Money Crimes with Nicole Lapin - GREED: Elizabeth Holmes Pt. 1

Episode Date: March 20, 2025

Elizabeth Holmes was just 19 years old when she founded a startup called Theranos. She claimed her company would change healthcare forever with its sophisticated blood-testing devices -- and before long, Elizabeth and Theranos were the darlings of Silicon Valley. But there was just one problem: it was all a lie. Money Crimes is a Crime House Original. For more true crime content, follow us on all social media, @crimehouse. To learn more about listener data and our privacy practices visit: https://www.audacyinc.com/privacy-policy Learn more about your ad choices. Visit https://podcastchoices.com/adchoices

There is nothing quite like a good origin story, especially when it comes to business and tech. From Thomas Edison inventing the light bulb to Steve Jobs creating Apple in his garage, history is full of visionaries who changed the world with a big idea and a dream. Elizabeth Holmes thought she was one of those people, and when Silicon Valley learned she was about to revolutionize the healthcare industry, everyone wanted to buy in. But Elizabeth bit off more than she could chew, and eventually her little dream had turned into a full-blown scam. By the time anyone realized the revolution she promised wasn't coming, she had taken

them for millions of dollars. As the saying goes, those who don't understand history are doomed to repeat it. That's especially true when it comes to money. If you want to make the right decisions when it comes to managing your assets, you need to know what mistakes to avoid and how to spot a trap. This is Money Crimes, a Crime House original. I'm your host, Nicole Lapin. Every Thursday, I'll be telling you the story of a famous financial crime and giving you

advice along the way on how to avoid becoming a victim yourself. And for more true crime stories that all happened this week in history, check out Crime House, the show. Each episode covers multiple cases unified by the same theme. So every week, you'll get something a little different. At Crime House, we want to express our gratitude to you, our community, for making this possible. Please support us by reading, reviewing, and following Money Crimes wherever you get your podcasts.

Your feedback truly matters. And to enhance your Money Crimes wherever you get your podcasts. Your feedback truly matters. And to enhance your Money Crimes listening experience, subscribe to CrimeHouse Plus on Apple Podcasts. You'll get every episode ad-free, and instead of having to wait for each episode of a two-part series, you'll get access to both at once, plus exciting Crime House bonus content. Today is the first of two episodes on the rise and fall of entrepreneur Elizabeth Holmes. Today I'll tell you about Elizabeth's early life, her decision to found a startup called Theranos at just 19 years old, and the very questionable steps she took to get it off the ground.

In the next episode, I'll unravel the truth about Theranos and tell you how Elizabeth went from a Silicon Valley darling to a convicted criminal. So I've got some exciting news. Crime House Studios is launching a brand new original show called Killer Minds, hosted by licensed forensic psychologist Dr. Tristan Ingalls and Crime House's Vanessa Richardson, each episode features a deep dive into the psychology of a notorious murderer from serial killers to cult leaders, deadly exes, and spree killers. Killer Minds is a Crime House original.

New episodes drop every single Monday and Thursday. Follow wherever you get your podcasts. You're not with Fizz. Switch today. Conditions apply. Details at Fizz.ca. Now streaming. What do you know about the Happy Face killer? He's my father. It's so good to see you, Missy. Experience the thrilling new series. He said he killed another woman. Inspired by a true life story.

If I don't deal with him, he will never leave us alone. You don't see how the world's saying to you. Anna Lee Ashford and Dennis Quaid star. I am not responsible for what my dad did. There are some really brilliant people out there. People with incredible ideas that can truly change the world. Some of them come from nothing, having to claw their way to the top and fight for every dollar. But there are others who are handed those opportunities on a silver platter, like Elizabeth Holmes. Elizabeth Holmes Born in February 1984 in Washington, D.C., Elizabeth came from a long line of accomplished

people. Her great-great-grandfather Christian Holmes founded Cincinnati General Hospital and helped establish the University of Cincinnati's medical school. And his father-in-law was Charles Lewis Fleischman, one of the wealthiest businessmen of the 19th century. Elizabeth was desperate to follow in their footsteps. When she was around 9 or 10 years old, a relative asked Elizabeth what she wanted to be when she grew up. She looked them dead in the eye and said, I want to be a billionaire. dead in the eye and said, I want to be a billionaire. Now that is a pretty bold claim for a child to make. But her answer might have been influenced by her environment.

