trumpet.jpg
Play Live Radio
Next Up:
0:00
0:00
Available On Air Stations
Business

Theranos whistleblower welcomes the guilty verdict against Elizabeth Holmes

A MARTINEZ, HOST:

A jury, earlier this week, found former Silicon Valley superstar Elizabeth Holmes guilty of fraud. It was welcome news to one group of people, the whistleblowers who exposed Holmes and her former blood testing startup Theranos. NPR's Bobby Allyn caught up with the first employee to report Holmes to government regulators.

(SOUNDBITE OF KNOCKING)

BOBBY ALLYN, BYLINE: Hey, Tyler?

TYLER SHULTZ: Hey, Bobby.

ALLYN: Good to meet you.

SHULTZ: Hey. Great to meet you.

ALLYN: This is Tyler Shultz. In 2011, he was visiting his grandfather, former Secretary of State George Shultz, at his home near the Stanford campus. His grandfather wanted him to meet someone. Her name was Elizabeth Holmes.

SHULTZ: She was wearing her all-black outfit, turtleneck. She had those deep blue, unblinking eyes, heard her deep voice.

ALLYN: And she started talking about Theranos. The idea was to make blood testing faster and easier and processed on an innovative device Holmes created called the Edison. Shultz, a biology major, was intrigued.

SHULTZ: She instantly sucked me into her vision. And I asked her, is there any way that I can come work at Theranos as an intern after my junior year?

ALLYN: And he did. Eventually, he became a full-time employee. Shultz had worked countless hours in a lab, and he soon realized something amiss when he looked inside Holmes' so-called miracle device.

SHULTZ: There is nothing that the Edison could do that I couldn't do with a pipette and my own hand.

ALLYN: Then he noticed that when Theranos complied with safety audits, it was running tests not on the Edison, but on big commercial lab equipment. That didn't seem right.

SHULTZ: It was clear that there was an open secret within Theranos that this technology simply did not exist.

ALLYN: This emboldened Shultz to blow the whistle. He contacted state regulators in New York. He worked with then-Wall Street Journal reporter John Carreyrou to reveal Theranos' problems.

SHULTZ: The path of least resistance was certainly just to quietly quit and move on with my life. And that's actually exactly what my parents (laughter) advised me to do when I was a, you know, 22-year-old kid fresh out of college.

ALLYN: But he chose the harder path, and that involved confronting his grandfather, a legendary statesman, who was on the Theranos board. He says it didn't go over well.

SHULTZ: He didn't believe me. He said, Elizabeth has assured me that they go above and beyond all regulatory standards. I think you're wrong is what he told me.

ALLYN: Blowing the whistle on Theranos turned into a nightmare. Besides having a falling out with his grandfather, he was dealing with private investigators Holmes hired to follow him. Lawyers tried to intimidate him. Holmes sought to destroy his life. Now 31, he watched the trial from afar. He did show up once during closing arguments and sat in the overflow room. He says seeing the trial firsthand provided him with some closure, but he also didn't want to cause a scene.

SHULTZ: You know, I had a jacket on. I had my hood pulled down, like, past my eyes so that nobody would recognize me.

ALLYN: Reporters did recognize him, but he wasn't ready to speak. Then on Monday, at his San Francisco apartment, his phone buzzed with a text from his wife.

SHULTZ: She was at work. She texted me, all caps, guilty.

ALLYN: When the full verdict was read, acquitted of four counts, undecided on three but convicted on four fraud-related charges, his family knew what to do.

SHULTZ: They said, come on down. We're popping Champagne. We're celebrating.

ALLYN: He says it's a celebration of the saga reaching an end more than Holmes being found guilty. But he thinks that's what she deserves. These days, Shultz is running his own biotech startup. He's pitching investors. He's making promises.

SHULTZ: I am under pressure to exaggerate technology claims. Sometimes investors will straight up tell you, you need to double, quadruple or 10x whatever revenue projection you think is realistic.

ALLYN: The experience has him thinking a lot about his now notorious former boss.

SHULTZ: I can see how this environment could create an Elizabeth Holmes.

ALLYN: Shultz was on the government's witness list. He was never called to the stand. But he did imagine a scenario, partially in jest. If he did have to testify, he was going to bring an Edison device with him.

SHULTZ: Let's prick the judge's finger and see what happens. And it wouldn't work. I knew with 100% confidence that would never happen. They would never be able to prove me wrong.

ALLYN: The jury, in delivering its verdict that Holmes lied to investors, did, indeed, believe Shultz.

Bobby Allyn, NPR News.

(SOUNDBITE OF MELODIESINFONIE'S "AO LONGO DO RIO") Transcript provided by NPR, Copyright NPR.