American Scandal - Encore: Theranos | The Race to Publish | 3

Episode Date: October 1, 2024

An investigative journalist looks into Theranos, and is shocked by his discoveries. Elizabeth Holmes tries to fend off the potentially devastating story.Need more American Scandal? With Wondery+, enjoy exclusive seasons, binge new seasons first, and listen completely ad-free. Start your free trial in the Wondery App, Apple Podcasts, Spotify or visit wondery.app.link/IM5aogASNNb now.  See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Hi, this is Lindsey Graham, host of American Scandal. Our back catalog has moved behind a paywall. Recent episodes remain free, but older ones will require a Wondery Plus subscription. With Wondery Plus, you get access to the full American Scandal archive, ad-free, plus early access to new seasons and more. Join Wondery Plus in the Wondery app or on Apple Podcasts. podcasts. It's February 2015, and a Monday morning in Manhattan. John Carreyrou climbs the stairs of a subway station alongside a crush of other commuters. When he steps out into the city streets in Midtown, he's greeted by bumper-to-bumper traffic and crowds of people hurrying into skyscrapers.

Carreyrou buttons up his coat, the cold wind blowing through his mop of brown hair. Then he slips into the crowd and begins hurrying to his office in a building that also reaches toward the gray winter sky. Kerry Rue has a lot of work ahead of him. For years, he's been a reporter at the Wall Street Journal. He's a highly respected journalist, and he's recently finished an investigative piece about Medicare fraud. That story was all-consuming, but now that it's behind him, it's time to get back to work to find his next great feature story. Carrie Rue steps into the newsroom of the Wall Street Journal. It's a beautiful, chaotic scene. Reporters type furiously on their keyboards while interviewing sources for their stories. Phones ring in every direction. Up above, flat-screen TVs are tuned to news about the markets and politics. Keriru has been in this building a thousand times, but he'll never get tired of the newsroom or the important work of holding people in power accountable for their actions.

A moment later, Keriru reaches his messy desk. He barely has a chance to take off his coat when his phone rings. Hello, this is John. John, it's Adam Clapper. Got a minute? Adam, good timing. I'm just starting to look for my next story. At some point, I was hoping to talk with my favorite physician slash blogger slash consultant. You know, you are a huge help for the Medicare series. Well, it's my pleasure, but you know,

I might be the gift that just keeps on giving. Oh, is that right? What do you got? I'm all ears. Carrie Rue reaches into his bag and fishes out a notebook and pen. Well, you read the feature in The New Yorker last week? Elizabeth Holmes and Theranos? A pioneer who dreams big, drops out of college, builds a revolutionary piece of technology.

Yeah, yeah, it was a compelling story. But John, didn't you notice? I mean, the whole Theranos story is full of holes. Yeah, yeah. That was a compelling story. But John, didn't you notice? I mean, the whole Theranos story is full of holes. Well, maybe. John, I think you're as curious about it as I am. What do you think? Talk to me. Well, there are some pretty big claims there.

They don't have any peer-reviewed data. That's right. And then Holmes. She studies chemical engineering for just a few semesters, but she's ready to become the next Edison. Yeah, that bothered me too. So I raised some questions about Theranos on my blog. And wouldn't you know it, a group of people contacted me.

Oh, is that right? Who? I can't tell you just yet. I gotta check with them first. But they might be willing to talk with you. They've got some information you're gonna wanna hear. It could be... it's big. How big? John, big. Carrier pauses, lets the words sink in.

Well, listen, if this is for real, and they wanna talk, send them my way, please. Of course. But there's one more thing. Please be delicate with this one. The people I'm connecting with, they're... Gosh, they're scared. Kerry Rue hangs up and leans back in his chair. More often than not, tips like this don't turn into anything serious. But he trusts Clapper's judgment.

And as Kerry Rou turns to his computer and begins researching Elizabeth Holmes, he starts to get that electric tingle of curiosity. This story is different. And if his gut reaction is right, there's something behind Theranos' success. Something dark. In the past decade, Boeing has been involved in a series of scandals and deadly crashes that have dented its once sterling reputation. At the center of it all, the 737 MAX. The latest season of Business Wars explores how Boeing allowed things to turn deadly

and what, if anything, can save the company's reputation. Make sure to listen to Business Wars wherever you get your podcasts. From Wondery, I'm Lindsey Graham, and this is American Scandal. By 2015, Elizabeth Holmes had grown to be a celebrity and an icon of the tech industry. She made magazine covers and was heralded as a visionary. President Barack Obama invited her to serve as a global ambassador for entrepreneurship, and Forbes magazine named her the youngest ever self-made female billionaire. Yet for all of the public triumphs, Theranos' blood-testing devices were still malfunctioning. That left Holmes and her team scrambling to keep the full truth from the public.