At some point when she was a kid, Elizabeth's family moved to Woodside, California in the heart of Silicon Valley. Steeped in the culture of the dot-com bubble, Elizabeth was surrounded by people living the life she dreamed of, like billionaire venture capitalist Tim Draper. After spending a few years in Woodside, the Holmes family packed up and relocated to Houston, Texas. Elizabeth was used to moving around. Her dad worked for different government agencies.

But that meant she was perpetually the new girl and didn't have a lot of friends. So Elizabeth focused on school instead. In high school, her primary focus was getting into a great college. Elizabeth had her site set on Stanford, which was just a few minutes down the road from her old house in California. In fact, she'd already spent several summers there taking Mandarin classes through their immersion program. Sure enough, 18-year-old Elizabeth

was accepted to Stanford in the spring of 2002. When she started that fall, she decided to major in chemical engineering. It was the most direct route to a career in biotech, which combined the two industries her ancestors had made money in – business and medicine. And Elizabeth didn't waste any time chasing after her goals. After taking only two classes with the star of the chemical engineering department, Dr. Channing Robertson, Elizabeth decided to work in his lab.

The problem was, it was only for grand students. But Elizabeth wasn't going to let that stop her. Whether it was her charm, determination, intelligence, or a combination of all three, she managed to snag a spot in Dr. Robertson's lab. By the time the fall semester came to an end, Elizabeth was doing well, really well. But things weren't moving fast enough for her. She was constantly searching for her big break, for that one idea that would kickstart everything. And the pieces started to fall into place after her freshman year ended.

In the summer of 2003, Elizabeth got an internship at the Genome Institute of Singapore. She was assigned to a lab testing patients for the SARS virus, which was spreading through Asia like wildfire. Elizabeth quickly realized that their methods were super inefficient. For starters, patients had to already be experiencing symptoms before they could be tested. To make things even worse, the medical staff had to collect every single sample by hand using swabs and needles, tools that hadn't changed in over a century. After that, those samples

were transported to labs like the one Elizabeth worked in. There, they used a bunch of different chemical processes to test the sample for SARS. Elizabeth felt like there had to be a better way. Once she finished her internship and returned home to Houston, she shut herself in her room. And five days later, she emerged with a patent application. Five days later, she emerged with a patent application. Now, in the US, a patent is a form of intellectual property similar to copyright or trademarking. It gives inventors the right to sue if someone tries to copy their ideas. And for an invention to be patented, it must be novel, non-obvious, and useful. Basically, it has to be a completely new process, machine, product, or something that vastly improves an existing one. But just because you apply for a patent doesn't mean you're going to get it.

To do that, you have to prove your idea actually works. And Elizabeth's idea didn't yet. She wanted to create a patch that would take a tiny sample of blood and test it for all kinds of infections, not just SARS. If any were detected, that same patch would dispense the treatment. Sounds like science fiction, right? Well, that's what Dr. Phyllis Gardner thought too. Dr. Gardner had been a professor of medicine at Stanford for almost 20 years, and her expertise made her a sought-after advisor and board member for biotech companies all over Silicon Valley.

She was exactly the type of person who could say whether Elizabeth's idea had legs or not. Elizabeth came to her multiple times in the fall of 2003 to discuss her patent application. But in the end, Dr. Gardner shut Elizabeth down. Running a bunch of tests with such a small amount of blood just wasn't realistic. But Elizabeth refused to listen. Her idea wasn't the problem. Dr. Gardner was. So Elizabeth moved on to someone else for validation. And this time, she wasn't taking no for an answer.

Hey everyone, it's Nicole. With an exciting update, Crime House Studios is launching a new original show called Killer Minds. Hosted by licensed forensic psychologist Dr. Tristan Ingalls and Crime House's Vanessa Richardson, each episode of Killer Minds features a deep dive into the psychology of a notorious murderer. From infamous serial killers to ruthless cult leaders, deadly exes, and terrifying spree killers.

