Can Anything be Fraud?

Recently, I’ve watched an HBO film “The Inventor: Out For Blood In Silicon Valley” about the world’s youngest billionaire Elizabeth Holmes. This girl at the age of 19 founded the blood-testing company Theranos that turned out to be a fraud.

Elizabeth was a Stanford dropout (it seems like being a Stanford dropout is even cooler than a Stanford alumnus) with a strongly entrenched belief that nothing is impossible. But she had only belief and no clue on how to achieve this “impossible,” so she joined a squad of Silicon Valley entrepreneurs who practice the “fake it ’til you make it” concept.

However, as opposed to Steve Jobs and Elon Musk, who made impossible happen, in Elizabeth’s case, overpromises and exaggerations turned into grim lies.

The point is she created a box called “Edison” named after the inventor Thomas Edison, which, supposedly, could conduct a full range of blood tests, from a pregnancy test to tests for cancer and syphilis, using just a few drops of blood.

Elizabeth raised more than $700 million from a handful of high-profile, seasoned businessmen and investors, such as:

• The Waltons family, heirs to Walmart founder Sam Walton
• Rupert Murdoch, executive chairman of 21st Century Fox and News Corp
• Oracle founder Larry Ellison and venture capitalist Tim Draper

Her self-assured, persuasive manner helped to increase Theranos’ valuation to $9 billion. At one point, her net worth reached $4.5 billion, and she was featured on covers of the world’s most popular magazines.

Theranos signed a contract with Walgreens, the second-largest pharmacy store chain in the US, which made Edison’s tests accessible in local drug stores in Arizona.

Elizabeth wanted the Edison box to become ubiquitous and appear in every American home, as once a personal computer did.

The successful company Theranos became a sinking ship on October 16, when the French journalist John Carreyrou published a provoking article with an innocent title. The article revealed the whole truth about Theranos, proving that it had used Siemens standard machines to run the majority of tests and that the Edison box, in fact, didn’t work.

The one thing Elizabeth didn’t take into account was that the employees were not blind.

Despite the strict control and lawyers’ threats, there might have been someone who would have dared to blow the whistle about the deceitful nature of the company.

Carreyrour’s article was published thanks to two dedicated believers in ethical entrepreneurship, Erika Cheung and Tyler Shultz, who agreed to tell the truth about Theranos in public.

In the wake of the article, the company faced a slippery slope of proven accusations.

In 2015, the Federal Drug Administration (FDA) released a report claiming that Theranos had used an “uncleared medical device.”

In 2018, Elizabeth Holmes and Theranos CEO Ramesh Balwani, a.k.a. “Sunny,” were charged by The US Securities and Exchange Commission (SEC) for “an elaborate, years-long fraud” and indicted by a federal grand jury on two counts of conspiracy and nine counts of wire fraud.

A few months later, Theranos shuttered up their offices.

Elizabeth is now awaiting trial, which will be delayed from July 28th to October 27th, due to the COVID-19 crisis. She is facing up to 20 years in prison and a fine of $250,000, plus restitution, for each count.

Last but not least: once again, I’ve assured that people do love following sensations (and I’m not an exception). While researching this topic, I’ve found holmesforpresident.com, where three idiots, as they call themselves, have described Elizabeth’s hypothetical 2020 presidential campaign.

The most interesting part is that the website is encouraging visitors to donate blood to the Red Cross, which is quite ironic.

So sometimes the “Fake it ’til you make it” idea does not lead to a happy end.

I assume that initially, Elizabeth didn’t have intentions to jeopardize patients’ health and commit a crime. But as she was too out for blood and took it too far, the Silicon Valley dream has played a low-down trick on her.

After all, I have only one question — how was this even possible?

For almost 13 years, hundreds of people worked for an illusion while other people invested tons of money in this illusion. The whole world was following a lie of a 20-something girl and thinking that she was revolutionizing the entire industry.

This story shows that the world is vulnerable, and there may be fraud around any corner.

Due to the coronavirus, the situation is even more dramatic because there is more ambiguous information, and lots of people are willing to take advantage of the crisis.

We should question the facts and look for the middle ground, which takes time.

I wish clarity and patience to everybody.