Theranos' Third Man
Like film noir villain Harry Lime, Theranos founder Elizabeth Holmes' crimes aren't just financial: They've harmed medical patients.
When Theranos, the blood-testing startup she founded, was thought to be on the verge of revolutionizing the medical industry, there was nobody Elizabeth Holmes was compared to more often than Apple founder Steve Jobs. Holmes encouraged the comparison by describing Theranos’s testing system as the ”iPod of health care.” She even dressed like Jobs, wearing the kind of black turtleneck he had made his personal trademark.
With her conviction earlier this month of fraud in a trial that exposed both her and Theranos, Holmes is now the subject of a new set of comparisons. The men she is being compared with are very different from Steve Jobs.
Two of them went to prison: In 2006 Andrew Fastow, the former chief financial officer of Enron was sentenced to serve six years and required to forfeit $23.8 million for his role in the fraud scheme of Enron, the Houston-based energy company. In 2009 Bernie Madoff was convicted of cheating investors out of an estimated $65 million in a giant Ponzi scheme and sentenced to 150 years.
This month in the New York Times, Holmes was even compared to F. Scott Fitzgerald’s Jay Gatsby, who for a time tried to pass himself off as a man of inherited wealth despite earning his money as a bootlegger. David Streitfeld, the author of the front-page Times article on Holmes’ trial, observed, “Gatsby was practically Ms. Holmes’s brother.”
All of these comparisons capture part of Holmes’s story, but they also obscure the smallness that characterizes her. The grift she is associated with today is best understood when she is linked to someone with a less-than-commanding presence—the American con man Harry Lime, the central figure in Carol Reed’s classic 1949 film, The Third Man. Lime makes his living selling adulterated penicillin in post-World War II Vienna and hides in the city’s sewers. He takes advantage of desperate times and is brought down when, after seeing some of the victims of his penicillin fraud in the hospital, a close friend leads the police to him.
Linking Lime (played in The Third Man by Orson Welles) and Holmes is their willingness to take risks with other people’s health. Penicillin had just come into widespread use in the 1940s, and Lime, like Holmes, was aware that any lifesaving medical breakthrough offered a great opportunity for exploitation. The key to Lime’s character comes in a scene in which he sits in a ferris wheel and looks down on the people below him and sees only “dots.”
Theranos grew into a $10 billion company based on its promise of revolutionizing blood testing by being able to run many different tests using only a few drops of blood and a small, portable machine.
In the most thorough book to date on Holmes and Theranos, Bad Blood: Secrets and Lies in a Silicon Valley Startup, investigative reporter John Carreyrou provides a detailed account of individual patients who were given inaccurate blood-test results from Theranos. Carreyrou goes on to point out that the number of blood tests that Theranos “voided or corrected” in California and Arizona eventually reached 1 million.
This patient side of the Elizabeth Holmes scandal has not gotten the attention it deserves in the media in the wake of her trial. Trial reportage has focused on the fact that the crimes for which she was convicted—three for fraud, one for conspiracy to commit fraud—were all against Theranos investors. Writers such as Christopher Weaver and Heather Somerville in the Wall Street Journal and Bethany McLean on the opinion page of the New York Times have been the rare exceptions, showing interest in the lives of the patients who were affected by Theranos tests.
The bulk of reporting and commentary on the Holmes trial has repeated the well-worn point that Holmes and Theranos epitomize the reckless culture of Silicon Valley with its emphasis on get-rich-quick schemes. Lost has been the opportunity to cut Holmes and her enablers down to size and see them as every bit as sordid as Harry Lime.
What will happen next in Holmes’ life is far from settled. Each of the charges on which she has been found guilty carries with it the possibility of a 20-year maximum sentence. In addition her conviction points to failures in due diligence by a host of figures who should know better—from Theranos investors such as publishing mogul Rupert Murdoch and former Secretary of Education Betsy DeVos, to members of Theranos’s board of directors, which included former Secretary of State Henry Kissinger and former Secretary of Defense William Perry.
Holmes, who is 37 and the mother of a baby born during her trial, seems likely to pay dearly for her misdeeds. Between now and September 26, when she is scheduled to be sentenced, she and her attorneys will have their work cut out for them if she is to have any kind of a life left for herself. The great pity is that those who supported her and basked in her presence during her heyday appear set to go on as before—only with less money in their pockets.
Nicolaus Mills is professor of literature and American studies at Sarah Lawrence College. He is author of Winning the Peace: The Marshall Plan and America’s Coming of Age as a Superpower.