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Here is a deep dive into the anomalous board of the now-defunct biotech startup Theranos. Theranos, a fraudulent company that ostensibly aimed to make “MiniLabs” that could perform dozens of tests from a single drop of blood, had a board consisting of “Deep State” figures including former Secretary of State and National Security Advisor Henry Kissinger, former Secretary of State George P. Schultz, retired US Navy Admiral Gary Roughhead, former US Secretary of Defense William J Perry, former Secretary of Defense James Mattis, and former Senator Sam Nunn, and aimed to develop mass-scale blood testing for diseases including Zika virus disease; leading some to speculate the company, and Holmes, were simply a cover for developing the kind of mass-scale testing that was rolled out for COVID-19.
Like the events surrounding the 9/11 attacks or the 2008 subprime mortgage crisis, the story of how infamous Silicon Valley biotech startup Theranos came to a fiery and unflattering end has now been solidified as a permanent fixture in the media: It was the company’s founder, Elizabeth Holmes, who almost single-handedly was able to dazzle and deceive everyone from her investors to her employees to the Food and Drug Administration (FDA). A hat trick of fraud she was able to execute thanks to her charm, beauty, and often-touted brilliance.
But while the con artist angle of Theranos’ meteoric rise and catastrophic downfall is easy enough to swallow—and indeed plays well for podcast series and tabloid articles—there are several (glaring) proverbial plot holes with the story. The biggest of which is how, exactly, did Holmes manage to dupe her board of directors? A board consisting of ultra-powerful players in the top echelons of national security and foreign policy, including, amongst others, the following figures:
George P. Schultz — former US secretary of state
Gary Roughhead — retired US Navy admiral
William J. Perry — former US secretary of defense
Sam Nunn — a former US senator who served as Chairman of the Senate Armed Services Committee and the Permanent Subcommittee on Investigations
James N. Mattis — a retired US Marine Corps general (who served as the US secretary of defense from 2017 to 2019, after Theranos’ collapse)
Henry A. Kissinger — former US secretary of state and national security advisor
William H. Foege — former director of the Centers for Disease Control and Prevention (CDC)
William H. Frist — a former US senator and heart and lung transplant surgeon
Again, the mainstream Theranos narrative would have you believe that Holmes—who dropped out of Stanford after her freshman year to found the biotech startup that ostensibly aimed to build a machine that could run myriad tests on a single drop of blood—was simply able to con all of these people, and the other board members including former CEO of Wells Fargo Richard Kovacevich, billionaire venture capitalist Donald Lucas Sr. (who even served as chairman), and Riley P Bechtel., chairman of the board of the Bechtel Group Inc.; a 109-year-old construction company with $40 billion in revenue that was responsible for “epic” projects such as the Hoover Dam and the Trans-Arabian Pipeline.
But the idea that Holmes was able to pass off a company so fishy it could have a stall at the Huanan Seafood Wholesale Market in Wuhan, China to a group of well-established power players with finely honed bullshit detectors is just as absurd as the “MiniLab” Theranos was supposed to bring to market. Not only because of how powerful these board members were, and still are, but also because of their ages; Fortune Senior Editor Jennifer Reingold wrote in a 2015 article dubbed “Theranos’ board: Plenty of political connections, little relevant expertise,” that the average age of the company’s board members was 80 years old.
Furthermore, as the title of Reingold’s article highlights, not only were the Theranos board members powerful and elderly, but they also largely had experience that was utterly irrelevant to the company’s supposed technology and mission.
As Forbes noted in a 2016 article dubbed “The Theranos Crisis: Where Was The Board?” the makeup of the board had “done very little for its credibility in the medical technology industry.” Writer Pamela Wasley added “The board appears to have been assembled primarily to secure influential government connections, rather than to govern with solid industry insight, product knowledge and operational expertise.”
Furthermore, Wasley added that “the board never pushed for proof of the product’s efficacy, either because they did not know any better—having no industry experience—or because they were not encouraged to be vigilant and involved.” The writer clarified that “no one demanded the proper data… [which was] ultimately the board’s responsibility.”
Heaping more criticism on the board, in an article titled “Theranos and the Tale of the Disappearing Board of Directors,” the Idaho State Bar wrote “There is no indication that any other board member [aside from Holmes], however, was even interested in asking questions or challenging Holmes.” The Bar article went on to say that “Theranos’s board was window dressing… From a compliance perspective… .”
