Service of Too Good to be True II

June 28th, 2018

Categories: Medical, Medical Tests, Scams, Too Good to Be True

Photo: depositphotos.com

I’ve followed highlights of the Elizabeth Holmes/Theranos criminal case for a while in newspaper and radio coverage and a few things nag at me:

  • How did high profile investors, partners and board members get duped by a machine and service that never worked?
  • Even though “Federal prosecutors filed criminal charges against Theranos Inc. founder Elizabeth Holmes and the blood-testing company’s former No. 2 executive,” news focus brushes over life-changing damage done to patients who think they are OK when they’re not.

The charges allege “that they defrauded investors out of hundreds of millions of dollars and also defrauded doctors and patients.” This quote and the one above made up the lead to John Carreyrou’s recent Wall Street Journal article.

Photo: en.wikipedia.org

“The blood test machine her company created doesn’t work — and never has,” Scott Simon wrote recently, capturing an interview with Carreyrou on NPR’s Morning Edition that he hosts. “She raised almost a billion dollars from investors, including Rupert Murdoch, Carlos Slim Helú, and the family of Betsy DeVos, and signed contracts with Walgreens and Safeway, by lying to them.” Carreyrou’s original coverage led to the 2½ year investigation.

He also wrote a book about the scandal, “Bad Blood: Secrets and Lies in a Silicon Valley Startup,” and the test that was expected to revolutionize the industry by costing less and using blood drops from a finger pin prick.

Simon continued quoting Carreyrou: Holmes and “Sunny Balwani, who was the number two of the company, knew as they were rolling out the blood testing services in Walgreens stores in California and Arizona that the blood tests were faulty, and yet they still went ahead with the rollout. And there were, I came across personally in my reporting more than a dozen patients who had health scares because they received bad results from Theranos.”

Photo: pehub.com

This was the most in-depth comment I could find about the patient victims of the scandal. Others mostly referred to them though in his New York Times coverage, Reed Abelson wrote that the so-called tests endangered lives.

So how did Holmes get away with bamboozling five star board members along with all the rest? Carreyrou told Simon “she capitalized on this yearning there was, in Silicon Valley and beyond, to see a woman break through in this man’s world in Silicon Valley.” In addition, he said, the investors based their decision on the Walgreens contract, figuring the company had confirmed the accuracy of the tests. This was a false assumption. Holmes refused to show the equipment claiming she was afraid the competition would discover the secret sauce.

About venture capitalists Abelson shared the prediction of Lakshman Ramamurthy, a former FDA official, now with Foundation Medicine, who “is not certain investors have learned their lesson. Companies like Theranos, which offered little hard evidence that its tests worked to its investors, ‘have their own rules,’ he said. ‘That hasn’t changed. The Silicon Valley hubris remains.’”

According to Ken Sweet’s AP article, referring to Holmes and Balwani: “If convicted, they could face prison sentences that would keep them behind bars for the rest of their lives, and total fines of $2.75 million each.” At one point the company, built on lies, was worth $10 billion +. I wonder if the fine covers the damage to investors sufficiently.

Surely lawsuits will follow should patients prove they were harmed either because they weren’t properly diagnosed or were damaged because they were given harmful medicines they didn’t need. Are you surprised that such high profile businesses, canny investors and high profile board members were deceived by the old “I can’t show you the goods” trick so soon after Bernie Madoff played the same card?

Photo: harp-onthis.com

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7 Responses to “Service of Too Good to be True II”

  1. EAM Said:

    Very interesting expose on Theranos on 60 Minutes:

    https://www.cbsnews.com/video/theranos-a-900-million-deception/

  2. Jeanne Byington Said:

    EAM,

    Great! I’ll take a look. Thanks.

  3. Martha Takayama Said:

    Unfortunately, I am not surprised either by the audacity of cruelty of Ms. Homes and her company’s behavior. She is a less ostensibly vulgar Martin Shrekli. She must be a conscienceless egomaniac
    who used a different set of personal tools, including the fact that she is a young female, to market her fraud.

    Sadly, I guess it is also not surprising in year II of the Trump dictatorship that insatiable desires for get ultra rich schemes seem to have lost none of their appeal despite Bernie Madoff’s enormous destruction. The desire for outrageous profits and wealth combined with a general public lack of concern with respect to inconvenient details, scientific proof, learning, logic or even common sense made a ripe atmosphere for the Theranos caper.

    Of course the fact that droves of people either suffering from ailments or fear of them were with all other matters aside desperate for answers in a society which is doing less and less to prevent or mitigate environmental and health care dangers, if not actually promoting them, only made and makes people anxious for bogus cures.

  4. Hank Goldman Said:

    I really don’t know how these massive swindlers live with themselves… I believe, not sure, one of Bernie Madoff‘s sons was a suicide! Such horrible people… I guess they just can’t stop!?!

  5. Jeanne Byington Said:

    Hank,

    One of Madoff’s sons died in a suicide and the other of natural causes.

    You make a good point: Knowing that you gain to profit from selling a service dressed to help that actually harms others–oh, my!

    The My Pillow man must be doing great business to help these folks sleep. Is it worse to offer useless blood tests than to look TV cameras in the eye and claim that cigarettes cause no harm or that immigrant children separated from their parents should be fine because they have TV to watch and soccer fields to play on?

    Someone is bound to say it’s human nature to cheat and lie. Thank God I am blessed to know so many who don’t.

  6. Jeanne Byington Said:

    Martha,

    I think the Shkreli character is the felon who raised the price of life-saving drugs to $700+ from under $100? They are cut from the same cloth.

    There does seem to be a trend here NOT to research or question anything although one would think that at the level of these businesses and/or investors either they–or staff–would perform due diligence. I wonder if the person at Walgreens who signed the contract with Theranos still works there.

    One thing’s sure and DJT knows it: If a person repeats something often enough as in “Mueller is conducting a witch-hunt,” people believe it. The puzzle to me is that I would think that the DJT fan club would be angry and fearful of rapprochement with anything “commie,” such as Putin. They remain mum one and all. They are irrational and inconsistent in another way: How come they resent helping people from Muslim and Central American countries–and the needy in their own–but they are gung-ho to explore how we might cooperate with Russia?

    Your comment directs us to expect more of the same kind of sleazy behavior from the top down. I wish I could disagree. I can’t.

  7. Lucrezia Said:

    The bigger the scam, the more likely it’s discovered. What is surprising is that the perps don’t appear to know that. There’s a bright light — immense wealth for lawyers! Sad.

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