How Elizabeth Holmes tricked a former US Secretary of State
When Tyler Shultz tested Theranos employees’ blood for syphilis, he said he knew something was seriously wrong with the company.
Tests indicated that 20% of his colleagues had the sexually transmitted disease, which he said could not be possible.
The same tests were being carried out on members of the public at pharmacies, he said.
“We were telling people who had syphilis they didn’t have syphilis and we were telling people who didn’t have syphilis they had syphilis,” Shultz said. “Basically, the tests didn’t work.
Shultz, who has denounced Theranos and its leader, Elizabeth Holmes, addressed a packed Bush auditorium at Cornell Hall on Friday at the Orin Ethics Symposium at the University of Missouri. The conference was sponsored by the School of Accountancy and the Trulaske College of Business.
Shultz’s grandfather, former U.S. Secretary of State George Shultz, had introduced Shultz to Holmes. His grandfather was on the board of Theranos and was a big investor there. Holmes, in his “deep baritone voice”, told her about the revolutionary blood test technology she had developed, a wearable device that could test for any number of diseases with a single drop of blood taken from the finger. .
“It was really hypnotic,” Shultz said of the presentation. He accepted her invitation to join Theranos.
On day one, Theranos launched with Walgreens. There was a screaming match between Holmes and a lab official.
Blood collected from pharmacies was tested by another lab, he said.
“It was really unclear what we were throwing,” Shultz said. “No one on my team had actually seen the Theranos device, which in retrospect is a big red flag.”
It was an open secret in the company that the technology didn’t exist, he said. Some who raised concerns were immediately fired. Some who quit were prosecuted.
He decided to confront Holmes, gently, with his data.
“I didn’t go into her office to say she was a fraud,” Shultz said.
Holmes dismissed her concerns and told her he misunderstood the data, he said.
“She started avoiding me, which was very strange,” Shultz said.
“I really tried to prove myself wrong,” but he couldn’t, he said. “I knew with 100% certainty that I was right.”
He voiced his concerns in a lengthy email to Theranos chairman Sunny Balwani, Holmes’ boyfriend. Balwani responded by calling Shultz “arrogant, ignorant, condescending and reckless”.
Shultz told the audience that Balwani was wrong; he is not condescending.
His reply email was his two weeks notice, but Balwani told him to leave immediately.
Holmes was his grandfather’s guest at Thanksgiving a few weeks later, he said.
“To say it was awkward was an understatement,” Shultz said.
Holmes gave a toast by declaring his love for the whole family and looking directly at him, he said. He raised his glass.
“I was telling my hand to stop shaking,” he said. “It was the worst Thanksgiving ever.”
He first started talking informally with Wall Street Journal reporter John Carreyrou. Shultz was wary of reporters, as previous stories about Holmes had been glowing profiles.
Theranos filed a temporary restraining order against Shultz and ordered him to appear in court. Holmes had hired private detectives to follow him.
Using his parents’ money, Shultz hired a legal team. At one point, his parents urged him to sign papers that Theranos wanted him to sign. They told him the best outcome was that they would spend $2 million and win and have to sell their house.
“I won’t sign what they want me to sign,” Shultz told her parents. “Prepare to sell the house.”
The first Wall Street Journal article on Theranos was weak, Shultz said. Then came more.
“It was just punch after punch after punch,” Shultz said of Carreyrou’s reporting exposing the company.
“I ended up recording the record a few days after my 26th birthday,” Shultz said. “It was the best decision I’ve ever made.”
His life changed for the better. He is celebrated everywhere he goes and has received dozens of job offers from legitimate companies.
He praised Carreyrou’s reporting.
“He’s tenacious,” Shultz said. “Your average reporter couldn’t have uncovered this story. It took a special type of reporter to do what he did.”
His relationship with his grandfather remains rocky, he said. He chose a criminal over his grandson, Shultz said.
During questions from the audience, he said he disliked the Hulu series “The Dropout” about Holmes and Theranos, saying it “humanized too much” Holmes, who was more like “a sociopathic, emotionless robot”.
Holmes, convicted of investor fraud and conspiracy, faces sentencing Nov. 18. She faces up to 20 years in prison.
Balwani was also convicted on 12 counts. No sentencing date has been set.
An audience member asked what the experience did for Shultz’s faith in humanity.
“I’ve witnessed firsthand that greed is a total disease,” Shultz said.
But there were other people like him who saw wrong and did the right thing.
Roger McKinney is the Tribune’s educational reporter. You can reach him at [email protected] or 573-815-1719. He’s on Twitter at @rmckinney9.