The downfall of Bernie Madoff has not served as a deterrent to many as other fraudulent scandals, fueled by greed, emerged about the same time as he was going down. A young lady called Elizabeth Holmes, who studied chemical engineering at Stanford University but dropped out of Stanford to start her company, allowed her desire for wealth, fame, and worldly honour to blind her.
Elizabeth Holmes was born into a well-to-do family. Her father, Christian Rasmus Holmes IV, was a vice president at Enron, an energy company that later went bankrupt after an accounting fraud scandal. After Enron’s collapse, her father worked in top positions at USAID, EPA, and USTDA. Her mother worked as a Congressional committee staffer. Holmes traced her ancestry to the founder of Fleischmann’s Yeast Company, Charles Louis Fleischmann, and the family always reminisced about this past glory.
Holmes tried to pioneer a new method of testing blood samples in which small volumes of blood from finger pricks can be used for all blood tests instead of using larger volumes of blood collected with needles from veins. When she discussed this idea with her medicine professor at Stanford, Phyllis Gardner, she told Holmes she doubted her idea would work. other experts in medicine told Holmes they doubted her idea would work, but she persevered and managed to get Channing Robertson, her advisor and dean at the School of Engineering to support her idea. Holmes first registered and called the company Real-Time Cures in Palo Alto, California, but later changed it to Theranos that same year. She was only 19 years old when she started this company. Channing became the first board member of Theranos and introduced Holmes to venture capitalists.
Between 2004 and 2010, Holmes managed to raise more than $96 million from investors. She managed to meander her way into the lives of great men and got the most illustrious board in the U.S. over the next three years. Her board included former Secretary of State, George Shultz and she became connected with great and influential people such as Henry Kissinger, James Mattis, and Betsy DeVos. Her company was later valued at $9 billion and she was named the youngest self-made female billionaire by Forbes and ranked #110 on the Forbes 400 in 2014. She went on to raise more than $400 million in venture capital in 2014 and was interviewed by the editor-in-chief of Medscape, Eric Topol, who praised her for “this phenomenal rebooting of laboratory medicine”
“Media attention increased in 2014 when Holmes appeared on the covers of Fortune, Forbes,The New York Times Style Magazine, and Inc.“
Holmes had her name on 18 U.S. patents and 66 foreign patents by the end of 2014. She also managed to clinch a lot of deals with major diagnostic and healthcare companies such as Cleveland Clinic, Capital Blue Cross, and AmeriHealth Caritas to use Theranos technology.
However, her media attention and phenomenal rise began drawing the eyes of wary observers. A medical expert who thought that Theranos’s Edison blood testing device seemed suspicious tipped John Carreyrou of The Wall Street Journal, who initiated a secret, months-long investigation of Theranos. Indeed, the chief scientific officer at Theranos, Ian Gibson, told Holmes that the tests were not ready to be used by patients as they had issues that needed to be corrected. Carreyou managed to speak to other scientists and former staff of Theranos and used that to write a damaging article about Theranos. He also managed to obtain company documents and showed that Theranos’ technology was defective. He also showed that the company used other commercial machines to test patient samples instead of the Theranos’ technology.
Although Holmes hired a renowned lawyer to stop the publication of Carreyou’s findings, the Wall Street Journal published it. The explosive article led to a series of FDA and State-initiated investigations into Theranos. Other companies that were doing business with Theranos began cancelling their contracts with Theranos. The investigations led to the ban of Holmes from the laboratory testing industry. She was removed as CEO of the company and by October 2016, Theranos was shut down.
However, her legal woes increased. In March 2018, Holmes was banned from serving as the officer or director of any public company for 10 years. She was fined $500,000 and later charged with fraud and conspiracy to commit fraud. The company’s assets and stocks were used to pay off creditors and investors after it shut down. Holmes was finally sentenced to prison custody for 135 months (11.25 years) with three years of supervised release. She is still serving her prison sentence.
Elizabeth Holmes destroyed herself! A 19-year-old girl with a burning desire to be a renowned billionaire at all cost: she succeeded in the beginning, but reality later dawned on her. Had she taken her time and finished her college education, she could have obtained the research experience to invent something valuable and long-lasting. Her zeal and determination to be rich clouded her reasoning and wisdom. She sowed to the wind and reaped the whirlwind…She destroyed the life, life savings, and investments of millions of people and investors who invested in her company and worked for her.
Beware of greed…beware of chasing wealth and materialism: they have destroyed millions!
“For the love of money is the root of all evil: which while some coveted after, they have erred from the faith, and pierced themselves through with many sorrows.” [1 Tim. 6:10].
Have a happy Sabbath and a peaceful weekend.
