0:00 In 2014, Theranos told its investors it made one hundred million dollars in revenue.0:07 The real number was one hundred thousand.0:10 Last week, we talked about chasing the shadows where corporate crime hides—today, we’re dragging one of the biggest frauds of the 21st century directly into the light.0:24 This is the story of a company once valued at nine billion dollars, built on a single drop of blood… and a sea of lies.0:34 The story starts with a name: Elizabeth Holmes.0:38 A nineteen-year-old Stanford dropout with a compelling vision.0:43 She wanted to revolutionize healthcare.0:47 No more big needles.0:48 No more waiting for lab results.0:51 Just a tiny fingerprick, a small box called the Edison, and a complete health profile in minutes.0:59 It was a beautiful idea.1:01 It was also a fantasy.1:03 Holmes raised over seven hundred million dollars from investors.1:08 She packed her board with powerful old men—George Shultz, Henry Kissinger—who lent her credibility she hadn't earned.1:18 They saw the next Steve Jobs.1:21 They bought the black turtleneck.1:24 They bought the deep, affected voice.1:27 They bought the nine-billion-dollar valuation.1:31 But inside the walls of Theranos, the engineers knew the truth.1:36 The Edison machine didn't work.1:38 It produced wild, inaccurate results.1:42 So what did the company do?1:44 They cheated.1:45 When doctors and patients sent in blood samples, Theranos employees would secretly run them on standard, commercially available machines from companies like Siemens.1:59 They just weren't telling anyone.2:02 The entire operation was a charade.2:05 Holmes and her second-in-command, Sunny Balwani, ruled through fear and secrecy.2:11 They demanded absolute loyalty.2:14 The incentive was simple: keep the story alive.2:18 Because the story was the only thing keeping the money flowing.2:23 The moment the story died, the company died.2:27 So they lied to investors.2:29 They lied to partners like Walgreens.2:32 And they lied to patients about the reliability of their tests.2:38 Then, an investigative journalist got a tip.2:41 John Carreyrou at The Wall Street Journal started asking questions.2:47 He found sources—brave employees willing to break their non-disclosure agreements.2:54 Theranos fought back.2:56 Hard.2:56 They hired David Boies, one of the most feared lawyers in America, to intimidate and threaten Carreyrou’s sources.3:06 They put immense pressure on the Journal's owner, Rupert Murdoch—who was also a Theranos investor—to kill the story.3:15 For a moment, it looked like they might succeed.3:19 But in October 2015, the bombshell article dropped.3:24 The fantasy world shattered.3:26 The fallout was swift.3:28 Regulators shut down their labs.3:31 Walgreens pulled out.3:32 The SEC charged Holmes and Balwani with massive fraud.3:37 The company that promised to change the world laid off hundreds of employees.3:43 But here’s the part of the story that often gets missed.3:48 Who benefits from a collapse?3:51 In December 2017, with the company bleeding cash, a hedge fund called Fortress Investment Group loaned Theranos one hundred million dollars.4:02 The terms were predatory.4:04 Fortress knew Theranos would default.4:08 And when it did, Fortress took control of the company’s only real asset: its patents.4:15 All one thousand, one hundred and seventy-five of them.4:19 Fortress got them for pennies on the dollar.4:23 They can now sell them, license them, or sue other biotech companies for infringement.4:30 Holmes lost.4:31 The employees lost.4:33 The investors lost.4:35 But the firm that showed up to pick at the bones… they walked away with the intellectual property, ready to monetize the wreckage.
