first they think you're crazy. >> enough with this insanity. >> then they fight you. >> it was just all a pack of lies. >> and then all of a sudden you change the world. >> if she had made this work, she would have been the next steve jobs. ♪ >> she dropped out of stanford at 19. >> steve jobs dropped out of college. mark zuckerberg dropped out of college. bill gates dropped out of college. to create theranos. >> making it possible to do any lab test. >> from a finger. >> she was able to put a magic spell on people with her big blue eyes and her deep voice. >> the whole steve jobs look. >> the youngest female billionaire. >> magazine cover after magazine cover. >> the golden girl of silicon valley. >> part of the new times 100 list just out. girl of silicon

valley. >> part of the new times 100 list just out. ♪ i got what it takes >> only problem -- it didn't work. >> did ms. holmes know theranos didn't work? >> yes, she knew. >> not only did they fool the investors -- >> all the nanotainerses. >> they fooled patients, doctors. >> elizabeth holmes and another former executive await a trial. >> holmes pleaded not guilty. >> i am so incredibly humbled. >> enough, elizabeth holmes. this company is a fraud. this is an investigation by the securities and exchange commission in the matter of theranos, inc.

>> reporter: elizabeth holmes -- grilled by 12 lawyers -- investigated for massive fraud. this was not how a young billionaire thought her empire would end. >> do you swear to tell the truth, the whole truth, and nothing but the truth? >> i do. >> reporter: it is certainly not where it began. elizabeth holmes was born in 1984, at the dawn of tech nation, just one month after the macintosh computer. she was raised in washington, d.c. >> the parents, from a young age thought of their daughter as a special person. the mother worked for various members of congress. the father worked for the state department. mostly involved in human rights and she looked up to him as an idealist, which is what she thought of herself as well. >> reporter: she wrote a letter to her father when she was 9. >> dear daddy, what i want out of life is to discover something new. something that mankind didn't know was possible. i also want to study about man

and his ways. life is really interesting. i love being with you. it's my most favorite thing in the whole world. love, elizabeth. i wanted to do something with my life that people thought was impossible before. >> at a young age she's asked by a relative, what do you want to do when you grow up? she answered immediately i want to be a billionaire. and the ss you want to be president? an she says no. the president will marry me because i'll have a billion dollars. >> reporter: her family was no stranger to wealth. elizabeth is the great-great-great-granddaughter of charles fleischmann, and the massive fleischmann yeast fortune. a 42-room mansion with 40 servants, polo, yachts, safaris. they helped found "the new yorker" magazine, and bought coconut island off the coast of hawaii. they entertained amelia earhart, and shirley temple had a birthday party on their estate. but the fortune was no more.

>> this magnificent family history that they had in terms of this extraordinary wealth had been dissipated by prior generations. >> so this is a picture of a young elizabeth and her brother christian v. >> reporter: joe fuisz was the family's neighbor when elizabeth was a child. >> this is my brother, justin, a young elizabeth. no evidence as yet of the black turtlenecks. the past of the holmes' family frequently came up. and it's -- was not hard for me to imagine that the holmes family believed that elizabeth was restoring them to their rightful place. >> reporter: the holmes moved to houston, where elizabeth excelled at a private school. megan long went to st. john's with her. they both ran track, and she says elizabeth was incredibly driven, and never gave up. >> typyorua race, the thing that you're going to remember is the person who gets first place. but elizabeth always finished her races last.

everyone would finish the race, saying don't cross the track, there's still a runner on the track. that runner was elizabeth. she was determined to do it. >> reporter: a tutor came to the house for private lessons, and elizabeth talked her way into college-level summer courses in chinese, courses that weren't open to high schoolers. >> and she convinced people that, you know, let her do it. she really -- she talked mandarin on the phone to them, and they were stunned, and she got in. >> reporter: her high school yearbook page says "dream, laugh, reach for the stars." in 20 years? trying to save the world. her song? "i'm in a hurry". ♪ all i really gotta do is live and die but i'm in a hurry and don't know why ♪ california for college. >> she picked stanford which was, like, the obvious choice if you were interested in becoming an entrepreneur and a successful one.