Even Vox took a slug at the board with a 2015 article dubbed “How a culture of secrecy set Theranos up for failure.” In the article author Timothy B. Lee noted that “This is obviously a distinguished group, but it’s not necessarily a great board for a biotechnology startup.” Lee went on to write “In the world of defense contracting, it’s not unusual to have secretive projects that cost tens of millions of dollars and take a decade to complete. But there was apparently no one on the board to point out that this approach doesn’t work very well for technology startups.”
While all of these outlets fully acknowledged the strangeness of Theranos’ board’s makeup in age and expertise, they all uniformly concluded that Holmes—with her blond hair and Steve Jobs-ian black turtleneck—was able to dupe them just like she did everyone else.
But if one takes this—ridiculous—theory at face value, it still doesn’t answer several major questions about the relationship between the board and Holmes, as well as the board’s not just disinterest, but outright dismissal of multiple whistleblowers who came forward with claims of fraud. Plus the question: How, exactly, did Holmes—again, a 19-year-old dropout with no relevant experience—manage to meet these extraordinarily powerful people in the first place?
As it stands, the narrative offers several explanations for this mysterious eloping of Holmes with her team of Deep State leaders. The first being a strong tie between Holmes’ family and billionaire venture capitalist Tim Draper.
In an article—published in February of 2022, after Holmes was convicted by a jury on four counts of fraud—Katie Canales wrote in an INSIDER article that “[Draper] was once neighbors with the Holmes family and is also the father of her childhood friend.” The title of the article was “Billionaire investor Tim Draper says he still respects Theranos and convicted founder Elizabeth Holmes: ‘She didn’t lie to me'” and described how the famous Silicon Valley investor maintained his support for Holmes since the initial allegations against her.
This near-familial relationship between the Holmes family and Draper could serve as a reasonable (in this farcical context) bridge between Holmes and the power players on her board. The question of how Holmes was able to meet such a powerful venture capitalist is also answered de facto by this explanation.
It does not, however, answer the question of why board member and former Secretary of State George Schultz did nothing even when his own grandson alerted him to fraud happening within Theranos.
Schultz, who first met Holmes in his grandfather’s living room after being called to his house, describes in a 2022 interview with 60 Minutes (immediately above) the strangeness of the Elder Schultz’s response to word of fraud. Word of fraud that not only came from him, but also whistleblower Erika Cheung.
“I went to him with my concerns and he couldn’t really understand the points I was making and he said ‘Just move on with your life,'” Tyler says in the interview. He notes he did try to move on, but only a few months afterward had to interact with Holmes again when she came to Thanksgiving dinner at George’s house.
“It was extremely frustrating to know that he was being lied to and just would not listen to what I had to say,” Tyler adds in the interview. “Especially as a board member, I felt like this isn’t just a grandson talking to his grandfather, this is an employee talking to the board member of the company they both work for. And I felt like he really did not do his job as a board member into looking into my concerns. As far as I could tell.”
Tylers goes on to say “The really hurtful time was actually after all of this had come out. But it was no longer a question of whether or not Tyler is right or Elizabeth is right. It was Tyler is right. And he continued to support Elizabeth.” Tyler adds “that’s when it became unfathomable, where it felt like… it just felt like something else has to be going on here. ‘Cause it makes no sense.”
Despite Tyler’s inclination to feel like “something else had to be going on” besides above-board business practices, he, like all the major media outlets, notes in the interview that he ultimately pinned the blame on Holmes and her ability to fool even what could be considered some of the most prudent minds out there.
With even a kind interpretation of the standard narrative failing to hold water, what then, could’ve been the real relationship between Theranos’ board, Holmes, and the company as a whole? And why would active board members—not just passive investors—fail to not put oversights into place for the company, nor heed warnings from multiple whistleblowers?
Furthermore, how did Holmes manage to drain $600 million from big-time billionaire investors such as Education Secretary Betsy Devos, media entrepreneur Rupert Murdoch, Walton family heirs, and Oracle co-founder Larry Ellison? Not to mention millions from the company’s board.
While one may be inclined to look for some kind of money laundering scheme at the core of Theranos’ business and origins—as this writer was, especially considering the SBF/FTX scandal, particularly related to its political financing endeavors—author and expert portfolio manager Alex Krainer offers a far more succinct and plausible explanation. And one that ascribes a far more insidious motive, which potentially makes it all the more compelling depending on how pessimistic your worldview is.