Along with Vanessa's immersive storytelling full of high stakes, twists, and turns, Dr. Ingalls will be providing expert analysis of the people involved. Not just how they killed, but why. Killer Minds is a Crimehouse Studios original. New episodes drop every Monday and Thursday. Follow wherever you get your podcasts. In the fall of 2003, 19-year-old Elizabeth Holmes began her sophomore year at Stanford University. But she didn't plan on sticking around for long.

She'd finally found an idea that she thought could strike big. A patch that could test for diseases and treat them. One professor had already shot down the concept, so Elizabeth went to someone else for advice. Someone who had already proven more receptive to her, Dr. Channing Robertson, whose work had partially inspired her idea in the first place. Unlike his colleague Dr. Gardner, Robertson was blown away with Elizabeth's concept. He knew how inefficient and costly blood testing currently was. In theory, Elizabeth's patch could change the entire

pharmaceutical industry. But when Elizabeth told him she wanted to drop out of school and pursue her vision full-time, he told her to pump the brakes. Once Elizabeth was set on something, there was no stopping her though. That fall she left Stanford and at only 19 years old started the company she'd been dreaming of since she was a little girl. At first, she called it Real-Time Cures. But it wasn't the catchiest name, so Elizabeth eventually switched it to Theranos, a combination of therapy and diagnosis. By June of 2004, Theranos was incorporated. Now it was time to look for money.

And Elizabeth started close to home. Very close. Her first investors were her own parents. And if Christian and Noel Holmes were disappointed she dropped out of school to start her own company, well, they definitely weren't showing it. They happily gave her the money they'd saved for her tuition to put toward Theranos.

Elizabeth's parents provided her with what's called seed funding. This is the very first round of fundraising that helps new companies get off the ground. Considering the cost of starting a tech company, very first round of fundraising that helps new companies get off the ground. Considering the cost of starting a tech company, these tend to be large amounts in the millions of dollars. But that money isn't a gift or a loan.

It's an investment. It's a big risk, but when it pays off, it can be a big reward. I don't know exactly how much money her parents gave her, but it wasn't enough to jumpstart Theranos. So, after Christian and Noelle's investment, Elizabeth called on some old family friends, like their former neighbors, the Drapers. Tim Draper listened to her pitch, mostly because Elizabeth had been his daughter's best friend. But what might have started as a favor

quickly turned into real interest. Now, to be clear, Elizabeth didn't have a physical product at this point, but she did have an engineer who was supposedly working on one. His name was Shannick Roy. He'd worked with Elizabeth in Dr. Channing's lab, and he saw the potential in it too. So

when Elizabeth asked him to join her as the company's co-founder and primary engineer, he said yes. Knowing that Shannick was already working on the prototype was all Draper needed to hear. Afterwards, he handed Elizabeth a check for a million dollars to invest in the company. But Draper's support was about more than just money. Given his reputation as a successful venture capitalist, his endorsement also meant Elizabeth was getting a serious boost in credibility. Still, not everyone was jumping to get a piece of Theranos. The next month, in July of 2004, Elizabeth met with five partners at MedVenture Associates.

Unlike the others she'd pitched so far, these people specialized in medical technology startups. Which meant they had a lot of questions. Elizabeth tried to dance around their concerns, but they saw through her act. Truth was, she couldn't get into the engineering and chemistry her idea would involve because she didn't really understand the concepts herself. After about an hour of trying to convince MedVenture through sheer optimism, the VC firm turned her away. But Elizabeth wasn't deterred. She had faith that Shannick could figure out how to make it work. Shannick wasn't so sure about that, though. While Elizabeth was busy looking for more investors, he was in their Bay Area lab

tinkering away. And the deeper he got into the development process, the less certain he was that he could get the tiny patch to do what Elizabeth wanted it to do. Shannick convinced her to pivot to a handheld device, like what diabetic people use to test their blood sugar. Still small, still portable. But even with the slightly larger device, Shoneck wasn't sure it could test for everything under the sun like Elizabeth had told investors it would. But Elizabeth didn't care. She told him to keep trying. While Shoneck sweated over the product, Elizabeth refined her sales pitch. She promised investors the prototype was