>> reporter: in the heart of silicon valley, it's where many tech giants started. >> varian, hewlett-packard, sun, yahoo. that's why it's called silicon valley and why it really generated that entrepreneurialism. >> and of course that's probably why elizabeth came here in the first place. >> yes, i'm sure that's why she came here. >> reporter: phyllis gardner is a professor of medicine here. she first met elizabeth in 2002. >> this is wilbur hall. >> wilbur hall. this is where most stanford freshmen start out. >> so this would've been elizabeth holmes first dorm. >> first dorm room right. >> elizabeth was brought to me by a person who'd been the former president of panasonic, saying to me that she was this brilliant girl and she had this wonderful business idea. >> she came up with an idea for this blood testing device. and the idea behind the blood testing device was that you would have a sticker on your arm, and this would be constantly checking your blood

levels and then if you needed to, you'd be able to give yourself an injection of whatever medicine you needed. >> the skin is a terrible barrier to go across. i kept saying to her, it's not feasible. it just went to deaf ears. how did she respond to the criticism? >> just kind of blinked her eyes and nodded, and left, and then came back another time with the same sort of concept. 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. >> elizabeth didn't want to be told it was impossible because she loved the idea. so, she went to another professor. >> he never allowed freshman in this advanced course. and she persuaded him that she was capable of doing it, and in fact she was. >> reporter: elizabeth took chemical engineering classes as a freshman. >> i was very intrigued by her vision. >> reporter: channing robertson was the chair of the department.

>> felt it would be a really interesting proposition. >> and he thought, hey, you know what, i see an opportunity here. maybe you can do this. maybe you can't. but let's give it a shot. >> and he became a kind of a mentor to her and said to me maybe once a century you come across someone like beethoven. "she's a beethoven figure," he said, "she's a genius. she is this rare creature." and he bet his career on it. >> i think he was the first enabler. he dragged her around campus, introduced her to people. >> reporter: and she was breaking down doors herself. >> this used to be my advisor's office and i would sit here literally in the hallway waiting for him to come back to his office to try to convince him to let me into his graduate research program. >> in silicon valley, one of the things that people brag about is that they drop out of college. >> i was at a point where

another few classes in chemical engineering was not necessary for what i wanted to do. >> steve jobs dropped out of college. mark zuckerberg dropped out of college. bill gates dropped out of college. >> zuckerberg, gates, jobs, holmes. you just have the sense that there are certain people who cannot be held back. >> reporter: elizabeth dropped out too. >> she decided she was going to actually try to build it. i think it's fair to say that. sure it's a great idea, but it's actually scientifically impossible. >> reporter: that didn't stop her from filing her first patent, the first of many. she had all the ideas, but she didn't have the cash. >> she didn't actually want to go to some of the traditional investors because she would have to prove that this was something that was even on a remotely, far-off, distant world something that you could do. >> this guy, tim draper, who was a family friend. he has made billions of dollars from his investments.

and he agreed to give her some money to get started. >> i ended up giving her her first million dollar check. >> reporter: everything seemed possible in 2004. but her next idea was much bigger. something that would use only a drop or two of blood and draw more than a billion dollars in investments. >> elizabeth holmes stirred a revolution. >> reporter: and her company began. so did the questions. >> how quickly was it before you start to notice problems?

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the type of person who frwould opont . is the same type of person who can help you find exactly the right car from our inventory of over 50,000, because helping people is what carmax people are all about. ambitn anr: silicon valley. where everyone wants to change the world and make a billion dollars while they're at it. >> silicon valley is the largest creation of wealth in a 50 square mile radius than anywhere in human history. >> reporter: the allure of success drew in 19-year-old elizabeth holmes. she had just dropped out of stanford and had a grand vision

to revolutionize healthcare by making by blood testing more affordable and more accessible for all. she opened her first office in this building and named her company "theranos," a combination of the words "therapy" and "diagnosis." but instead of that skin patch , she came to envision something else. >> we've made it possible to run comprehensive laboratory tests from a tiny sample or a few drops of blood that could be taken from the finger. >> reporter: she made it sound so simple. >> the puncture will be made. the collection tubes will now be held up to the drop. and you will see the blood wick into the channels. the nanotainer tubes are then removed and the sample can be processed immediately. >> reporter: that sample was then put into a cartridge and placed into this portable device

which she claimed processed hundreds of blood tests which could detect diseases from stds to even cancer in real time. >> the ability to be able to use a pinprick and test you right there in a doctor's office, or even in a battlefield, is revolutionary. it changes everything. >> i said, this could be the holy grail! >> reporter: she named early prototypes of her invention the edison after another revolutionary thinker. elizabeth became a master at marketing. >> having gone through in my own life, losing people that i loved, i couldn't think of anything that was more meaningful than being able to change what people go through when they say goodbye too soon. >> reporter: from high-profile