This complex web of lies would attract the attention of John Carreyrou, a dogged journalist. In the course of his investigation, he would speak with whistleblowers who were determined to speak up about their experiences with Theranos. The investigation would reach far and wide, and soon it would pose an existential risk to Elizabeth Holmes' company. This is Episode 3, The Race to Publish. It's February 26, 2015, in Manhattan, and John Kerryrew is clutching his cell phone, ready to make another call. He's already dialed the number a half-dozen times without getting an answer, but he knows he needs to keep trying. Because if he gets through, he could uncover a treasure

trove of information about Theranos. It's been a busy couple of weeks, ever since Carreyrou first heard from Adam Clapper, the doctor and blogger. Clapper did eventually connect Carreyrou with the potential sources, people who'd associated with Elizabeth Holmes and Theranos. But as Keri Roo dug into their backstories, he learned that they were tied up in lawsuits with Theranos, making them poor sources for a potential expose. Soon, Keri Roo learned about another potential source, a man who'd recently quit Theranos after working as the company's lab director. Unlike the others, he wasn't tainted by litigation. And even though Carreyrou's calls have all gone to voicemail, it's worth trying again. So Carreyrou lifts his cell phone and dials the source's number. After a few rings, a man's voice answers and Carreyrou introduces

himself. Right away, the man clams up. He says he can't talk. Theranos could sue him if they discovered he was talking to a reporter from the Wall Street Journal. Carreyrou steadies himself and thinks through his response. He's been down this road many times before. Informants are often jittery and afraid of retaliation, but there are ways to earn their trust and to work with them. So Carreyrou calms his voice, and he says he completely understands. It's normal for whistleblowers to feel scared. There's a lot on the line. But he has an offer.

The man can use a pseudonym if he'd like. There's a pause on the other end of the line. Then the man says, fine, he'll speak. But from here on out, he'll take the name Alan Beam. Keriru agrees, and soon, Beam starts telling him about his first days at Theranos. Back then, he had large hopes that the company would be revolutionary, that it would transform healthcare.

But that changed when Beam learned the truth about Theranos' blood-testing device. It was a dud. The device, known as an Edison, often churned out error messages and failed quality control tests. Keri Roo scribbles notes as fast as he can, his pulse quickening. He can already tell that this is the beginning of a major story. Beam continues, and the information only gets more damaging. He explains that because the Edison devices didn't work, Theranos began to use other companies' equipment.

But that created a new problem. Theranos insisted only on drawing a small amount of blood, which was central to the Theranos sales pitch. But if you rely on other companies' machines, you have to use more than just a drop of blood. So the company had to come up with a workaround. Technicians diluted the samples so there was enough liquid to process, but that made the results inaccurate, and sometimes badly so.

According to Beam, Theranos was not only misrepresenting what it was doing, but it was reporting test results that could potentially harm patients. Kerry Roof sets down his pen in shock. This kind of deception is unbelievable, and so he asks Beam if he ever tried to intervene. Beam exhales. He explains that he tried to postpone the launch of Theranos' partnership with Walgreens, but Holmes wouldn't do it. Beam also spoke with Sonny Balwani, the chief operating officer, but he was a bully who used intimidation to crush any kind of dissent.

Beam's warnings fell on deaf ears. Carreyrou continues scribbling furiously in his notepad as Beam reveals bombshell after bombshell. After speaking for an hour, the two end their call. As Carreyrou hangs up, he feels a familiar rush of adrenaline. This isn't just a story about a failed startup. It's bigger than that. Because if what Beam is saying is true, Theranos could be the next Enron. A tale of hubris and deception, one that could end with an incredible downfall. One that could end with an incredible downfall. Two days later, John Carreyrou steps through a park in Brooklyn, New York.

The nearby trees are studded with frost, and Carreyrou rubs his hands together, trying to stay warm. It's one of the city's coldest Februaries on record, and Carreyrou should be inside. But he made a promise. He's taking his sons to the park so they can play with their friends. And although his face is numb, Keri Rue doesn't really mind. He's distracted by more important development in the Theranos investigation. Alan Beam, his confidential source, may soon offer up a cache of incriminating records. While he was still at Theranos, Beam grew concerned that something bad could happen to a patient who used a Theranos blood test and that he could be held personally responsible. So Beam tried to protect himself. He forwarded dozens of work emails to his personal email account.

