A small and space-saving machine baptized, not without presumption, Edison. Sold as a miraculous device capable of carrying out blood tests for over 200 factors and values, from the simplest such as blood counts to the elements of risk for cancers and other diseases, using a few drops of blood material. The promise of the American entrepreneur (or scammer?) Elizabeth Holmes and her dream startup Theranos was precisely this: to revolutionize diagnostics by avoiding analyzes with demanding withdrawals. A pinch on your fingertip to find out in a few seconds if you are sick or, trivially, how your cholesterol is going. Too bad that Edison never worked and that, despite the impressive amount of funding and personalities involved in running the company at the time, its founder is now on trial for fraud. A court case covered with extreme attention by the US media both for the personality of the defendant and for the sensitivity of the subject (many people have received completely stoned diagnoses after undergoing analysis with that contraption by apprentice sorcerers) and for a broader discourse: the one in Theranos almost resembles a liberating Silicon Valley trial.
In fact, on 8 September at the Court of San Jose, in California, the proceedings began which – as stated in the official communications of the same court – sees the accused Holmes and the 56-year-old former president of Theranos Ramesh “Sunny” Balwani, of Pakistani origin and with whom the woman had a relationship. Against them “two counts of conspiracy to commit electronic fraud and nine counts of electronic fraud”. According to the prosecutor led by Robert Leach, the couple, who are however facing two separate trials (Balwani’s will begin in January), would have built a multimillion-dollar scheme to defraud investors and another to deceive doctors and patients. Both scams revolved around this glittering empty box, Theranos, a company founded by then 19-year-old Holmes in Palo Alto, California. It was a private health care and life science company with a stated mission to revolutionize medical laboratory testing through supposedly innovative methods for blood sampling, material analysis, and interpretation of patient data. The device produced, Edison, could have been used in pharmacies and parapharmacies – as happened with some partnerships with Safeway or Walgreens, except using traditional machinery to cover Edison’s inefficiency, but we will see it later – as well as, in perspective, in home. The prosecution believes that Holmes has always known that the device did not work but that he proceeded, both in the search for funds and in the commercial proposal, as if nothing had happened. Putting investments and patient health at risk.
Born in 1984 and daughter of a former vice president of the energy giant Enron, Holmes gave birth to Theranos after leaving his studies at Stanford in 2004, using the funds for tuition as the first piece of capital. It was a very different world than it is today: Google had only existed for six years and was about to go public, Facebook was being born in those months, the iPhone would only be presented three years later and the Silicon Valley narrative was of certainly less critical, articulated and problematized than it is today. Perhaps only in this perspective can we understand the inexplicable success of the early years, fundamentally based on nothing: the charisma of the young Holmes, always dressed in turtleneck sweaters to imitate his (alleged) legend Steve Jobs, at the time managed to keep standing the house of false cards. Not only by pumping his group’s valuation to around $ 10 billion in the span of a decade, but also by involving unthinkable names (all without extensive medical knowledge): among them Henry Kissinger and John Schultz, two former secretaries of state Americans, Betsy DeVos, a businesswoman and former secretary of education under Donald Trump, and James Mattis, the former commanding general of US forces in Afghanistan and Iraq and former defense minister. And again: the lawyer close to the Democrats David Boies, the former senators Sam Nunn and Bill Frist, not to mention the Australian tycoon Rupert Murdoch, who put on the table as much as 125 million dollars.
Even the world of large commercial chains and some health agencies, or at least part of them, fell victim to the sirens of Holmes and associates and their miraculous device that was of no use: to some extent to be clarified in the course of the trial: in 2012, for example, the aforementioned Safeway chain invested 350 million dollars to arrange 800 warehouses and obtain collection areas where they could offer blood tests with Edison, only to cancel the agreement. The following year came the deal with Walgreens. In March 2015, just before the fall, the Cleveland Clinic announced a partnership as well as, in July, one with private insurance companies AmeriHealth Caritas and Capital BlueCross. In the same month of that year, the Food and Drug Administration approved the use of the analysis system with sampling from the finger for the diagnosis of the HSV-1 virus, herpes simplex virus, out of a laboratory context: it would be remained the only real health authorization ever granted to Theranos. Yet, incredibly, it remains to be wondered how it was possible that such a machine could have snatched such a green light from the FDA.