panels to tech talks, that phrase -- >> a world in which no one ever has to say goodbye too soon. >> reporter: -- became elizabeth's mantra. >> a world in which you don't have to say goodbye too soon. a world in which people don't have to say goodbye too soon. saying goodbye too soon. >> she was a good storyteller. that's part of her seductiveness which is why she was able to raise all this money. >> reporter: by february 2005, the 21-year-old had already raised around $6 million. behind those piercing eyes was a peculiar young woman who seemed to survive on ambition alone. >> i had this image of her as kind of like a nun-like existence. you know, black, quiet, all alone. she lived in an apartment, which she wouldn't let me see. she said there was just one bedroom. the refrigerator just had a bottle of water in it. she had a lot of, you know, green drinks, and -- and all

this stuff that i -- you know, i looked at and i said, "oh my god, i can't." >> if you are what you eat, what are you? >> green juice. >> best word to describe you? >> mission oriented. >> favorite place to visit? >> my office. >> one of elizabeth's most bizarre characteristics was just her obsession with steve jobs and with apple computer and imitating him and the company. >> reporter: she even went after steve jobs' own right hand man. >> i'd like to now welcome one of my colleagues, somebody i've worked with for over a decade, dr. avie tevanian. >> reporter: avie tevanian had been head of software at apple and was one of jobs' closest friends. after retiring, avie learned about elizabeth holmes and theranos. >> when you find these ideas that can cut across everything it's huge. and so clearly if this could be made to work, then it was going to be hugely

>> was she selling you on the mission of theranos? how did she come across? >> she was definitely selling me on a vision for what she wanted to do in this realm of blood testing and making it something that was much more accessible than it's ever been. >> so you joined the board. >> joined the board. >> reporter: his involvement attracted others from apple to join theranos like ana arriola who had helped design the iphone. >> the opportunity was altruistic, it was potentially human-kind changing and i was very curious. unfortunately i left 15,000 shares at apple but se la vie. >> reporter: ana might have left apple, but to her surprise, she certainly did not leave all of steve jobs behind. >> elizabeth was very curious about steve's attire, and i explained to her that he was inspired by sony's heritage of . and then i think she went off

and tracked down who issey miyake was and the rest is couture history. >> reporter: but ana says elizabeth's transformation didn't end there. her voice -- >> what she could figure out -- >> reporter: -- a surprising baritone -- >> is that it would likely cost her a few thousand dollars to get this test done. >> reporter: -- was fake, according to ana. >> we didn't know that it was not her voice until much later. i think it was at one of the parties, and maybe she had too much to drink or what not, but she fell out of character and exposed that that wasn't necessarily her true voice. >> translator: in this interview with npr from 2005, we hear a very different sounding elizabeth. >> no it hasn't. if i use traditional words to describe what we're doing, it's hard. >> when she came to me she didn't have a low voice. >> she didn't? >> no. >> what was her voice like when she came to you. >> just like a typical undergrad student. when i next saw her again was at the harvard medical school board meeting where she was being introduced.

she has this low voice and i'm like oh my god. >> you know it's this pastiche. whether it be the turtleneck, the baritone, the swagger, the sense of belief in herself. you were captivated. >> reporter: but then as the money poured in, the problems poured out. suddenly, it wasn't just her voice that insiders were worried about. >> i would never expect that anyone would behave the way that she behaved as a ceo. and believe me, i worked for steve jobs. i saw some crazy things. you shopping, you maximizing. you shopping, you maximizing. find the brands you love and get more you for your money, every time. it's not shopping, it's maximizing.