They included messages to Sonny Balwani, in which he detailed his concerns with Theranos. Carreyrou was thrilled to learn about these emails. They could be exactly what he needs to help corroborate Beam's incredible accusations. So as he paces around the freezing park in Brooklyn, Carreyrou decides to give Beam another call to check in. When Beam answers, Carreyrou cuts to the chase. He's hoping that Beam will send over those old work emails.

There's a moment of silence, and then Beam announces that he has some bad news. The emails are gone. He was forced to get rid of them as part of his legal agreement with Theranos. Keri Rue shakes his head, watching his breath turn to steam. This is a disappointing turn of events. Trying to compose himself, he asks whether Beam double-checked his

emails trashed or whether he tried contacting his email provider for support. There are often ways to get back old deleted messages, but Beam apologizes and says he's sorry. Those emails are gone. Carrieroo collapses onto a park bench, trying to think of another plan. They need some way to corroborate his accusations. And so he asks Beam whether he has any other way to get these kinds of damning internal communications. Beam pauses, then says there might be someone worth talking to. A younger guy named Tyler Schultz. His grandfather is George Schultz, the former U.S. Secretary of State and a Theranos board member.

Beam doesn't know all the details, but it sounded like Tyler Schultz left the company on bad terms. He might be worth talking to. Carreyrou nods, and with his fingers numb from the cold, he takes a note. Tyler Schultz could be a promising lead. He could also be another dead end. It's impossible to know when you're reporting the news. lead. He could also be another dead end. It's impossible to know when you're reporting the news. But either way, Kerry Rue is going to reach out to see what Schultz knows about Elizabeth Holmes and Theranos. It's the spring of 2015 in Palo Alto, California. In a dark bedroom,

Tyler Schultz closes the door and removes a cell phone from his pocket. He turns it over in his hands, marveling at the step he's about to take. The phone is a prepaid burner. Its number is untraceable. And today, Schultz is going to use it to contact an investigative reporter and blow the whistle on Theranos. Schultz dials the number for John Carreyrou, his fingers sweating. Hello, this is John. Hi, Mr. Carreyrou. This is Tyler Schultz. You messaged me on LinkedIn? Yes, Tyler, hi. I did not think I'd hear from you. That was about a month ago. Yeah, yeah. I don't know. Sorry.

I didn't know what to do. Oh, don't worry. No, I didn't mean to guilt you. I'm just happy you called. Why did you? Well, I left Theranos only eight months after coming on board. My parents tried to get me just to walk away, forget about the whole thing. But I don't know. I couldn't.

Huh? Why? What's on your mind? Schultz gets out of bed and begins pacing the room. Well, Theranos' blood tests, they're just not accurate. What happens if someone actually relies on one of those tests and ends up getting hurt or dying? I just couldn't stop thinking about it. Yeah, it's a terrible possibility. A lot of people could suffer, and not just the patients, but everyone in Theranos' orbit. Including my grandfather. I mean, he's 94.

What happens if he dies and Theranos is exposed and he can't clear his name? That's the last the world ever knows of him. Well, it sounds to me like you want to help get out the truth before that can happen. Yeah, I guess so. Well, I'm with you. you want to help get out the truth before that can happen. Yeah, I guess so. Well, I'm with you. You want to go on the record? Schultz shuts his eyes, feeling anxious and jittery. No, no, no.

No, not yet. But look, I'm sure you've done your research. You know you can trust me. I'm a responsible journalist. Oh, it's not that. I believe you, yeah. I'm just happy with my life. I've got a new job. I'm doing well. I don't want Theranos coming after me. I mean, Elizabeth Holmes likes to sue people, you know. Yeah, I've heard that. But Tyler, this can be confidential. I mean, certainly at first.

Ultimately, though, I will probably need something on the record if we want to run a story. For a moment, Schultz weighs the decision. He meant what he said. He doesn't want people to get hurt. But Schultz also doesn't want to upend his own life. But maybe there's a middle way. It's then that Schultz remembers the paper trail. Before he left Theranos, he emailed Elizabeth Holmes, warning her about issues at the company.

