yet Holmes's downfall helped shine a light on one of the dark sides of Silicon Valley, where exaggeration, over promises, and a good story can be worth billions. Even if that story rests on a foundation of lies. From Hungary, this is episode three of Theranos from American Scandal. On the next episode, I sit down with Charles Duig, the best selling author of the book, The Power of Habit, and a journalist who covers the tech industry. We'll look at the troubled relationship between venture capitalists and tech companies, and we'll discuss whether powerful investors helps set the stage for fraud. If you like our show, please give us a five star rating and leave a review and be sure to tell your friends. I also have two other podcasts you might like, American History Tellers and Business Movers. Follow on Apple Podcasts, Amazon Music, or wherever you're listening right now. Or you can listen to new episodes early and add free by subscribing to OneGree Plus in Apple Podcasts or in the OneGree app. You'll also find some links and offers from our sponsors in the episode notes. Supporting them helps us keep up with the best and them helps us keep offering our shows for free. Another way you can support the show is by filling out a small survey at OneGree.com slash survey to tell us what topics we might come next. You can also find us and me on Twitter. Follow me at Lindsay A. Graham, Lindsay with an A, Middle and Initially, and thank you. If you'd like to learn more about Theranos, we recommend a book, Bad Blood, Secrets and Lies in a Silicon Valley startup by John Kerry Rue, a quick note about our reenactments. In most cases, we can't know exactly what was said, but all our dramatizations are based on historical research. American Scanell has hosted, edited and executed produced by me Lindsay Graham for Airship, audio editing by Molly Bond, sound design by Derek Barrett, music by Lindsay Graham. This episode is written by Samantha Charlotte, edited by Christina Mollsberger. Our senior producer is Gabe Riven. Executive producers are Stephanie Gens, Jenny Lauer Beckman, and her nonmopezz for Wonder.