© The Daily Beast/Getty ImagesElizabeth Holmes
But behind this dazzling facade, all was not well. As federal prosecutors would later allege, the Silicon Valley tech firm, its evangelizing inventor, and her one-time boyfriend were peddling snake oil: Theranos' device simply did not work.
Now Holmes, 37, is about to stand trial, and ex-Theranos employees are watching closely. Some describe themselves as survivors of a startup ruled by paranoia, subterfuge, bullying, and retaliation. And they want Holmes to pay.
Justin Maxwell, who worked at the company as a designer from 2007 to 2008 said:
"We knew Theranos to be a deceptive organization, but we had to chill out and not say anything about it because they would make our lives difficult. There are some people who probably had to go to therapy for this, and there's one person on the team who died from suicide."Holmes and Ramesh "Sunny" Balwani, her ex-boyfriend and the former president of Theranos, are both charged with defrauding investors out of hundreds of millions of dollars and endangering patients with a technology that didn't function as advertised. The pair, who will be tried separately, each pleaded not guilty to nine counts of wire fraud and two counts of conspiracy to commit wire fraud.
© Brendan McDermid/ReutersElizabeth Holmes was riding high in 2015 when she spoke with Bill Clinton and Alibaba Group chairman Jack Ma at the Clinton Global Initiative’s annual meeting.
Opening statements in Holmes' trial are expected to begin on Wednesday, and for some former employees, the proceeding in San Jose federal court is bringing back bad memories — and giving them hope that someone will be held accountable.
Former Theranos software engineer Del Barnwell told The Daily Beast:
"The cynical side of me, after years in the Marine Corps, thought there's no balance in the universe — bad people get away with shit. But this is like this giant karma."Barnwell said he's keenly interested in seeing Balwani, 56, convicted at his trial, now scheduled for January.
"If he gets jail time, that's a cause for celebration. In my view, that man had no redeeming qualities I could see. All he ever did was talk about the money he made."One former member of the firm's management team told us, "This is health care. You're dealing with people's lives. She should go to jail."
The insider, who asked not to be named out of fear of retaliation, said he joined Theranos because of Holmes' ambition but realized two or three weeks into the job that her promises to investors and potential corporate partners weren't feasible. He called the turtleneck-loving wunderkind a "classic bullshit artist," and said he suspects some former Theranos employees have PTSD from bullying within the workplace which he says Holmes condoned.
"It's surprising it took so long to be uncovered," the former manager said of Holmes' and Balwani's alleged fraud. "People were drinking the Kool-Aid."
Holmes cultivated a board of directors with powerful men including former U.S. Secretaries of State George Shultz and Henry Kissinger and former Marine General and Secretary of Defense James Mattis — endorsements that gave her efforts a patina of legitimacy. She also entranced high-powered investors, among them Rupert Murdoch, the Walton family, former Education Secretary Betsy DeVos, and New England Patriots owner Robert Kraft.
According to the indictment, Holmes and Balwani hyped Theranos' devices as a faster, less painful alternative to traditional bloodwork and rolled them out in Walgreens pharmacy locations in California and Arizona. They knew their "technology was, in fact, not capable of consistently producing accurate and reliable results," the indictment alleged.
Recently unsealed court records indicate Holmes' defense might rely on her bombshell claims that Balwani controlled and abused her, and that this alleged misconduct affected her mental state and her capacity to make decisions. (Balwani denied these allegations, and in court filings his attorneys called them "deeply offensive.")
Maxwell, who also hopes Holmes serves time, doesn't believe Balwani coerced Holmes in connection to the alleged multimillion-dollar conspiracy — a sentiment echoed by multiple employees interviewed by The Daily Beast.
"The only thing I know and swear by is that she was already manipulative and lying before he entered the scene when we were there in the late 2000s.Lawyers for Balwani and Holmes didn't return messages left by The Daily Beast.