One day, he printed that email, as well as the company's response, and tucked the pages under his shirt before leaving the office. Schultz has evidence. And he also has his correspondence with the New York Department of Health, in which a state expert suggested that Theranos was cheating. So while Schultz isn't quite ready to be the face of the opposition, he still has plenty that he can share with John Kerryrook, and plenty that can put a stop to Theranos. On January 5th, 2024, an Alaska Airlines door plug tore away mid-flight, leaving a gaping hole in the side of a plane that carried 171 passengers. This heart-stopping incident was just the latest in a string of crises surrounding the aviation manufacturing giant, Boeing. In the past decade, Boeing has been involved in a series of damning scandals and deadly crashes that have chipped away at its once sterling reputation. At the center of it all, the 737 MAX, the latest

season of business wars, explores how Boeing, once the gold standard of aviation engineering, descended into a nightmare of safety concerns and public mistrust. The decisions, denials, and devastating consequences bringing the Titan to its knees, and what, if anything, can save the company's reputation. Now, follow Business Wars on the Wondery app or wherever you get your podcasts. You can binge Business Wars, The Unraveling of Boeing, early and ad-free right now on Wondery Plus. I'm Jake Warren, and in our first season of Finding, I set out on a very personal quest to find the woman who saved my mum's life. You can listen to Finding Natasha right now exclusively on Wondery Plus.

In season two, I found myself caught up in a new journey to help someone I've never even met. But a couple of years ago, I came across a social media post by a person named Loti. It read in part, Three years ago today that I attempted to jump off this bridge, but this wasn't my time to go. A gentleman named Andy saved my life. I still haven't found him. This is a story that I came across purely by chance, but it instantly moved me,

and it's taken me to a place where I've had to consider some deeper issues around mental health. This is season two of Finding, and this time, if all goes to plan, we'll be finding Andy. You can listen to Finding Andy and Finding Natasha exclusively and ad-free on Wondery+. Join Wondery in the Wondery app, Apple Podcasts, or Spotify. It's the spring of 2015 in Phoenix, Arizona. The door opens inside a Starbucks, and John Carreyrou enters, a notebook tucked under his arm.

Carreyrou breathes in the smell of roasted coffee as he makes his way through the busy shop. It doesn't look like Carreyrou's source has arrived. So he orders a cup of coffee and heads over to a quiet table in the corner. As he waits for his interviewee, Carreyrou flips through the pages of notes. He's spoken with a number of Theranos' former employees, and all together their testimony paints a damaging portrait of the company and its technology. It appears that Theranos is at the center of a major fraud, and with dozens of its wellness centers now operating in storefronts across the country, Theranos is putting patients' lives at risk. Kerry Rue is almost ready to publish his first story, but before he does,

he needs to capture the human toll of Theranos' lies. That's why he's here at this Starbucks. He's about to meet with a woman who relied on one of Theranos' lies. That's why he's here at this Starbucks. He's about to meet with a woman who relied on one of Theranos' test results and suffered some painful consequences. A few minutes later, the front door of the coffee shop swings open and a perky, middle-aged woman steps inside. Keriru smiles and rises. It's time to meet his newest source. He waves over at Maureen Gluntz, a patient of one of the doctors who Keri Rue has spoken with. Gluntz approaches the table, and after some small talk, she begins sharing the mortifying details about her experience with Theranos.

Gluntz explains that she had some ringing in her ears, so she went to get a blood test from a Theranos machine. When the results came back, she was terribly worried. blood test from a Theranos machine. When the results came back, she was terribly worried. Theranos reported that Gluntz had elevated levels of liver enzymes and glucose, among other issues. And with the ringing in her ear, her doctor worried that she might be having a stroke. So she went to the ER. Keriru looks up from his notepad, concerned. He asks whether Gluntz is okay. She shakes her head bitterly. She's okay, but that doesn't make her any less angry. She spent hours in the ER, ultimately getting a CT scan and an MRI.

They wanted to take every precaution in case it really was a stroke. The doctors also ordered a new round of blood tests, but when those came back, the results were normal. So were all the other tests. Keriru scribbles down the details in his notebook, then shoots Gluntz a look of sympathy. He apologizes, saying it sounds like she had to go through quite an ordeal, and all because Theranos' test results were inaccurate. Did she have a good insurance plan that might have covered it? Gluntz shakes her head again. She explains that she pays for her own insurance and her plan has a high deductible. Altogether, she was on the hook for $3,000, all because Theranos' blood tests don't work.

Keriru takes a final note and considers the weight of this story. Because of Theranos, Gluntz didn't just endure a frightening health scare. She had to deal with the financial consequences too. And while ultimately she survived, other patients with incorrect test results might not be so lucky. Carrie Rue thanks her for her time. He can feel Gluntz's anger at the inconvenience, at the cost, and the frightening emotional rollercoaster Gluntz was put through.