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>> coupa cafe, a bustling eatery in downtown palo alto. >> just a small black coffee please. >> this was the hot spot, where the heavy hitters of tech were n and elizabeth holmes wanted in on this elite club. eagle-eyed viewers of the social network might even spot mark zuckerberg's character with his coupa cafe cup in this scene. >> i'm not a bad guy. >> somewhere over there there's a 40 million dollar check being cut, i'm just kidding. >> that's yours right? >> reporter: by 2006, elizabeth's obsession with steve jobs was in full swing. she had already recruited his former right hand man, avie tevanian, and iphone product designer ana arriola -- and now was continuing to poach aggressively from apple and silicon valley's ranks. that requisite green juice never out of grasp. >> i had just gone in there with this expectation that i was

meeting brilliance, the next steve jobs, next zuckerberg. >> she's incredibly passionate. >> her passion was pretty intense, pretty compelling. >> very expressive with her hands. >> she has a lot of conviction in her vision. you know we're changing the world. we have the technology to do it. >> reporter: they all eagerly jumped on board. >> it was the opportunity to join the rocket ship. >> and just like her intensity is a little overwhelming. >> i think, in retrospect look at intensity in different light but at the time, yeah, it was great. >> reporter: almost as soon as they started, they say, life at theranos was just a little bit off. >> how would you describe the culture at theranos? justin? >> not a lot of camaraderie. a lot of paranoia. >> the office environment was designed to not really interact with anybody else.

>> she believed in multiple levels of secrecy and compartmentalization. >> reporter: employees say elizabeth's style was off putting. for justin, what began as excessive micro-managing turned into -- >> actually noticing that this person is willing to lie to me about extremely trivial unimportant things. >> reporter: silly things like saying she left the office for the day. >> and she was actually just in an office right down the hall from me. >> you could see her sending that email. >> so i walked over to her and had a bit of an argument with her and she stormed after me and said don't you ever walk off on me again. >> you know like if you watch "the office" there was a lot of like looking at the camera in disbelief and that was all day. we were all just looking just like what is going on. >> you got a sense that not everyone in the company at that time really knew what was happening from a holistic picture.

>> that was partly through an intentional effort. >> reporter: adam says the departments were purposely kept separate, designed so no one could catch on that the technology didn't actually work. >> we're expecting people to prick their fingers which is hard and scary and put it into the device and it turned out if you screwed up the introduction of the blood into this cartridge it was like game over. >> wouldn't work? >> it would be inaccurate. >> you would get a wildly wrong result. >> how quickly is it before you start to notice problems? >> nine months into it. i was starting to get a little bit frustrated that we would see demos and they just wouldn't work. >> but some of that you expect to get from a startup that has a product that's not done, right? but the problem was it never got any better. i think what she didn't expect was that i would ask a lot of questions and that i would ask tough questions. >> she did not want to hear other people's opinions. >> reporter: elizabeth reacted

swiftly and harshly, eliminating those who raised doubts. >> there were posts from employees. they equated it to a south american dictatorship or a drug cartel. >> they assembled some of the best people that they could possibly get and they just vanished. >> i was one of the few people that stood up to her. i have told her no numerous occasions. >> reporter: in august 2007, ana found out about a research study that was testing theranos technology on terminal cancer patients. >> there were patients who were third and fourth stage oncology cancer patients that had given their blood to test this device. the light was seeping in and corrupting the blood assays and so the data was faulty. >> reporter: the test results wouldn't be used to impact the actual treatments given to patients. but employees hated doing research on such vulnerable people. >> i brought this to elizabeth

and she gave me an ultimatum. suppress it and continue on business as usual and i was like that's unacceptable. and i decided to resign. i just literally had nothing i wanted to do with that company anymore. >> reporter: ana wasn't alone. justin sent elizabeth two management books with titles not safe for broadcast. >> i can't say any of those on abc news. >> reporter: and a pretty epic letter of resignation. >> hi i'm resigning. lying is a disgusting habit and it flows through conversations here like it's our own currency. the cultural disease is what we should be curing. but i really truly believe you know it already. and for some reason i can't figure out why you allow it to continue. justin maxwell. >> reporter: avie, perhaps her biggest recruit, was at his breaking point too and expressed his concerns to another board member. >> i said i'm going to give you a choice. i think that there is a chance this company can make this

product work. i would love to stick around with you and we probably need to revisit elizabeth's role or if you want i resign. he said lielizabeth wants you t resign. he said you ask too many questions. >> were you surprised she wanted you to resign? >> she had already poisoned the well. >> i would never expect anyone would behave the way that she behaved as a ceo. and believe me i worked for steve jobs. i saw some crazy things but elizabeth took it to a level i'd never seen before. >> reporter: while on the inside, there may have been turmoil, on the outside, people were fawning all over elizabeth

and her idea. >> are we crazy now that all these people are making a big deal out of it? maybe we're crazy? >> reporter: she was becoming a full-fledged star. >> ladies and gentlemen please welcome the only person i know who makes me feel like a lazy bastard, elizabeth holmes. this is the invitation to lexus sales event. with generous offers now through march 31st. experience amazing at your lexus dealer. [ "werk it" by mama haze ] wit♪ werk it now ers no♪ woo,uwerk it now,t. woo, werk it now ♪ ♪ baby watch me werk it like ♪ ♪ werk it now, woo. werk it now ♪ ♪ baby, baby, baby