"I think if she got off without any sort of conviction, it will support the ongoing perception that the legal system is biased and skewed in this country."
While neither tech executive appears to have commented publicly on employees' claims of intimidation, Holmes previously tried to separate herself from Balwani's alleged management tactics while testifying under oath in 2017.
"We disagreed all the time about a lot of things," Holmes said in a deposition with the Securities and Exchange Commission, according to ABC News. "We have very different leadership styles."
© Justin Sullivan/Getty ImagesRamesh “Sunny” Balwani, former chief operating officer of Theranos and ex-boyfriend of Elizabeth Holmes, will stand trial separately.
Her late husband, Ian, was the chief scientist at Theranos. He died by suicide in May 2013, the day before he was scheduled to testify in a patent dispute between the startup and Holmes' erstwhile family friend, an inventor named Richard Fuisz. Gibbons said that Theranos had pressured Ian to evade a deposition in the case.
When Gibbons alerted Theranos to her husband's death, the company reportedly responded by asking her to return his laptop and any other confidential materials. "[Holmes] never actually really reached out to me ever in the whole history of my relationship with her," Gibbons told The Daily Beast. "And Sunny didn't reach out to me."
Gibbons said the company made her husband miserable in other ways. "It was hell for him to work there. It was complete hell. And I think that he was very confused about why he was being treated so badly," she said.
According to Gibbons, Theranos created a culture of harassment and paranoia. Her husband believed that his emails were reviewed by members of the legal staff.
"He felt that he was always being watched. I think [Holmes] wanted to pit people against each other. She was very intimidating. I don't know what else to say."Watching news of the trial drip out, Gibbons said she has struggled to process Holmes' possible defense in the fraud case — that alleged partner abuse by Balwani destroyed
"her capacity to make decisions. Originally, she was putting herself forth as sort of an independent, ferocious woman. And now she's playing the meek, poor mother. She's figuring out a defense, which strikes me as sort of skipping a step, because then she has to admit that she did something wrong.During his stint at Theranos, Maxwell also encountered a troubling corporate environment — one he says was more toxic for some employees than others.
"I miss Ian every day. To my surprise, I'm very much at the same level as I was when it first happened. I just feel like I've lost something from my life that'll never come back."
In interviews with The Daily Beast, Maxwell and other former Theranos employees said the tech unicorn's stomping grounds were replete with high turnover, bizarre loyalty pledges, fears of legal retaliation, and the tracking of employees' hours, email and computer activity, and even who they had lunch with. Maxwell said Holmes repeatedly lied to employees and that he eventually learned from engineers that the technology wasn't functional.
"I hope engineers are testifying (at trial)," he said. "I hope there's other people to demonstrate early that she had been crafting this environment of untruths since the beginning."Whenever people quit or were terminated, Maxwell said, Holmes would gather the Theranos flock in a common area to disparage the departing employee, claiming they weren't a team player, didn't understand the technology, or couldn't be trusted.
Maxwell said the Theranos IT team monitored his computer activity and questioned him about who he communicated with or what programs he installed, while Holmes' assistants watched who came and went from the office. Both teams functioned as "weird corporate spies" who reported their findings to Holmes, he said.
© Glenn Fawcett/WIkimedia CommonsThen-Deputy Secretary of Defense Ashton Carter and former Secretary of Defense William Perry sit down for a meeting with Elizabeth Holmes during a 2013 swing through Silicon Valley.
Maxwell, who had left Apple for Theranos, said employees knew the blood-testing devices weren't reliable but felt they couldn't speak up because they feared Holmes and company lawyers would wage legal battles against them.
He said Theranos continued tracking him even after he left the company. When someone noticed he gave a talk on interactive design in which he described his previous employer as "a startup that built a blood vampire robot," company attorneys threatened Maxwell and the host of the program, demanding the speech be redacted. Maxwell said the company also went after his online portfolio for calling the device a "blood robot."