All because of an inaccurate test. And while it seems like it's just one person and maybe only a thousand dollars, if you multiply it times the scale of Theranos' ambition, it's a catastrophe waiting to happen. Kerry Rue is ready to publish. His investigation of Theranos will reveal how the Silicon Valley darling is putting people's lives at risk, and how its reckless behavior has to stop. It's July 23, 2015, in Newark, California. A lock turns slowly in a heavy metal door.

And when it opens, Elizabeth Holmes stands in the doorway alongside the Vice President of the United States, Joe Biden. A bright, gleaming light washes over them as the two gaze at what appears to be a state-of-the-art blood testing lab. With a flourish, Holmes welcomes in a small group of people. It includes Biden, his entourage, and local print and TV journalists. Together, they step into a modern-looking space filled with polished equipment and bustling lab technicians. Holmes describes the place as Theranos' newest facility. And when she glances over her shoulder,

she can tell that her presentation is already having its desired effect. The vice president seems like he might be enjoying himself. And Holmes is, too. Getting a photo op with Joe Biden is a huge deal. And maybe with this tour, he might give Theranos his stamp of approval. And that kind of support couldn't come soon enough. Holmes recently caught wind of a potentially devastating investigation from a reporter named John Carreyrou. He seems to have cultivated a number of inside sources, including Tyler Schultz. Theranos has tried to contain the fallout. Its lawyers have gone after Schultz,

threatening to bankrupt him and his family as punishment for speaking with a reporter. The legal team has also gone after another former employee, as well as multiple doctors who Carreyrou has spoken with. And it's not just legal action Theranos is planning. With its technology still far from perfect, Holmes had to do something to shore up Theranos' reputation. That's why the tour today is so important. Biden's support could help blunt any future attacks and make Theranos more immune to criticism. So Holmes continues the tour, showing off a range of high-tech equipment. It all seems to be going well, until she catches one of Biden's aides staring at a stack of

Theranos devices. Holmes' heart skips a beat. She wonders if this aide is an expert in clinical labs. Maybe his trained eye could figure out what's going on here. Because the truth is, the lab is a fake. It was created just for the vice president's tour. And that's not the only thing that's wrong. Theranos doesn't even have a real lab director. They replaced Alan Beam with a figurehead, a dermatologist with very little lab experience. Her concern growing, Holmes decides it's time for another captivating presentation,

something to distract her guests from the fake lab. And so as they continue the tour, she employs her usual soaring language. She explains that this lab is state-of-the-art, that Theranos is on the forefront of a medical revolution, one that will lower the cost of care and provide medical services to millions. The vice president narrows his eyes as he surveys the lab. For a moment, Holmes feels panicked. It's hard to tell what Biden is thinking. Maybe he can sniff out the ruse too. But then Biden turns back with a big grin. He says he's very impressed. Theranos is clearly the future of medicine. Hearing Biden's praise, Holmes melts

with relief. Finally, a small victory after so many hurdles. The vice president's approval will do a lot to bolster her public image, and with any luck, it'll help her turn the tide. But Holmes knows the work doesn't end there. If Theranos is going to survive the scrutiny of the press and John Carreyrou of the Wall Street Journal, she'll have to do more to win over the public's opinion and prove that Theranos is here to stay. Five days later, John Carreyrou steps into the newsroom of the Wall Street Journal in Manhattan. He sets down his briefcase, grabs a cup of coffee, and starts paging through today's edition of the journal. As far as he's concerned, it's the very best way to start the morning.

But as his eyes scan the paper's first section, he stops. There, prominently placed in his own newspaper, is an op-ed written by none other than Theranos CEO Elizabeth Holmes. In it, she boasts that the FDA has recently approved a Theranos test for herpes. Her article makes it sound like Theranos is an ally of government regulators. Kerry Roo stares at the article in disgust. This is an obvious ploy and a clever act of war. At the Wall Street Journal, there's a clear boundary between the editorial division and the news division. The editorial staff have no idea that Carrie Rue is working on a big investigative piece about Theranos.