In the video immediately above Krainer offers his take on the Theranos scandal, which appears to answer all of the aforementioned questions in a more than satisfactory manner. In fact, his outline of the events surrounding Theranos puts the story in a box and wraps a red bow around it.
Krainer spends the first ~half of the video picking apart the standard, “hugely implausible” Theranos narrative—specifically highlighting the absurdity of seasoned investors not doing their due diligence on such a risky startup with an untested founder.
Krainer digs deeper into the absurdity of the connection between Holmes and her board members and investors, highlighting clues as to the real story not offered by the mainstream narrative. Perhaps chief amongst those clues being her father’s prominent role in government and military circles.
As the portfolio manager notes, Holmes’ father, Christian Rasmus Holmes IV—who HNGN reports came from an “affluent family” and is a descendant of the Fleischmann bloodline, which established Fleischmann’s Yeast in 1868—has been: Chief Operating Office of the Office of US Foreign Disaster Assitance; Director of the US Trade and Development Agency; Senior Vice President of the Global Environment and Technology Foundation; and Vice President of the World Wildlife Foundation. Not to mention a Vice President at the infamous Enron, which exploded under the weight of its own catastrophic fraud.
Perhaps due to her father’s prominence (likely, this writer would say), Krainer notes Holmes was able to secure a position at Stanford Chemistry Professor Channing Robertson’s lab. Then, during a tour of Asia, Krainer says “she happened to have witnessed the SARS outbreak.” (That is, the first SARS outbreak identified in Foshan, Guangdong, China, in November 2002.) Indeed, as the Straight Times notes, “After the end of her freshman year, Holmes worked for a time at the Genome Institute Lab in Singapore to help develop systems to detect the Sars virus.”
Krainer notes Holmes’ first patent was filed in 2005—when she was still 19 years old—and outlined an “invention [relating] to an ingestible, implantable or wearable medical device comprising a microarray which comprises a bioactive agent capable of interacting with a disease marker… .” Holmes’ patent also described the invention having “a plurality of microchips comprising a microarray scanning device capable of obtaining physical parameter data of an interaction between [a] disease marker biological analyte with the bioactive agent.” (An analyte is a substance whose chemical constituents are being identified and measured.)
The patent also described the ingestible, implantable, or wearable device containing “an energy source to power the medical device” as well as “an interface device capable of facilitating communications between the microarray scanning device, biometric recognition device and the therapeutic agent releasing device.”
Along with Holmes’ fascination with SARS, her father’s prominence in government circles, and the way her patent lines up perfectly with say, digestible pills that have been pitched by Pfizer CEO Albert Bourla—read more about that via the post embedded immediately above—Krainer highlights the fact that whistleblowers like Schultz and Cheung weren’t just ignored by Theranos’ board, but were actively harassed.
After joining Theranos, Krainer says, Cheung discovered that Theranos’ MiniLab “produced very unreliable results and was scandalized that it was nevertheless used to diagnosis patients, potentially putting their health and lives at risk.” He adds Cheung brought these complaints to her superiors’ attention “but she was warned to keep quiet, intimidated, and placed under close and aggressive surveillance.”
Likewise, when Cheung and Schultz went to George Schultz directly, rather than being scandalized and upset with Holmes due to potential fraud, he brushed them off. Krainer also notes that “super-lawyer” David Boies, whose law firm has defended the likes of Harvey Weinstein in court—and was also on the board of Theranos for a time—also “had a hand in pressuring whistleblowers to keep quiet.” Krainer notes that “this indicates that he too was in the know about Theranos’ dark secret.”
Furthermore, Krainer notes that the case was eventually brought to the attention of Wall Street Journal reporter John Carreyrou, “who had broken several stories of corporate malfeasance and had extensive experience with surveillance and intimidation.” Even with that background, however, Krainer says that Carreyrou expressed that he was never under the kind of pressure that he received from Boies’ law firm in response to the Theranos story.
Indeed, in an interview with Yahoo! Entertainment, Carreyrou said that he saw Boies’ role in the Theranos story as that of a “scarecrow.” Carreyrou added in the interview that Boies’ tactics consisted of “thuggish behavior” and not the kind you’d “associate with a white-shoe law firm.”
