The Hollywood Reporter broke the news on Jan. 18 that American health care entrepreneur Elizabeth Holmes, whose California-based company, Theranos, collapsed into bankruptcy in 2016, has filed for bankruptcy protection. Forbes estimated her net worth at $4.5 billion in 2012, but subsequent revelations about the company’s impossibly impressive sales numbers coupled with an August 2016 New York Times expose revealed that it didn’t have a single valid machine (its claim that it had more than 1,000 at numerous locations nationwide was also dispelled). Now, a Tribune-Washington Post story on Friday says her once-promising story is falling apart, with now-famous tipsters turning against her.
The story, by Anita Kumar, Rick Maese and Ryan Reilly, has a few details that won’t surprise techies familiar with the saga. It’s mostly about how Holmes did whatever she could to market her company — from orchestrating unseemly, suggestive ads to aiming special attention at doctors. For two years, she told reporters that Theranos produced a medical device that can do an array of unrelated things, including measuring blood pressure, heart rate and blood sugar. This story seems to be about the collateral damage from all of those untruths: After Times reporter David Barstow detailed the company’s web of fabrication, allegations that led to a police investigation and a grand jury subpoena, almost everybody in the Silicon Valley knew about it. “This was the perfect storm,” Tim Ferriss, an author, told the story. “She was feeding the factoids.”
Now, all the white-collar fraud investigators you’ve heard of are apparently “in her debt.” For example, Kalmus Law firm said that investigators are taking a “formal interest” in the company. The special agent-in-charge of the federal health fraud unit at the FDA, John Grogan, has told the paper he plans to interview Holmes and Theranos employees about their activities, though it’s not clear that they’ve done anything wrong. The paper cited law enforcement sources who said she still has not admitted any wrongdoing, despite the company’s significant setbacks and recent troubles.
The team behind that takedown story said it could get a new story going if it got something that “outlandish.” But now, according to this Tribune-Post story, Holmes and her supporters are focused on restricting the paper’s ability to speak to current and former employees. “We have over 200 potential evidence sources and we would like to hear from all of them,” a representative for Theranos said.
While she’s got nothing to lose, this certainly isn’t going to go over well in her industry. As one person close to Holmes told the paper, she “is the ghostwritten Carrie Underwood, the perfect starlet who did nothing wrong” and “every lie she told was as scandalous as it could get.”