Theranos and Elizabeth Holmes: Silicon Valley’s Greatest Fraud
By Emma Ferraro
June 22, 2022
UPDATED 12:00 PM EST
Theranos was supposed to be a revolutionary health technology company―until the worst events ensued.
[Photo Credit: Vanity Fair]
Elizabeth Holmes was the youngest female self-made billionaire in the world, as founder of Theranos in 2003 at just age nineteen. The company’s mission was to revolutionize healthcare by developing a method for blood diagnosing that was both simple and effective. The leaders of the company claimed that the technology used in Theranos offers 240 tests from a simple finger prick. The results of these tests would be reported back via phone call in just a period of hours, and “a single test would cost less than half of the reimbursement rate of Medicare and Medicaid” (Ethics Unwrapped).
In 2014, just a bit over a decade after its founding, the company valued an approximate $9 billion. This gave it the title of one of Silicon Valley’s unicorn startups, which is a privately held company that values over $9 billion. Holmes owned a great percentage of this stake, growing massively in fortune and in the scope of the public eye. Theranos was able to partner with Walgreens, which complied, desperate for company growth. Despite suspicions, Walgreens continued on with the tests
Although Holmes was exposed to the public, the methods behind Theranos’ blood sampling technology remained very hidden. According to Ethics Unwrapped, “...many of its lab results went unchecked.” John Carreyrou, journalist for The Wall Street Journal, was the catalyst for unveiling many of these inaccuracies. He noticed that the company used inaccurate testing technologies; he also stated that these technologies were not uniquely their own. Holmes ignored these claims and continued boasting about Theranos, the company growing less in credibility each day.
The Food and Drug Administration (FDA) along with the Centers for Medicare & Medicaid Services opened investigations to discover that the company was using a prototype to test their blood samples that was malfunctioning and unable to be used. This discovery led to lawsuits from their pharmaceutical partners, countless investors, and the state of Arizona. The Securities and Exchange Commission (SEC) finally ended up charging Theranos with fraud, essentially leading to its defunct in September. Before stepping down as CEO in June 2018, Holmes had to pay a penalty of $500,000, return 18.9 million shares, and be prohibited from being a director of a public company for a decade.
This event makes you wonder how something so fraudulent and misleading was able to make it past so many scientists, policy makers, and consumers for years.
References
ColdFusion. "Theranos - Silicon Valley's Greatest Disaster." YouTube, 1 Mar. 2019, www.youtube.com/watch?v=3CccfnRpPtM.
Hartmans, Avery, and Paige Leskin. "The Rise and Fall of Elizabeth Holmes, the Theranos Founder Whose Federal Fraud Trial is Delayed Until 2021." Business Insider, 11 Aug. 2020, www.businessinsider.com/theranos-founder-ceo-elizabeth-holmes-life-story-bio-2018-4.
"Theranos' Bad Blood." Ethics Unwrapped, 24 Oct. 2018, ethicsunwrapped.utexas.edu/video/theranos-bad-blood.