around the corner. And most of the time, people believed her. As a result, 20-year-old Elizabeth rounded out 2004 with a total of $6.9 million in seed funding. Thanks to her first investors, Theranos was now valued at an impressive $30 million. Before the product was even made. In the new year, Elizabeth looked to keep the momentum going. Which meant series fundraising. Series fundraising typically happens after the seed round. In each step of this type of fundraising, companies are expected to hit certain milestones. Series A, the first round, is all about development. It's when investors look

at the basic business plan. Is the business model viable? What kind of profits is the company going to generate? If the answers to all of those questions sound promising, investors will keep pumping capital into the company. During Elizabeth's Series A funding, she told potential investors that the plan was to partner with major pharmaceutical companies. She wanted these companies to use her product during clinical trials when they were testing new treatments and procedures. Running clinical trials is incredibly expensive. If there was a way to make the process cheaper and easier, Elizabeth was betting the pharma giants would want in.

Her investors agreed. By the time her Series A was finished in February of 2005, Theranos had raised another $5.8 million. Most of that money went into developing the actual product. But by November, Shonic had bad news. The handheld device they'd decided on still couldn't do what Elizabeth wanted. That's when they were forced to pivot the prototype again. The mechanics are complicated, so I'll do my best to try and explain it as simply as

I can. Basically, the blood sample, which Elizabeth wanted to be taken through a finger prick, went into a small, credit card-shaped cartridge for testing. After that, the cartridge was inserted into a toaster-sized box for analysis, which read the data and sent it to a computer to be analyzed. It was a far cry from the tiny sleek device Elizabeth had promised investors. But she needed something to show for all the money they'd handed over. So with the logistics in place, Elizabeth and Shannick were finally able to put together a prototype that

they called Theranus 1.0. The thing was, it also didn't work. But Elizabeth kept pushing. Now she'd brought in a team of engineers to get the device to function. But there were a few issues, like the fact that Elizabeth wanted to keep the blood sample to no more than a drop. Her engineers told her that was impossible. They needed a larger sample than that to work with.

So the team decided to dilute the samples with saline solution, but that might not get them the most accurate results. Still, Elizabeth didn't seem to care. She was already living in the future, imagining a world where Theranos 1.0 was being mass-produced and shipped around the world. In fact, she'd already spent $2 million on an automated packaging line to pump out thousands of devices. Between her reckless spending and the cost of research and development, Theranos needed more money fast.

So in February of 2006, Elizabeth opened Theranos' Series B round of fundraising. If Series A is all about development, Series B is all about growth. Typically, if a company has made it this far, they need more cash to expand operations. Which means they need to show investors their significant demand for their product or service, and they need the capital to meet it. When Theranos held their Series B, all they had was that barely functioning prototype. But Elizabeth didn't tell her investors that, which worked out because they didn't ask to see the product in action.

At this point, the business plan was more important. So once again, Elizabeth was able to convince some heavy hitters to come on board. Her biggest gets were Donald Lucas and Larry Ellison. Don Lucas was a legendary venture capitalist who was well into his 70s. If he really believed in a company, he liked to take the CEO under his wing. Which was what he had done with Elizabeth's other big investor, multi-billionaire Larry Ellison. Ellison's company, Oracle, had made him and Don Lucas extremely rich in the mid-80s.

And it seemed like they both saw themselves in Elizabeth. Not only did they invest, but Lucas became the chairman of Theranos' board of directors. With such prominent investors joining them, Theranos finished their Series B with another $9.9 million. Elizabeth was riding high and looking to fill out the rest of her C-suite with more big names. In March of 2006, the 22-year-old hired Henry Mosley as CFO. Mosley had decades of experience working with major

Silicon Valley companies. Honestly, he was a little overqualified to be working at a three-year-old startup. But Theranos was different. It was the shiny new toy that everyone in the Valley wanted to get their hands on. That fall, Elizabeth's series C round of fundraising became her most successful yet, putting Theranos on track to keep growing. It brought in $28.5 million, which bumped the company up to a valuation of $165 million. But with so much at stake, Series C investors were expecting success. And typically, they wanted to see the product they were funding in action.