And Holmes seems to have taken advantage of the situation. Her article makes her look like a saint in one of the most respected papers in the country. It's an obvious PR maneuver, one that seems intent to set up a defense and pressure the paper to not publish Carreyrou's story. With this morning's paper in hand, Carreyrou hurries to the office of his editor, Mike Sicanolfi. Carreyrou steps into his editor's office and comes face-to-face with Sicanolfi, a slim, bookish man with a wave of dark hair. Hey Mike, you got a minute? Not really. I'm on deadline. I'm sorry, but this can't wait. His editor stops and exhales as he

looks up. All right, John, what's going on? You see the paper this morning? John, I see the paper every morning. Well, did you see this? Carrier opens the paper to Holmes Op Ed and hands it across the table. No. God, I missed this. Yeah, and that's not all. She recently gave a lab tour to Joe Biden. Apparently it was very well received. Public relations coup. Yeah, no kidding. Keriru leans forward with a determined look. Listen, Mike, my story's done. I filed my draft a week ago. We have to move on it, because right now, as we speak, Theranos is intimidating my sources. They're trying to crush this story. They're building a PR defense. We have to beat them to the punch.

Well, no, it's an explosive story. And that's why it has to go through the usual process. We need to make it bulletproof. Mike, it's too slow. No, no, no, it's just, it's the way it's going to be. I haven't even finished my edits. Then it goes to page one, and standards and legal. You know they need to go through it, too.

That could take months. In the meantime, Theranos could get all my sources to turn. The story could fall apart. You know it. Sicanolfi leans back in his chair with a sly grin. John, I need to remind you about La Matanza, the ancient ritual. The fishermen with their spears in the Mediterranean, standing there for hours perfectly still, waiting. So still and so long that the fish don't even realize the hunters are still there. And it's at that moment the fishermen strike.

Jesus, Mike. La Matanza every time. That's how we win. La Matanza is how we win. We wait until all the pieces fall into place and Theranos has forgotten about us. And then we strike. Kerry Rue shakes his head. All right, fine. But look. La Matanza has to happen before October 21st. Why, what's that?

Elizabeth Holmes is slated to give a talk at the journal's technology conference in Laguna Beach. Man, if that happens, the paper's going to feel a lot of pressure to kill the story. Well, it's over two months away. So we just got to get back to work. We'll break this thing. I promise. Carreyrou nods and walks out of his editor's office. This isn't ideal. He's still worried that Theranos will somehow get ahead of him, find a way to sink the story. But that just means Carreyrou needs to keep pushing forward, finding more sources, uncovering more lies,

and working on the fullest version of the story that will expose Theranos. It's late September 2015, and Elizabeth Holmes is hurrying through a skyscraper in midtown Manhattan. The towering building houses News Corporation, the global media conglomerate and one of the most powerful companies in America. News Corp also happens to be the parent company of the Wall Street Journal. That's why Holmes is here today. She's on her way to a meeting with News Corp's leader, Rupert Murdoch. Holmes met the media mogul back in 2014 at a gala in Silicon Valley. She made a quick impression on Murdoch and convinced him to invest $125 million in Theranos. That made him the company's largest investor.

The two have met several times since, and with Murdoch's sizable investment in Theranos, Holmes believes he may be willing to pull the plug on the Wall Street Journal's investigation of her company. It's in his own self-interest. Soon, Holmes reaches the outside of a large office, and then an assistant leads Holmes into a large room with wide windows. Standing in the center is Rupert Murdoch, the aging media titan. Holmes and Murdoch are on good terms, and so he greets her warmly, asking how things are going. But Holmes hesitates. Part of her wonders if she's making the right decision, trying to get Murdoch to intervene in one of his newspaper stories. It's a serious request.

And the last thing she needs is to give a prominent investor reason to doubt Theranos. But Carrie Rue's investigation could soon be published and tarnish Theranos' image. The threat is too real and too imminent, so Holmes can't risk taking a soft approach. She tells Murdoch that she has a problem. A Wall Street Journal reporter, John Carreyrou, has collected false information from disgruntled former employees. He has a notebook full of lies. But given his reputation, he could do serious damage if his story is published. Murdoch nods, saying he understands Holmes' plight. He went through his own scandal a few years back and was dragged through the mud by reporters.

It's a bitter fight, but he survived, and she will too. Holmes swallows hard and repeats her concerns. She argues that Carreyrou's false reporting poses an enormous threat. The story has to be killed. Murdoch has the power to make the right decision. But Murdoch shakes his head. He says he trusts his editors to do their jobs. He's not going to intervene. Then, with a pat on Holmes' shoulder, he tells her that everything is going to work out. She just needs to have faith. Holmes manages to muster a smile, but inside she's seized by a feeling of complete terror. Theranos has tried to silence

its former employees. They've tried to get ahead of the Wall Street Journal to sabotage the reporting, but somehow Holmes and her allies weren't able to put out the fire. Murdoch was her last option to put an end to the Wall Street Journal story. Theranos' secrets are about to become public. He was hip-hop's biggest mogul, the man who redefined fame, fortune, and the music industry. The first male rapper to be honored on the Hollywood Walk of Fame, Sean Diddy Combs. Diddy built an empire and lived a life most people only dream about. Everybody know ain't no party like a Diddy party, so. Yeah, that's what's up.

