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August, 2021 – Business Insider

As Elizabeth Holmes heads to trial on fraud charges, former Theranos employees share new tales about her alleged paranoia, a 'tone deaf' Christmas gift and demands for utter devotion

Elizabeth Holmes, seven months pregnant, leaves the Robert F. Peckham Federal Building after a court hearing in San Jose, California, on May 4. Nhat V. Meyer/MediaNews Group/Mercury News via Getty Images

On July 10, Elizabeth Holmes, the founder of Theranos, gave birth to her first child, William Holmes Evans. But instead of basking in the afterglow of becoming a mother, Holmes is preparing to stand trial on fraud charges. If found guilty, she faces up to 20 years in prison.

Holmes’ startup promised to revolutionize medical testing. When she founded Theranos, in 2003, she said her blood-testing machine could perform numerous complicated tests, including ones that could detect cancer, with just a drop of blood. She was hailed as the next Steve Jobs in a fawning 2015 Inc. cover story and spoke on panels alongside Bill Clinton. But the machines didn’t work. And Holmes, prosecutors now say, knew it all along. In 2018, the Securities and Exchange Commission accused Holmes of conducting “an elaborate, years-long fraud,” and authorities charged her with two counts of conspiracy to commit wire fraud as well as 10 counts of wire fraud.

Now, on the heels of one of the most anticipated tech trials of all time, set to start August 31, former employees look back at Holmes’ Theranos, telling Insider about her infatuation with secrecy and unrelenting belief that their work at Theranos would change the world. Her unconventional requests and expectations — like forbidding the use of the word “blood” during interviews — defined many of their experiences. Several of Holmes’ associates, including former Theranos employees — some of whom are speaking out for the first time — expressed concern that her 7-week-old infant would distract jurors from the crimes she’s alleged to have committed.

“I hope justice gets served for the investors and patients that were defrauded” a former Theranos operations engineer said.
While Holmes, who is 37, has been accused of being an expert manipulator, the former billionaire continues to stand by her innocence.

“She feels wronged, like Salem-witch-trial wronged,” a person who used to work closely with Holmes said. “I believe that she feels there is a version of this story that would not have happened if she weren’t a woman, let alone a young, blond-haired, blue-eyed woman.”

Holmes couldn’t be reached for an interview, and her attorneys did not return requests for comment.

‘I want to change the world, and I want you to come help me do it’

Holmes at Lincoln Center in New York after being named one of Time’s
most influential people of 2015. Taylor Hill/Getty Images

For nearly a decade she was a Silicon Valley superstar, appearing on the cover of Fortune and Forbes. Time magazine named her one of the 100 most influential people in the world in 2015. She chartered private jets, had a personal publicist on retainer for $25,000 a month, and cultivated a taste for Birkin bags. She was America’s youngest self-made female billionaire, and investors including Rupert Murdoch and Betsy DeVos poured millions into Theranos. At its height, in 2015, the company was worth $9 billion and employed over 800 workers.

Former employees say Holmes demanded complete devotion to the company from the start.

She was a 19-year-old student at Stanford University when she came up with the idea for rapid blood testing. With the help of her father, Christian Rasmus Holmes IV, a former vice president of Enron, Holmes secured a funding round from venture capitalists and dropped out of school.

She opened a small office in Menlo Park, California, and started recruiting a team. Holmes spent nearly every waking hour at the Theranos office and always conducted interviews with job candidates herself, employees said.
“She’d basically say, ‘Hey, I want to change the world, and I want you to come help me do it,'” the former operations engineer hired in 2006 recalled.

At daily all-hands meetings, Holmes often launched into lengthy speeches about how they were “saving lives,” according to three former employees.

“She had this belief and she was so completely sold on it,” said a former hardware engineer who worked at Theranos from 2012 to 2014. “There was no doubt in her mind, and it was infectious.”

Her passion could be intense.

Cheryl Gafner, who worked as a receptionist at Theranos, recalled her 2006 job interview with Holmes and the CEO’s unflinching stare. “I kept digging my fingernails into my palm because I felt like I couldn’t look away,” Gafner said. “It was like some kind of staring competition — like if I blink I won’t get the job.”

Employees felt that Holmes often measured their devotion by the number of hours spent physically at the office.
Staffers “were literally living their lives at the workplace, and she appreciated and she encouraged that kind of behavior,” a former senior scientist at Theranos said.

Face time was so important to Holmes, the former senior scientist said, that employees would deliberately go for walks by her office, which was made of glass, so that she would see them. Others, he said, would kill time by going to the gym and showering in the middle of the workday so that they could show their devotion by staying there even later.

To keep employees satisfied, Holmes had security personnel order three meals a day for the team, which could cost upwards of $3,000 for one meal, a former security-team member said. There were no limits to what they could buy, but Holmes, who was a hardcore vegan, drew the line at fast food and soda.

“We couldn’t buy things like KFC for dinner, even though people wanted it,” the former security member said, adding that they were also forbidden from installing soda machines in the office.

But as the hype around Theranos grew, so did Holmes’ obsession with secrecy, according to former employees.
Teams like engineering and research and development were kept separated by locked doors that required designated keys, the former security member said.

Ankur Shah, a former recruiter for Theranos, says that when he was interviewing candidates, he was told to remain vague and “couldn’t say the word ‘blood,'” he recalled. “So when I would describe what we would do with the company, I would have to say ‘human bodily fluids,'” Shah said.

Within seven years of launching the company, Holmes had a four-person security detail that shocked even Rupert Murdoch, who had a single bodyguard himself, according to John Carreyrou’s book about Theranos, “Bad Blood: Secrets and Lies in a Silicon Valley Startup.” The security team referred to her as “Eagle 1.”