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>> reporter: in 2009, elizabeth holmes found herself in an uncertain place. despite losing key recruits, her company was now six years old. she had a new office in palo alto where theranos employees were working to carry out her revolutionary mission. but she was desperately in need of more money. the nation was in the middle of economic turmoil. >> the country is officially declared to be in recession. >> lost their jobs. >> reporter: companies that had been around for generations were struggling to get loans, and

like dominoes. toptcy. others, elizabeth had an ace up her sleeve. >> first name is ramesh. last name is balwani. most people call me sunny. >> reporter: sunny balwani was a multimillionaire who seemingly came out of nowhere to save the day. >> i knew this mission, what the company was trying to do, was paramount. so i ended up giving a $13 million personal loan. >> sunny balwani had made his own fortune at microsoft and lotus. he had zero medical credentials. >> did he have any qualifications in the lab testing business? >> he did not. >> or in pathology or anything like that? >> not to my knowledge. >> and yet, he became essentially the most powerful person at the company, next to elizabeth. >> i always wondered why he was there.

if she held this vision of really impacting the world, i was like why? why did she pick him? he was terse and he was a bit of a hothead. >> he brought this ruthlessness with him that the company had never seen. >> reporter: the license plate on his lamborghini was a fitting metaphor for his management style. it paid homage to caesar's famous "i came, i saw, i conquered." and yet, sunny's vision for the company seemed to line up with elizabeth's. >> we have been working hard to build something which we think is magical. >> reporter: in early 2010, their work was about to pay off when the duo secured a meeting with pharmacy giant walgreens. >> we were interested in partnering with walgreens because of the retail footprint. >> the partnership with walgreens is a huge game-changer because walgreens has these wellness centers.

and if they have the ability to test people's blood with a finger prick right in the store, it could change everything. >> reporter: according to walgreens, theranos said their technology had been co pre hence "comprehensively validated" and was "viable and consumer ready." >> i thought "this is incredible." if these people have actually pulled off what they're claiming then that could certainly change the practice of lab medicine. >> reporter: walgreens saw the chance to be at the forefront of something huge. so they eventually cut a $140 million deal. fast forward to three years later, and elizabeth is celebrating the opening of her first theranos wellness center in this walgreens in palo alto, california. and with that -- >> are you one of these people that love blood tests? >> no. >> it grosses me out. >> reporter: elizabeth started peddling her product to the masses, launching this striking

video campaign directed by oscar-winning documentarian errol morris. >> i was wondering if you would take a test for us, which is one drop of blood. >> one drop? >> bring it on. >> that's it? >> how are you feeling? >> feeling good. >> they exude confidence. they exude this reality that this thing is real. it gives elizabeth holmes just one more card to say, "look, what i'm doing is going to change the world." >> i'm a fan. >> likewise. >> our work is in the belief that access to health information is a basic human right. >> reporter: elizabeth took her mission to the mainstage, charming the audience at the clinton global initiative. >> you founded this company twelve years ago, right? >> yeah. >> tell them how old you were. >> i was 19. >> don't worry about the future. we're in good hands.

>> reporter: in june 2014, she was vaulted to stardom after she was profiled in "fortune" magazine. the article stated that theranos offers more than 200 blood tests without the need for a syringe. but precisely how theranos accomplishes all these amazing feats is a trade secret. >> and that's when the press coverage really started picking up and you saw her almost once a week. >> elizabeth holmes from theranos. >> elizabeth holmes. >> elizabeth holmes. >> elizabeth holmes. >> thank you for having me. >> i am so incredibly humbled. >> we did this. >> these big splashy profiles were kind of big wet kisses. >> she did "mad money" with jim cramer, charlie rose, "cbs this morning." >> little tiny tubes which we call the nanotainers. >> i mean on and on and on. >> congratulations on all the success you've had, and i sure hope you win! >> we cannot lose sight of how much we wanted to believe.