But just as quickly as his empire rose, it came crashing down. Today I'm announcing the unsealing of a three-count indictment, charging Sean Combs with racketeering conspiracy, sex trafficking, interstate transportation for prostitution. I was f***ed up. I hit rock bottom, but I made no excuses. I'm disgusted. I'm so sorry. Until you're wearing an orange jumpsuit, it's not real. Now it's real. From his meteoric rise to his shocking fall from grace, from law and crime, this is The Rise and Fall of Diddy. Listen to The Rise and Fall of Diddy exclusively with Wondery Plus. It's October 8th 2015, in Manhattan.

An elevator door opens, and John Carreyrou steps out onto the sixth-floor newsroom of the Wall Street Journal. Beside him is Jerry Baker, the paper's editor-in-chief. As they walk toward a conference room, the two veteran journalists share a knowing glance. They're about to sit down with Theranos' legal team in a meeting that could produce fireworks. The journal is on the verge of publishing Carreyrou's investigation of Theranos. And despite all the company's best efforts, including legal threats and intimidation of sources, the storied newspaper doesn't have any intention to cave. Theranos threatened to sue the Wall Street Journal and demanded a meeting with the editors.

Baker, the editor-in-chief, believes in fairness, and so he granted the request. This is the meeting they agreed to. Kerry Rue and Baker enter the conference room, where they find several stone-faced lawyers. One of them is Heather King, who sets a tape recorder on the table. I hope you don't mind, but I brought a tape recorder because we keep diligent records, unlike some of you in this room. Carrie Rue raises his eyebrows as he takes a seat. All right, well, we're off to a good start.

Miss King, what would you like to discuss? We're here because we have a duty to prevent Miss Holmes and her company from suffering grievous harm. And we have a duty to get the truth to the public. But you failed in that responsibility. Miss King, I have to disagree. Mr. Carreyrou, your reporting is reckless. You're more interested in a good piece of drama than the facts. Trauma? Look, I've done my reporting, and I've only followed the facts.

You're going to deny them all? There's nothing you're willing to concede? No, there is. We will admit that the company has not run all of its blood tests on Theranos devices. Employees have used third-party technology. Oh, okay. Well, that explains why you took that line off your webpage. The lawyers exchange confused looks. I'm sorry, what are you talking about? The Theranos webpage. It used to say, many of our tests require only a small drop of blood. That's verbatim.

It used to be on the website, and now it's not. Because from what I've learned, when Theranos uses these other companies' machines, they need more than a small drop of blood. And that's why test results have been false. Mr. Carrier, that deletion, I assure you, was just for marketing accuracy. Suddenly, the room gets tense.

Carreyrou can tell that King has made a gaffe, admitting Theranos can no longer stand by its most coveted claim that its tests only depend on a single drop of blood. Gentlemen, look, this talk is just going in circles. The truth is, we're not here to kill your article. We'd simply like you to push it back. I'm sorry, we can run it, but you want us to delay it.

Yes, not indefinitely, just long enough so we can arrange a demonstration, proof that our technology works. Well, how soon could we get a demo? And some assurance that there wouldn't be any slight of hand. I promise you it would be entirely above board, but it might take us a few weeks to organize. What do you say to that? Just a few weeks? Carrie Rue exchanges glances with his editor-in-chief. Holmes is set to appear at the Wall Street Journal's tech conference in less

than two weeks. This would put the story at risk. So Baker, the editor-in-chief, shakes his head and says he's sorry. The paper is willing to push back publication a few days, but only if Elizabeth Holmes is willing to sit down for an interview. Otherwise, they're going to print. The room is silent as the lawyers exchange looks. Then they nod, gather their belongings, and walk out. It takes a moment to sink in, but then the truth hits Keri Roo.

This meeting was a victory. Theranos didn't have any other trick up its sleeve. And in a matter of days, the entire world will know the truth. Eight days later, the skies in Palo Alto are blanketed with clouds. Inside Theranos' headquarters, Elizabeth Holmes walks by herself, surveying the empty office. She studies the expensive furniture, the sleek design, everything intended to make Theranos look like a Silicon Valley dream. But it's a dream that's now been shattered.