At one point, Shah’s team was recruiting for a security-guard position and one of the job requirements was “evasive driving maneuvers,” he added.

“Only certain people were trusted around her stuff,” the security member said. He was responsible for loading Holmes’ car with personal items including bottles of Voss water, the only water she drank, he said.

“She was very paranoid,” Shah added. “I just didn’t understand this aura that she created, this idea that ‘people are coming after me.'”

‘She was like a kid in a candy store’

Theranos’ 116,000-square-foot office building on Page Mill Road in Palo Alto, California.
Andrej Sokolow/Getty Images

Holmes’ dreams began to unravel in October 2015 after Carreyrou published a report in The Wall Street Journal saying that the blood-testing machine, called Edison, was faulty. The Edison, according to the report, could complete only 15 of the purported 240-plus tests, and instead of using its so-called state-of-the art technology, Theranos sent blood samples to traditional laboratories for testing. The bombshell launched Theranos into a tailspin. Investors sued the company and the government revoked its blood-testing license. By September 2018 Theranos was shut down.

“She really feels that this Journal reporter was out to get her” and, without his articles, “she would have been able to achieve her vision,” the person who worked closely with Holmes said, adding that Holmes thought being an attractive female with big blue eyes and fine blond hair put a target on her back.

The person added, “Her commitment to what she was doing was completely authentic.”

But some employees said they were quick to notice cracks in Holmes’ grandiose vision.

One operation engineer told Insider that on his first day of work, Holmes rushed him to the products facility to show off her brand-new multimillion-dollar machine that stored the tiny blood cartridges she called “nanotainers.”

“I found it odd that the cartridges were nowhere near ready, yet she had already spent all this money on where to store them,” he said. “She was like a kid in a candy store.”

“She believes so emphatically in the power of positive thinking, it’s almost completely devoid of reality,” the person who worked closely with Holmes said.

When employees did point out issues within the company to Holmes, many were either punished or fired, people with knowledge of the matter said. According to Carreyrou’s book, Theranos’ chief financial officer, Henry Mosley, was fired after questioning the accuracy of the Edison’s technology; and Todd Surdey, the head of sales and marketing, and Michael Esquivel, Theranos’ general counsel, were let go after expressing concerns to Theranos’ board that they were being misled about the company’s projected finances and how well the devices worked.

In 2015, the senior scientist who worked on developing the Edison’s assay systems — the process of testing blood for diseases — voiced concerns to Holmes about the minilab machines they were given and how they were “failing nonstop” during an assay validation.

“She bombarded me saying: ‘No, this is not right. Everybody else is using it, and if they can use it, so can you.’ Then she just ended the meeting right there,” the scientist, who started at Theranos in 2011, said.

The scientist says he was immediately removed from the project. He left the company two years later.

“There was a running joke on the HR team that, 4 o’clock Friday, whoever was in front of their office was conducting an exit interview,” said Shah, the former recruiter.

‘I’m just going to continue to spread love’

After Theranos’ downfall, Holmes started a quieter life.

One San Francisco friend told Insider that Holmes has been supported by a “very loyal crew” who’ve promised not to speak with reporters. Holmes lives with her husband, Billy Evans, a 29-year-old MIT grad, who most recently worked at the self-driving-car company Luminar Technologies. The two got engaged in 2019, tying the knot months later.

“No one I know has seen her in a long time,” Joe Fuisz said. “She appears to be in seclusion somewhere.” Fuisz, a lawyer and inventor, says he was a close family friend of the Holmeses for decades until Elizabeth Holmes sued him and his father in 2011. Holmes accused them of stealing secret Theranos information to file their own medical-analyzer patent. (The case went to trial but settled before the jury rendered a verdict.)

For Christmas 2017, Holmes sent a copy of her favorite book, “Meditations” by Marcus Aurelius, to dozens of former employees with a note offering “peace and love.”

“It was so incredibly tone-deaf, but I have no doubt she thought of it as ‘I just want to spread love, I’m just going to continue to be a force for spreading positive energy,'” said the person who worked closely with Holmes.

When news of Holmes’ pregnancy broke, some former Theranos employees said they were upset that the focus was shifting to her personal life rather than the fraud charges.

Some legal experts believe that having a newborn baby could work in Holmes’ favor during her trial.

“There are going to be certain jurors, especially female jurors, that are going to connect with her and may feel some type of alliance or allegiance to her just by virtue of the fact that they are parents as well,” Marshall Hennington, a psychologist and trial and jury consultant, said.

Holmes, right, leaving the Robert F. Peckham Federal Building in San Jose with her defense team on May 4.
Nhat V. Meyer/MediaNews Group/Mercury News via Getty Images

But if Holmes is sentenced to prison time exceeding 30 months, her options for seeing her newborn will be limited, said Justin Paperny, a prison consultant.

The Residential Parenting Program allows mothers serving 30 months or less in prison to stay with their children until they’re released, in a designated unit of the prison. The Mothers and Infants Nurturing Together program helps pregnant inmates navigate childbirth.

Women serving sentences more than 30 months are given no special privileges in prison. Depending on the level of security, Holmes would be granted visitation rights, but with the recent surge in COVID-19 Delta-variant cases, it’s possible in-person visits could be suspended again.

“We’ve had clients go more than a year without visiting their children due to COVID, and while it appeared to slow down, it’s now ramping back up again,” said Paperny, who runs White Collar Advice and has advised Martha Stewart, Bernie Madoff, and a number of the parents caught up in the college-admissions scandal on how to prepare for life behind bars.

“If convicted,” Paperny said, “the Bureau of Prisons is not going to see her as a mother or as a former executive — they’re going to see her as a criminal.”