Another oddity Krainer highlights is how desperate the board was to keep Holmes on as CEO, even after Carreyrou’s big WSJ story revealed Theranos as a scam. Theranos’ “powerful guardians continued to defend the venture and Elizabeth Holmes until the very last, in spite of the fact that events were shaping up to become a scandal of absolutely massive proportions.” Krainer notes Holmes was still CEO even after she’d lost the support of many of her employees and managers.
Prior to the company’s downfall, General “Mad Dog” Mattis, Krainer notes, even “gushed over [Holmes]” in a 2014 Fortune article, claiming “she has probably one of the most mature and well-honed senses of ethics… [including] personal ethics, managerial ethics, business ethics, [and] medical ethics that I’ve ever heard articulated.”
Critically, Krainer also notes how bizarre it was for Theranos to not only attract such a powerful board and prominent investors, but also major drugstore chains that should’ve been able to declare the biotech startup as DOA from the get-go. Pfizer, for example, teamed up with Theranos to draw and analyze blood from cancer patients. Walgreens also not only invested $140 million into Theranos without ever testing the company’s tech for itself, but, as Yahoo! Sports reports, even deployed the company’s machines to 40 of its stores before pulling the plug on the deal. Six years after the drugstore chain had signed on with Theranos.
Krainer even notes the Centers for Medicare & Medicaid Services (CMS), which is under the umbrella of the Centers for Disease Control (CDC), found that Theranos’ tests were jeopardizing people’s health. Fierce Healthcare reported in 2016 that CMS claimed “the deficient practices of the [Theranos] laboratory pose immediate jeopardy to patient health and safety.” It was not CMS’ alarming complaints that brought down the company, however. (Perhaps thanks to former CDC Director William Foege being on the company’s board?)
Taking all of this into consideration, Krainer steps back and re-analyzes the standard Theranos narrative, tying it to both the COVID-19 control scheme that’s been rolled out since 2020, as well as a broader control scheme using mass-scale testing that the so-called “elites” like billionaire (and legitimate psychopath) Bill Gates are thirsty to unleash upon the world.
Krainer highlights one particular video Gates put out on YouTube in early 2021—immediately above—in which the tech mogul and “philanthropist” describes a disease-response scheme involving “mega testing diagnostic platforms” that would be integral to a “global alert system.” These tests, Gates notes, “can be deployed quickly, cost very little, and test 20% of the [world’s] population every week.”
“Doesn’t [this] sound a lot like what Theranos was trying to build?” Krainer asks rhetorically. He adds that while promoting the biotech startup’s relationship with Walgreens in 2013 Holmes said that “We have an operational plan that will allow us to be within five miles of every person’s home through Walgreens that we’ve opened and continue to open nationally.” Krainer adds that, in other words, “Theranos’ plan was to build out the mega testing diagnostic infrastructure that would be needed to fight future pandemics. The explicit purpose of the infrastructure was to enable centralizing the healthcare process so that diagnostics, medication, and treatment, could all come from the same source.”
“Now that kind of a thing could explain [the board’s] excitement about Theranos,” Krainer says. Because “It would be a very powerful tool of population control in the hands of those who were lusting to wield it.” He adds “This agenda could explain the imperative of building network-connected mini-analyzers and distributing them widely so that they are available in the vicinity of every household.” It would also explain, the portfolio manager and author says, why the Theranos board consisted “almost exclusively of Deep State actors, but no medical doctors or healthcare experts” for the first 11 years of the company.
This explanation likewise explains why “the power players behind Theranos didn’t care whether the technology actually worked or not,” Krainer says. “It was not intended as an accurate diagnostic tool—we already had those. It was intended as an information weapon.” Krainer then contrasts Theranos’ tech with the PCR test that has been rolled out worldwide for COVID, saying that while labs are familiar with PCR, “Theranos’ technology would’ve remained hidden behind patents and intellectual property [meaning] the public would [not have been] given the opportunity to have the [MiniLabs] examined independently.”
Krainer goes on to speculate that Theranos’ tests were actually intended to be deployed “as an information weapon with which to manage future pandemics, convince the population that they were facing a health threat, that emergency measures were needed, and that this or that kind of medication would be recommended or mandated.”
Krainer notes the most logical reason Schultz, Kissinger, Mattis, et al. would risk their money and—more importantly—their reputations to invest in and defend Theranos is because its (faulty) technology was going to be deployed for this kind of control scheme. The portfolio manager says this is why the company was so valuable for the “king-maker class.” Not because of the investment potential or potential of the technology itself.