Just that year, after a decade of unstoppable race between hype and intoxication from maxi-bids that would have brought Holmes on all the covers of the main world business magazines, and not only (among the main ones we remember at least those of Fortune of June 2014, ” This Ceo is out for blood ”, by Inc., which in 2015 also called it“ the new Steve Jobs ”) the beginning of the collapse. Another front page, this time that of a newspaper like the Wall Street Journal, reported in the edition of October 15, 2015 the first chapter of a journalistic investigation in which John Carreyrou removed the veil from the complex operation, explaining that the company “was not using its technology for the results of the exams it carries out ”. Yes, because, knowing full well that Edison was not working, the group had begun to conduct tests with traditional machinery modified ad hoc to work (however badly) with a few drops of blood. In turn, they returned partial and completely out of order analyzes precisely because they had been tampered with in order to “mimic” Edison’s work. Carreyrou would then tell the whole story in detail in his book “A single drop of blood. Secrets and lies of a startup in Silicon Valley ”, published in Italy in 2019 by Mondadori.
The process that is therefore staged in these months (we are around the 12th week of the procedure) has its roots in events no more recent than six years but which, in some cases, go back to the foundation of the company, therefore relating to 17 years ago . Among these, for example, the relationship that over the years would have linked Holmes and the businessman Balwani: according to the defense of the woman led by Lance Wade, which seems to center the whole strategy on the fact that “failure is not a crime” and therefore on the good faith of the former founder, the real control of the operational activities was in the hands of the then 50 year old. Which would have had a very profound influence on Holmes by forcing her to make choices and actions against her will and, among other things, sexually and psychologically abusing her (the former businesswoman stated at the beginning of the trial). Or the more recent one of the database containing data and test results of patients undergoing analysis by Theranos: a copy was delivered in 2018, albeit encrypted, to the prosecutor. Except in the meantime delete all traces from the servers of the company, which has become a sort of living corpse. After the publication of the journalistic investigation, corroborated by a series of experts, and the launch of the investigation by the Security and Exchange Commission, the valuation had in fact rapidly plummeted from 10 billion to zero: the company finally went bankrupt in September 2018 after a long series of lawsuits and compensation with patients, investors, authorities and assorted prosecutors, although the accounts were already shaky as early as 2013. That was the year of the formalization of the accusations by the District Attorney of the Northern California. The rest is history that is being written in recent weeks.
Holmes faces a twenty-year prison sentence. The prosecution and defense will have to convince a jury of 12 people, five women and seven men chosen at the request of Holmes’ lawyers from among people who knew nothing of the matter: investors and clients who have guaranteed nearly a billion of funds have been deliberately scammed or even the founder of Theranos was not aware of the specific details of her machinery, would she have been somehow plagiarized by Balwani and in any case she only made mistakes in the dynamics of a company that has ended up financially out of control as happens to many but was extraneous to any criminal scheme?
Holmes in the last days he asked for and was granted the floor, almost surprisingly given that usually in this kind of proceedings the defendants intervene as little as possible so as not to betray themselves, and began to testify. Supported by her mother and partner Billy Evans and pleading innocent, the 37-year-old explained, for example, that the initial results of the Theranos tests were more comforting. Then he brought up big names in the pharmaceutical industry like Pfizer and Novartis that didn’t really have anything to do with it (in fact, documents containing the counterfeit Pfizer logo produced in order to push investors to put money on Theranos were disclosed). . In the first interrogation on Friday 19 November, however, Holmes retraced the first years of his university activity.
Attempts to complicate the situation even if the trial, which should reach a sentence in December, appears compromised: testimonies and materials such as e-mails have highlighted, in recent weeks, such as the alarms and observations of the directors of the Theranos laboratories with respect to Edison’s effectiveness had been largely ignored, they revealed the pressures on investors convinced by fake materials and would seem to prove the substantial awareness of those who led the then unicorn that had to change world medicine.
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