Elizabeth Holmes forced to answer questions about Theranos device claims: Part 9

The former Theranos CEO says "I don't know" more than 660 times during a 2017 deposition with Securities and Exchange Commission attorneys.
6:57 | 03/16/19

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Transcript for Elizabeth Holmes forced to answer questions about Theranos device claims: Part 9
Reporter: Elizabeth Holmes was the darling of sill valley was in a precarious spot. A bombshell article came out of accusing her company of deception. Elizabeth went on the offense. The tables are here, just like they were when we left. I was sitting right over in that booth over there. Reporter: Amidst the chaos, Elizabeth and her president and C.O.O., sunny balwani, called an all staff meeting in the cafeteria at theranos headquarters. We were all gathered in here. Elizabeth right in the middle there. There was probably like 500 people maybe. Then sunny got up and he basically called out John carreyrou for being a slanderous slimy kind of guy. And then he started this chant, of getting anyone to do it on three. Two words? Am I allowed to say them? You tell me. You carreyrou is what we chanted. Fists in the air and saying it. Let's not let the fac get in the way of the story! Sorry John. I thought it was crazy, but I didn't dwell on it too much because I was in the heat of, you know, reporting more stories and reporting the fallout. Were you buying it? At the time, yeah. When you're really committed to something you'll do whatever you need to do believe it. They really believed that the world, particularly the press, was out to get her. She was very nixon-like in that sense. She had her enemies list. Reporter: Elizabeth went on CNN to make excuses why patient results were off. There's a man that was suggesting the lab results from theranos weren't correct and he had a heart attack. I'm not the lab director. But you're the CEO of company and this is as serious as it gets. What I know is I put the best people together to investigate every aspect of this. I know they're doing that. Reporter: But Elizabeth's empire began tumbling down in a matter of months. Walgreens halted plans to open any new wellness centers, ultimately terminating its contract and suing theranos. The two companies settled for an undisclosed sum with no finding or admission of liability. Federal lab inspectors issued a warning that theranos tests "Pose immediate jeopardy to patient health and safety." Forbes cut Elizabeth's net worth from $4.5 billion to zero. And amidst all of this, sunny and Elizabeth called it quits. The sort of romantic piece that was there at the very begined died. Reporter: Both personally and professionally sunny left theranos in may 2016. And then the biggest blow yet. Elizabeth was now under the harsh glare of a very different kind of spotlight. Ms. Holmes, please raise your right hand. Reporter: She was finally forced to answer to the securities and exchange commission as she was investigated for an alleged elaborate years-long fraud. Do you swear to tell the truth, the whole truth, and nothing but the truth? I do. Reporter: Suddenly, the woman who had always seemed to have all the answers -- We are the only lab company that is actually really focused on leading with transparency. Reporter: -- Now had none. I don't know specifically. I'm not sure. I don't know exactly. I would be speculating. I just don't know. Reporter: Claiming ignorance more than 660 times. Elizabeth's carefully crafted narrative began to unravel. There were those hundreds of blood tests she said her signature technology could supposedly perform. Making it possible to do any lab test from a tiny drop of blood from a finger. How many tests could it run at that time in 2010? I don't know exactly what the number was. There was probably tens of tests. So when you say "Tens of tests," you mean something less than 100? Yes. Reporter: And those claims she allegedly pedaled to high powered board members -- Was theranos' technology deployed in emergency rooms, hospitals, and provider offices? No. Was a theranos-manufactured device ever deployed in the battlefield? No. Was it ever deployed in a medevac helicopter? No. Reporter: She was challenged sentence by sentence on what she told Roger parloff in that star-making "Fortune" cover story. Is the statement that theranos currently offers more than 200, and is ramping up to offer more than 1,000, of the most commonly-ordered blood diagnostic tests, all without the need for a syringe -- was that statement correct? Reading it now, I don't think it is. Reporter: And, as for those assertions that all tests were done on their own proprietary device? Did you tell Mr. Parloff that most of theranos' tests were run on commercially available analyzers? I -- I don't think so. Reporter: Sunny balwani, her former lover and C.O.O., was also questioned about the claims in that "Fortune" article. There's a paragraph that begins "Theranos, which does not buy analyzers from third parties, is therefore in a unique position." Was that a true statement in June of 2014? No, it was not. Were you worried that if Mr. Parloff wrote an article mentioning only theranos' manufactured devices, that people would be given an inaccurate impression of how theranos was conducting its patient testing? Not at the time. Because at the time I thought it was all about the aspiration and the vision. Looking back at it now, I absolutely wish we had handled our communications differently. Reporter: Roger parloff later wrote another, very different article. The title? "How theranos misled me." This divide between Elizabeth's grandiose vision versus reality became clear, through lengthy depositions with Elizabeth and sunny, and people on the inside. Now, the S.E.C. Was now ready to bring civil charges. Elizabeth Holmes charged with massive fraud. Raising funds through fraud. She and the government settled the case. Reporter: Elizabeth settled with no admission of wrong doing. She got off with a slap on the wrist, but the story's not over yet. Reporter: She was about to be face criminal charges for multiple counts of fraud which could land her decades in jail, if convicted. I would be shocked if she didn't finish this behind bars. But Allstate actually helps you drive safely...

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