Considering this assumption, Krainer says we would expect to see said “king-makers” attempt to pull off this kind of fraud again, which he notes they are. Krainer says that at this time many nations are “preparing to abandon PCR testing and replace it with other kinds of tests.” He notes, for example, Bill Gates and George Soros are a part of a consortium that recently bought Mologic (now Global Access Diagnostics), “a leading developer and manufacturer of advanced lateral flow and rapid diagnostic technologies.” Of course this means COVID-19 tests as well.
“We’ve also seen focused commitment to offer faster, more reliable, and more widely available testing,” Krainer adds. “And the venture capitalist quest to democratize diagnostics with miniature network connected analyzers hasn’t withered either.” Krainer then highlights several companies working on such technology including Truvian, Athelas, and Genalyte. Indeed, in an article from late 2019 dubbed “With echoes of Theranos, Truvian Sciences revives the dream of low-cost, accessible blood tests” Jonathan Shieber writing for TechCrunch noted that “A little over a year after the dissolution of the once high-flying blood testing startup Theranos, another startup has raised more than $27 million to breathe new life into the vision of bringing low-cost blood tests to point-of-care medical facilities.”
Likewise, on Genalyte’s website, the company noted in a post from September of 2021 that “Silicon Valley still believes in the promise of easy blood tests despite the Theranos scandal.” The company added that “Silicon Valley still believes it can build a computer that can diagnose medical problems from drops of blood, even as the founder of failed start-up Theranos appeared in court this week on charges of defrauding investors with such a vision.”
“[T]he power players who brought us Theranos haven’t given up on their agenda,” Krainer says. He sums up the power players’ general strategy moving forward, saying that:
“If we heed the warnings from Bill Gates, we must expect to see more pandemics [and] mega-testing diagnostic platforms might spring up in our neighborhoods and we might be pressured to take those tests and believe the results they produce. The health authorities will save us from danger and will tell us exactly what’s expected to protect ourselves and others. This could be our childrens’ future and it is indeed a very dark vision.”
Krainer does, however, end his salient, potentially disturbing description of the Theranos story on a high note. In essence, he says that this powerful group of people who—conspired—to “pool their resources and create a technology that would manage and control the global response to pandemic[s]” did not stop moving forward, even after their vision turned out to be a “fantasy.” Implying that “their agenda was based on a grand deception from the get-go.”
While the powerful cabal’s venture launched and lasted for years with Holmes serving as the famous face of the enterprise (she was even added to the Harvard Medical School Board of Fellows and appointed by President Obama as a U.S. ambassador for global entrepreneurship), Krainer says “things didn’t have to be true. It was only necessary that ordinary people believed them.”
The silver lining, Krainer says, is the fact that despite the wealth and power of the Deep State actors connected to Theranos—as well as Holmes’ charm and beauty—a handful of the biotech’s employees still spoke out and all the money in the world couldn’t keep them quiet. Nor could that money “expunge the rot at the core of Theranos.”
Despite all the legal shenanigans and intimidation tactics from Boies, et al., the employees still wouldn’t be shut up. Krainer specifically credits just five people with bringing down the entire Deep State-backed Theranos fraud: Erika Cheung, Tyler Schultz, Ian Gibbons’ widow, Richard Fuisz, and John Carreyrou. Krainer credits Richard Fuisz for issuing subpoenas to executives at Theranos who had “proprietary” components of the would-be technology. (Fuisz was a Holmes neighbor, medical doctor, and inventor and had a patent dispute with Theranos.) He credits Ian Gibbons’ wife, as Ian himself committed suicide after being subpoenaed. His widow, however, continued to speak up about the “lies” he said Holmes was covering up at the biotech company.
Krainer concludes the Theranos saga has a happy ending because it’s ultimately (in this writer’s words) a David and Goliath story. “Resolute powers of deep state actors, powerful lawyers, and ultra-wealthy investors determined to preserve and protect their creation by any means necessary” went up against “ordinary people armed with truth and compelled by their conscience to speak the truth in spite of fear, intimidation, and seemingly insurmountable odds stacked against them” and the latter group won. Krainer says all they needed to do was “[stand] their ground and [refuse] to be silenced.”
….
Below is a picture of—left to right—William Perry, Sam Nunn, George P. Shultz, and Henry Kissinger meeting with President Barack Obama in 2009. They were not on the Theranos board at this point.
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Feature image: Pete Souza / Columbo image: NBC Television / Backup on Krainer’s YouTube
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