By this point, Elizabeth had been fooling her investors for years, keeping them on the hook with empty promises. Everything had been leading up to this moment, and she still didn't have a functioning device. So, she decided it was time to take her con to a whole new level. One that would fool even the most discerning investors. During their live demos, her CFO, Henry Mosley, would take a group of investors into lead engineer Shannick Roy's office. Investors watched as Shannick pricked his own finger and loaded a few drops of blood

into a cartridge, which he then fed into the reader. Once the reader got what it needed from the cartridge, the data went onto a server that analyzed and sent back the results. Sometimes. More often than not, the system did a whole lot of nothing. But Elizabeth couldn't risk that happening in front of investors. So she told Shonek to use a pre-recorded result from one of the times it did work. AKA, she duped her investors right in front of their very eyes. And it took the heat off of Elizabeth,

at least for the time being. She was free to keep chugging along. In November of 2006, the 22-year-old flew to Switzerland to meet with executives from Novartis, a multinational pharmaceutical corporation. She took two Theranos 1.0 devices and a small group of her employees with her. As usual, she used a fake result to make it look like the machine worked. Novartis had no idea the whole thing was a sham. They weren't

ready to sign on just yet, but the demo was enough to keep the conversation going. Elizabeth was thrilled, but her CFO Henry Mosley noticed the rest of the team wasn't too happy. After asking around, Shoneck told him Elizabeth had faked the demo. Not only that, but Shoneck finally confessed that he'd been faking them too. Mosley had no idea. He thought he'd been selling people on a functioning, reliable system.

In reality, all he'd done was scam investors out of tens of millions of dollars. But when he tried to sound the alarm, it was his head on the chopping block. How far would you go in your pursuit of the American dream? Would you put in the work? Would you take a big risk? Would you cheat? Would you lie? Would you lie? Were they shot? Were they shot? Would you kill?

I'm robbing dad! I'm robbing right dad! I'm Jeremy Schwartz, and I'll be taking you inside the minds of some of our most notorious felons and outlaws, exploring the dark side to the American dream. You'll meet the picture-perfect brothers who teamed up to kill their parents, the thief who stole babies and ruined countless lives, the crypto king who siphoned off billions in the name of saving the world, and plenty more. From assassins to gangsters to killers and con artists,

whatever the case, whoever the criminal, you don't know the full story until now. Go to AmericanCriminal.com or search for and follow American Criminal wherever you get your podcasts. By November 2006, Elizabeth Holmes was the CEO of a multimillion dollar company. At just 22 years old, she had no plans of slowing down anytime soon. She claimed Theranos' product was almost ready to hit the shelves, although the reality was very different. Of course, she didn't want the pharmaceutical companies she was in talks with to know that. That month, Elizabeth completely faked a demonstration in front of reps from the pharmaceutical giant

Novartis. And although the company didn't catch on, some people at Theranos were starting to ask questions, including its CFO, Henry Mosley. After Mosley learned that the Theranos 1.0 device was a total dud, he wanted to give her the benefiteranos 1.0 device was a total dud, he wanted to give her the benefit of the doubt. She was young and a first-time CEO after all. Maybe she didn't realize how serious the consequences of that kind of deception were. But when he told Elizabeth they had to stop the fake demos, she fired him for not being a quote, team player. And with Mosley gone,

Elizabeth was ready to up the ante by using the Theranos 1.0 on actual patients. In August of 2007, Elizabeth convinced Pfizer to let her test the machine on some patients in Tennessee with terminal cancer. The idea was for them to someday have a Theranos device in their homes so they wouldn't need to travel for blood tests. Somehow they managed to successfully draw a couple samples.

But it was obvious that Theranos 1.0 was nowhere close to being ready, no matter how badly Elizabeth wanted it to work. So she reluctantly agreed to abandon the current system entirely. Instead of reinventing the wheel, Thernos would simply use machines to automate the steps most labs had people doing. It wasn't the revolution Elizabeth was promising, but in theory it could save a lot of time and money. The resulting machine was dubbed the Edison. The Edison had a small robotic arm that was programmed to follow the steps a human chemist

would normally perform. It was bigger than the Theranos 1.0, but still only about the size of a printer. It wasn't exactly groundbreaking, but it functioned a lot better than the Theranos 1.0 ever did. Which wasn't saying much, considering the old model didn't work at all. It was enough for Elizabeth to paint a very rosy picture for her investors, some of whom had joined the board of directors. By mid-2007, legendary venture capitalist Don Lucas was chairman, while Elizabeth's former advisor, Dr. Channing Robertson, was also on the board. They were an impressive bunch, but none of them were medical experts, not even Dr. Robertson,