>> there is no better story than the young woman at stanford who dropped out because she wanted to save people's lives. >> to the young women in the room here, do everything you can to be the best. >> reporter: she was named one of "time" magazine's "100 most influential people." "wired" called her work mind blowing. ♪ i got what it takes ♪ i will never break ♪ always going hard >> reporter: elizabeth started living the life befitting of a cover girl. >> i also heard she was traveling with four bodyguards packing heat. >> reporter: further adding to the hype, her all-star board of directors. >> her board was made up of some of the biggest names in history. >> george shultz, i think that was her first connection.

>> the former secretary of state, the guy who many people credit with winning the cold war. he met elizabeth holmes back in 2011. >> she is a dropout. she left after her sophomore year. >> he joined the board, he then introduced her to all these other aging exstatesmen. bill frist. >> i was impressed with the technology. >> admiral roughead. >> i just saw this this potential that was there and was intrigued by that. >> she's got kissinger! come on, kissinger! >> a friend of mine said your board, looks like you guys are ready to take over the world, not start a medical device company. >> i remember thinking what an odd group of people that is. and it's interesting there wasn't a woman on the board. it's kind of fascinating if you think about it. >> what elizabeth holmes' gift was, was she was able to take older, white men who were incredibly successful at one point in their careers, and wrap them around her finger.

>> reporter: the board and the walgreens deal became significant selling points, enticing a variety of investors from the ultra wealthy to the everyday joes. by 2014, theranos was valued at $9 billion. the founders of walmart invested $150 million. media mogul rupert murdoch, $125 million. and the devos family, including now education secretary betsy devos, $100 million. >> she was able to sell to all these people and get them because they all trust each other. if you're doing it, it must be good. >> i'm seeing things pop up inside of walgreens and i'm wondering maybe it finally works. but i'm still in my mind remembering all these other things and saying i still don't believe it. i still don't believe it. >> she seemed forthcoming except when you asked her can i see the

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>> reporter: now just 28 years old elizabeth continued to carefully craft her brand. she set her sights on chiat day, the legendary los angeles ad company behind iconic campaigns like apple's think different. and 1984. right off the bat, elizabeth made quite the impression. >> here's to the crazy ones. >> you'll see why 1984 won't be like 1984. >> elizabeth and sunny flew to los angeles on a private jet and met with our team members. at that time we were told of the story and her vision for theranos. and it was great. >> the stature of everything felt very like i don't know like a politician or like royalty was there like we were rolling out the red carpet. the pomp and circumstance around

it, it was really like who is this person and what is what is this product? >> the first thing that you'll if you ever meet elizabeth that you've noticed is her voice. >> i'm not in a position to do that. >> it's extraordinarily deep. it sounded to me like she was a man or a robot or both a man robot and so you were kind of struck so demeanor-wise she carried herself like a highly intelligent person which she is. we thought something really special was going to happen. >> reporter: theranos eventually inked a $6 million retainer with the agency. >> that's a lot of money for marketing. i'm always wary when people do a lot of marketing. same thing with office furniture. the offices are too nice. i'm always like hmm i wonder what's going on here. >> reporter: the team built out the theranos website and created ad campaigns reminiscent of that other tech giant. >> there are some similarities to what apple does when you take a look at very minimalistic on white, choice type font. there are definitely some parallels to that. >> everything was based on this tiny drop of blood. so we wanted to make that a big

portion of the iconography of the brand. one of the lines was goodbye big bad needle and it had a picture of a child with big blue eyes and he had. just quizzical look on his face you felt the importance of the mission. >> reporter: but before the ads went live, chiat day had to confirm that all the assertions theranos was making were in fact true to legally protect themselves. >> mike, you sent over this matrix. >> we had spreadsheets with feedback that we were trying to explain to them. what type of proof that you needed to get this done. >> reporter: they say elizabeth got a little fast and loose with dramatic claims about the technology. >> i mean there were specific claims like the four-hour claim. you can't say that unless it's four hours. if you want to say hundreds of tests on one single drop that it has to be hundreds of tests on one single drop.

