Elizabeth Holmes and the Downfall of Theranos

Elizabeth Holmes faces multiple charges of fraud, while Theranos was shuttered last year.

Therapy and diagnosis. 

The two words formed the basis of the name Theranos, a company once hailed as innovative for its breakthrough technology that claimed it could perform hundreds of lab tests using only a couple drops of blood.

But it was a "massive fraud," SEC investigators say, perpetuated by the company's founder and CEO Elizabeth Holmes. 

The story is featured in the HBO documentary "The Inventor: Out for Blood in Silicon Valley," airing Monday at 9 p.m. It is also laid out on the six-part ABC News podcast "The Dropout."

The Beginning

At the tender age of 19, Elizabeth Holmes dropped out of Stanford University to pursue her company, Theranos. Holmes had come up with an idea to make a skin patch that would test for infectious diseases in the blood and then deliver antibiotics to treat the illness. 

It was ambitious, but ludicrous, Dr. Phyllis Gardner, a professor of medicine at Stanford, told ABC News. Gardner said she told Holmes as much. 

“[She] just kind of blinked her eyes and nodded, and left. It was just a 19-year-old talking who'd taken one course in microfluidics, and she thought she was gonna make something of it,” Gardner said. 

She wrote a patent for it, though the idea later changed to a device that would run any blood test with just a couple drops.

After dropping out of college to devote more time to Theranos in March 2004, Holmes went on to raise a staggering $6 million by December of that year. 

The company's meteoric rise continued for years after. Holmes, a staunch admirer of Apple founder Steve Jobs, poached employees from the company as she built up her own. 

“When I was asked to meet this particular person who was leading this stealth startup, I didn't know what it was at that time, and it was a bit of a clandestine meeting," former Theranos employee Ana Arriola, who also helped design the iPhone, told ABC News. "And it turned out to be Elizabeth Holmes. We had a great conversation."

Arriola was hired to design the aesthetic of Theranos' devices, including the famed Edison, the machine that was supposed to run all the tests on one or two drops of blood, but she said that Holmes turned to her for fashion advice as well. Holmes eventually began to channel Jobs in more ways and could often be seen wearing black turtlenecks like the Apple founder. 

But while Holmes' passion drew top talent to the company and convinced wealthy venture capitalists to invest in it, employees say it quickly became apparent that the technology they were working on wasn't scientifically possible. 

“Elizabeth did do a great job of recruiting amazing people," said Justin Maxwell, a former Apple employee who joined Arriola's team at Theranos, according to ABC News. "I would watch those people that I trusted disappear. Our office was right next to the general counsel and the head of business development, both of whom were people I had tremendous admiration for. They were extremely sharp and knew the industry very well and they just vanished."

Arriola and Maxwell later resigned. Arriola said that she resigned after Holmes gave her an ultimatum. "She basically conveyed to me that I should not intervene that this is an incredibly critical juncture in the company's current fundraising," Arriola told ABC News. "And I was like, that's unacceptable from an ethical perspective. I just can't stomach it."

Maxwell followed shortly afterward. In his resignation letter, he accused Holmes of lying. 

“I wish I could say better things," he wrote, according to the letter obtained by ABC News. "But I think you know exactly what is going on at Theranos.... Lying is a disgusting habit and it flows through conversations here like it's our own currency. But I really truly believe you know it already. And for some reason, I can't figure out why you allow it to continue.”

A Scientist's Suicide

Among the high-profile hires was Ian Gibbons, a British scientist tasked with actually developing the technology Theranos promised.

Gibbons, according to Vanity Fair, was hired in 2005 and soon discovered that Holmes had a great idea that simply wasn't feasible. Still, he felt duty-bound to try "every possible direction and exhaust every option," Vanity Fair reported. 

This went on for years — Holmes continued to raise more and more money as Gibbons attempted to get the technology to work, all while dealing with a cancer diagnosis himself.  

Theranos eventually developed a partnership with Walgreens on the basis of the promise of the technology, a thought that panicked Gibbons, his wife, Rochelle, said. He knew the technology wasn't ready, nor would it likely ever be ready, she said.