"I thought my life was going to come crashing down and they would come after me. They clearly had someone monitoring everything I was doing and publishing online. It sent a message loud and clear that you don't mess with Theranos."Barnwell said that when he came to Theranos in 2009, he quickly noticed Holmes and Balwani were "super paranoid about everything." They wouldn't allow employees to list Theranos on their LinkedIn pages and were hell-bent on protecting trade secrets. He said Balwani had enlisted Theranos security guards to carry notepads and jot down when employees entered and left the startup's headquarters.
The former Marine helicopter pilot had a strange feeling during his final job interview with Holmes.
"I could tell then and there, she had this vision and came off like a cult leader. I think she just wanted fame at all costs."Barnwell also figured out that the blood-testing device — one that Holmes vowed would change the world — was far from revolutionary.
"The machine did not work at all. When Walgreens signed and Safeway signed, I was looking at my two buddies, 'I'm like dude what the hell are these people thinking?' It doesn't do anything. It was totally snake oil. They would have us manually load data in the database."The software engineer finally quit after Balwani called him into a meeting and demanded he work at least 60 hours a week. As Barnwell tells it, Balwani informed him he'd reviewed security cameras to see when Barnwell was in the building and chastised him for working only eight hours a day — a strange episode also detailed in Carreyrou's book. "I'm going to fix you," Balwani allegedly warned.
The mysterious businessman also allegedly told Barnwell:
"If I would have interviewed you, you wouldn't have been hired. He told me straight to my face, 'The only reason you got hired is because I wasn't in the country at the time.'Barnwell said Holmes and Balwani never acknowledged his two-week notice, but on his last day, they chased him into the lobby, demanding he sign a non-disclosure agreement. He refused. Balwani then allegedly called a security guard to stop him in the parking lot.
"The day I left, Sunny made threats about suing me for everything I owned. Everybody's got different levels of what they can take. I wouldn't listen to Sunny and everybody knew it. At one point, he wanted to put hands on me, and I said that would be a bad idea."
According to Barnwell, his former colleagues later told him Balwani called the cops after he drove away and claimed he'd stolen from the company. When police asked what was taken, Balwani allegedly replied: "Well, it's in his head."
"Silicon Valley is a strange place. There's a lot of pretenders there. But Sunny and Elizabeth were the weirdest thing I've ever seen in my life. If these harebrained ideas came out anywhere else, if you were in Des Moines, it wouldn't get very far. In Silicon Valley, people think everything is magic."Yet Holmes still has her defenders. Another former staffer, speaking on the condition of anonymity, said he has "mixed feelings" about the ongoing trial.
"It appears that she did many bad things, but I think her intentions initially were certainly not that. She wasn't trying to build a house of cards. She was trying to solve a problem that no one else had been able to solve. Elizabeth is portrayed as a charlatan, and I mean, that's probably somewhat correct."He acknowledged that Holmes refused to modulate her vision when Theranos' technology lagged, choosing instead to "ignore the realities."
Another ex-employee noticed that same stubbornness, which at first seemed like mere mismanagement.
"It just felt like trying stuff that continued to fail, rather than any of the more dark cloud stuff that's come to light, which slipped from dysfunction into deception and manipulation."Now, years removed from the business, the employee wants Holmes and Balwani held accountable. "For me, it mostly seems like, why has it taken so long?"
Reader Comments
IF this trial goes forward (my bet would be that one or both will end in pleas with light to no jail time because of the rich political idiots who were invested in it), they HAD to know or at least question the underlying profitability.
Also, and again, 'if', it goes forward, the case will be studied for ages on the countless evidentiary issues. Reputation, hearsay, best evidence, every single bit of evidence law and a good part of criminal procedure too, will become huge in it.
The whole shoddy thing is a study of evil - read the above rationalizations of those who KNEW that they were scamming (stealing) and kept on working. Why? The Benjamins.
I hope the bitch gets more than BF does but I've learned to never hope against hope.
R.C.