who was more of a chemist. Still, new investors didn't seem to take issue with that. After four short years, Theranos was already valued at $165 million. But Elizabeth couldn't fool everyone. Even with Henry Mosley gone, there were still a few people at Theranos asking questions. Namely a guy named Avi Tevinian. Elizabeth had convinced Avi to join the board of directors the year before. Before that, he had been the head of software engineering at Apple since 1997 and was one of Steve Jobs' oldest and closest friends. Given Elizabeth's obsession with Steve Jobs, bringing someone like Avi on the board was a

dream come true. But as thrilled as Elizabeth was at first, her excitement quickly cooled, especially when Avi proved to be a little too good at his job. After attending a few board meetings, Avi started asking about the supposed deals Elizabeth was working on. She told him they'd already secured funding from several pharmaceutical companies, but Avi couldn't seem to find any of those numbers on the books. And Elizabeth kept avoiding him anytime he asked to see the contracts. His suspicions only grew in October of 2007.

That month, Elizabeth asked the board to donate some company stock toward a foundation she wanted to create. She said the foundation was for, quote, tax planning purposes. According to ProPublica, businesses and billionaires often create private foundations to get some serious tax breaks. Although these foundations are technically meant to be charitable, no one's really checking to make sure they are. So a lot of the time, they're used as tax shelters, which means anything donated to them,

money, our real estate, stocks, can't be taxed. While there's nothing illegal about creating a foundation to save on taxes, Avi suspected Elizabeth had another motivation behind it. He thought what Elizabeth really wanted was increased voting power in board meetings. As the head of the foundation, Elizabeth would own the stocks she was asking for. And the more shares she had, the more influential she'd become. Since Avi was already questioning her management abilities, he voted against her proposal. disabilities, he voted against her proposal. Elizabeth was pissed.

She went to Don Lucas, the chairman of the board, and told him she wanted Avi out. And he listened. When Avi came to Don with his concerns about Elizabeth, Don asked him to resign from the board. Avi was happy to go, and was later replaced by a guy named Tom Broding. But Elizabeth's issue with her board of directors were far from over. In March of 2008, when Elizabeth was 24 years old, two Theranos employees came to Tom with some concerns.

They told him things at Theranos weren't as great as they seemed. They said the revenue projections were inflated and the Edison machines didn't work the way they were supposed to. Tom brought the situation to Don Lucas' attention. This time he couldn't ignore the red flags waving in front of him and called an emergency board meeting. Elizabeth waited outside the room like a kid sitting by the principal's office. And after bending the rules time and again, the board decided to vote her out as CEO. And yet somehow, she was able to talk them out of it. Even more incredible, she had the employees who sounded the alarm fired.

By mid-2008, it was clear that no one could stand against Elizabeth. But without anyone looking over her shoulder, she was steering a sinking ship into uncharted waters. and she was going to go down with it. Thank you so much for listening. I'm your host, Nicole Lapin. Come back next week for part two of this wild story, where I also offer you some advice along the way. Money Crimes is a Crime House original. Join me every Thursday for a brand new episode.

Here at Crime House, we want to thank each and every one of you for your support. If you like what you heard today, please reach out on social media at Crime House. And don't forget to rate, review, and follow Money Crimes wherever you get your podcasts. Your feedback truly makes a difference. And for ad-free and early access to Money Crimes plus exciting bonus content, subscribe to CrimeHouse Plus on Apple Podcasts. Money Crimes is hosted by me, Nicole Lapin, and is a CrimeHouse original powered by PAVE Studios.

This episode was brought to life by the Money Crimes team, Max Cutler, Ron Shapiro, Alex Benedon, Natalie Persovsky, Lori Maranlli, Sarah Camp, Yelena Waugh, Michael Langsner, and Joanna Powell. Thank you so much for listening. What drives a person to murder? Find out from a licensed forensic psychologist on Hiller Minds, a Crime House original podcast. New episodes drop every single Monday and Thursday. Follow wherever you get your podcasts.