It was a real conundrum, though. He didn't want to lose his job and he didn't want to jeopardize the jobs of his fellow Theranos employees, but he worried that costumers using Theranos' technology — which didn't work reliably — might be affected. 

“Ian felt like he would lose his job if he told the truth,” Rochelle told Vanity Fair. “Ian was a real obstacle for Elizabeth. He started to be very vocal. They kept him around to keep him quiet.” 

It was May 2013 when Gibbons received a phone call that Holmes wanted to meet with him amid a lawsuit for which Gibbons had been called to testify. 

“Do you think she’s going to fire me?” Rochelle said her husband asked her. She replied in the affirmative. 

The next morning, Rochelle discovered Gibbons barely breathing, having overdosed on acetaminophen. He died a week later.

Things Fall Apart

Theranos' growth continued unimpeded following Gibbons' death. 

In April 2015, Holmes was labeled one of the Most Influential People in the World by Time, with a write-up by Henry Kissinger, former U.S. Secretary of State and then a Theranos board member. Then, in May, Holmes was named the youngest self-made female billionaire in America by Forbes, thanks to what was at that point a $9 billion valuation of the company. A few months later, AZBio named Theranos 2015's Bioscience Company of the Year. 

But an article in the Wall Street Journal in October of that year brought everything crashing down. 

A story by reporter John Carreyrou revealed that Theranos was not using its Edison machine, but rather traditional blood testing mechanisms, as the Edison provided at times inaccurate results.

The information came from whistleblower Tyler Shultz, the grandson of a then-member of Theranos' board of directors, George P. Shultz. Tyler had worked for the company for a year and after noticing the issues, brought them to management, but he said they did not act. It was at that point he sought out Carreyrou and reported Theranos to the New York State Department of Health.

Theranos disputed the story, saying it was "factually and scientifically erroneous and grounded in baseless assertions by inexperienced and disgruntled former employees and industry incumbents."

But by April 2016, Theranos was officially under criminal investigation by the Securities and Exchange Commission and federal prosecutors. It was also sued by Walgreens for continuous breaches of contract. Walgreens claimed that it was misled by Theranos. The suit was later settled out of court. Theranos denies any wrongdoing.

About two years later, in March 2018, Holmes reached a settlement with the SEC and agreed to pay a fine of $500,000, among other penalties. 

In May 2018, Holmes was charged with multiple counts of fraud for misleading investors, government officials and consumers about Theranos' technology. Holmes denies any wrongdoing and has pleaded not guilty. She is awaiting criminal trial and faces a prison sentence of 20 years, if convicted.

In September 2018, Theranos officially shuttered its doors. 

Nowadays, Holmes is living in San Francisco and is engaged to an hospitality heir, according to a recent profile in Vanity Fair. "She wears his M.I.T. signet ring on a necklace and the couple regularly post stories on Instagram professing their love for each other," the article reads. "She reliably looks 'chirpy' and 'chipper.' She’s also abandoned the black turtleneck look and now dresses in athleisure."

Inside Edition's cameras recently found her walking in San Francisco with her boyfriend. Holmes has traded in her signature black turtlenecks for yoga pants. She was hiding behind a pair of mirrored wire-rim glasses and a ball cap. The disgraced biotech billionaire was prancing around, sporting some bling — perhaps an engagement ring from her new beau.

She didn't answer Inside Edition Chief Investigative Correspondent Lisa Guerrero when she asked her about the recent HBO documentary about her, "The Inventor: Out for Blood in Silicon Valley."

According to two people who spoke to Vanity Fair, Holmes claims she is regularly approached on the street by people who hope she will rebuild herself.

Former Theranos employees paint a different picture, however, telling the magazine that they struggle to find work to this day, thanks to the company's infamy.

In addition to "The Dropout" and "The Inventor," the story of Holmes and Theranos is being developed into a movie starring Jennifer Lawrence called "Bad Blood," based on Carreyrou's book of the same name.