Yesterday, the Wall Street Journal published its expose from the journalist John Carreyrou. The article made devastating accusations, accusing Theranos of lies and criminality. When Holmes read the story, she was awash in shame and humiliation, kinds of feelings she thought she'd outgrown. She was supposed to be an incredible success, a pioneer like Steve Jobs, who would change the world. And for a brief flicker of time, it seemed like Holmes had achieved her wildest ambitions. She made the covers of magazines, befriended global leaders, made herself into a billionaire. But now it's all come crashing down, and she has to face this very ugly and public spectacle.

Her employees have gathered in the company cafeteria. And in a minute, Holmes is going to have to try to explain what exactly happened. If she's a good enough leader, maybe she'll convince them to stay. To remain believers in her vision. A moment later, Holmes reaches the doors of the cafeteria and takes a deep breath. Then she steps through. All eyes turn to her as Holmes enters the cool, dimly lit room. She puts on a steely expression and steps onto the stage.

Holmes begins by greeting her team. She acknowledges that by this point, everyone has seen the news, and there's something she has to say. But before she goes on, she pauses. All at once, it's clear. Her employees don't look angry. They look terrified. They need this company, and they need Holmes to be strong. She has a moment of emotional clarity. It's not time to fold. It's not time to surrender. Not now, when they've come so far. So Holmes straightens her back and tells her employees that the article in the Wall Street Journal may be explosive, but it's full of lies, misinformation spread by bitter ex-employees.

Holmes shakes her head. She says this sort of thing is bound to happen when you're working to change the world. Apple faced this kind of opposition. So too did Google. Now it's Theranos' time in this excruciating spotlight. Holmes tells her employees to remember the name John Carreyrou, the journalist who tried to smear them all. But Theranos isn't done. They won't be taken down by a desperate man looking for a good quote. They're stronger than that. They're smarter, better, and they will prevail. Holmes then steps down from the stage, as slowly, like a wave cresting over the ocean, her employees begin to chant. As Holmes leaves the cafeteria, her employees are cursing the

journalist John Carreyrou, over and over, getting louder, more boisterous, and united in fury. The employees have taken her side. They won't be beaten down by John Carreyrou or his hatchet job. And this is not the end of Theranos. Far from it. For Elizabeth Holmes, this is a new beginning. Elizabeth Holmes did not back down in the face of John Keri Roo's accusations. She publicly fought back against the investigation, claiming that Keri Roo's reporting was inaccurate and that his sources, including former employees, were badly mistaken.

But it wasn't enough to protect Theranos. In November 2016, Walgreens sued the company, seeking the return of their $140 million investment. In June 2018, the Securities and Exchange Commission charged Elizabeth Holmes and Sonny Balwani in what the agency described as an elaborate, years-long fraud. Facing multiple federal and civil suits, Theranos dissolved later that year. September 8, 2021 marked the first day of Elizabeth Holmes' federal criminal trial. She and Sonny Balwani were both charged with wire fraud. Holmes' lawyers argued that while Theranos failed as a business, Holmes is innocent of fraud. This episode was produced while the trial was still ongoing.

Homes was once heralded as a maverick, a powerful female entrepreneur in the male-dominated world of tech. And her company Theranos promised that it would revolutionize medicine. Yet Homes' downfall helped shine a light on one of the dark sides of Silicon Valley, where exaggeration over promises and a good story can be worth billions, even if that story rests on a foundation of lies. From Wondery, this is Episode 3 of Theranos from American Scandal. On the next episode, I sit down with Charles Duhigg,

the best-selling author of the book The Power of Habit and a journalist who covers the tech industry. We'll look at the troubled relationship between venture capitalists and tech companies, and we'll discuss whether powerful investors help set the stage for fraud. If you're enjoying American Scandal, you can unlock exclusive seasons on Wondery Plus. Binge new seasons first and listen completely ad-free when you join Wondery Plus in the Wondery app, Apple Podcasts, or Spotify. And before you go, tell us about yourself by filling out a survey at wondery.com slash survey. If you'd like to learn more about Theranos, we recommend the book Bad Blood, Secrets and Lies in a Silicon Valley Startup by John Carreyrou.

A quick note about our reenactments. In most cases, we can't know exactly what was said, but all our dramatizations are based on historical research. American Scandal is hosted, edited, and executive produced by me, Lindsey Graham, for Airship. Audio editing by Molly Bogg. Sound design by Derek Behrens. Music by Lindsey Graham. This episode is written by Samantha Charlotte, edited by Christina Malsberger. Our senior producer is Gabe Riven. Executive producers are Stephanie Jens, Jenny Lauer-Beckman, and Hernán López for Wondery.