it has to be true at the time of publication or you can't you can't do it. >> reporter: now it was the ad guys -- not just theranos employees -- poking holes in the story and holding them accountable. they told elizabeth they had to amend the copy eliminating specific, unproven claims and distilling them down to vague catch-alls. and then things got weirder. >> there are times where she would go dark for a month. >> is that typical? >> no. that is not typical. not given the ambition and the desire to move quickly and then to be completely unresponsive was odd very odd to us. >> reporter: with wellness centers now poised to open in multiple cities, mike asked an innocent question. >> i asked, where is the wrethbs curious where it was and. i was told. oh, we haven't built it yet. it's like but you're doing the tests. how do you do the test then? >> and this is great. >> and then it was oh we fedex

them up to palo alto. >> reporter: they'd stumbled on a bombshell. turns out theranos wasn't going to actually put these devices inside of walgreens because that would have required fda approval, something they didn't have. instead they were exploiting a legal loophole and flying the blood samples to a central lab. >> mike and i looked at each other and there were two problems with that. one was the speed. another is, how are you using fedex to actually carry somebody's blood? >> it was like whoa wait and especially when you consider what the promise of the of the box was. these things -- it was portable you can run tests real quick. i thought they were just going to be in every store and they

were going to do it there. >> it was my contention that the box didn't exist or that they could manufacturer it. >> reporter: it wasn't long before many on the chiat day team were wondering exactly who or what they were really dealing with. >> i will say i was at one point convinced it was a front for the government. and the reason why is the one of the first meetings i had with her she had said that the box had been field tested in afghanistan and then you look at her board and you look who is sitting on the board and she would continue to drop you know major political and military names. and it got to a point where like ok maybe this whole thing is some sort of cia and i mean, and i'm kind of joking but i'm also not joking. i'm like what's going on here. >> reporter: suddenly, with no clear explanation, theranos pulled the plug on chiat day. they were done and chiat was relieved. but the lingering apprehension that elizabeth and theranos might retaliate against naysayers never really went away. >> there's still a part of me that has fear. is this -- are we being set up? just because they were -- just very unscrupulous when it when it came to protecting and make sure nobody talked. >> reporter: but somebody would. a brave and unlikely whistleblower was about to emerge. >> there was definitely a culture of fear.

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>> do you swear to tell the whole truth? >> i do. >> there's no better story than dropped out because she wanted to save people's lives. >> once touted as silicon valley's sweetheart. >> if they have the ability to test people's blood right in the store, this could be the holy grail. >> if you could take a blood test -- >> one drop? >> one drop. >> did ms. holmes know theranos couldn't do that? >> she knew. >> there's a part of me that still has fear. >> everyone that invested lost

it all. >> send me my $100,000 back please. >> there's this argument she's trying to change the world and it's not easy to change the world. should someone go to jail forth? >> orange is the new black. >> reporter: after 10 years in silicon valley, elizabeth holmes seemed unstoppable. >> walgreens boots that's the largest they have decided that your way is the way to go. >> reporter: she now envisioned a nationwide takeover. >> access for every person means rolling this out ultimately within five miles of every person's home. >> reporter: that would give millions of people access to her so called revolutionary technology. >> when will i have that opportunity to use a small test like that and find out datamyse? >> working on it as fast as we can. i can tell you our next states are underway.

>> reporter: as theranos began building its wellness centers in walgreens, the first major expansion was arizona. >> i first was diagnosed with breast cancer back in 2013. i would get a sharp pain in my left breast. i'd gotten pretty thin, everybody was worried and boom there was a tumor. >> reporter: sheri ackert, a wife and grandmother, was 57 years old when she began the fight of her life. >> i had the bilateral mastectomy in the beginning of reconstructi. chemothera. i trts and i o went back to life, kindy new normal. >> reporter: that new normal

meant getting her blood drawn regularly to make sure she remained cancer-free. >> so my ob-gyn said do you want to try one of the theranos labs? i said hey, yeah let's try it. i think walgreen reputation. they're willing to bring theranos in. they must be okay. >> this is where i had the infamous blood draw. they seemed to know what they were doing and that was that. >> reporter: but things took a terrifying turn when sheri got her results. >> i will never forget that day and i saw that the estrogen amount was over 300. i also called my oncologist's office and the nurse called me back and she said i'm so sorry. that's not good. there could be a tumor growing somewhere. >> reporter: the doctor told sheri to go in for more tests, but this time recommended a nontheranos lab. >> it was about a week later i got the call from my doctor and he said congratulations your estrogen is basically nonexistent.

new cancer. the theranos tests had been off by hundreds of points. sheri says she tried to reach out to the company for answers, but didn't get a response. >> no one from theranos ever called me to apologize. that's the least you can do when you mess up so badly. not okay. >> reporter: it turns out this wasn't an isolated incident. back in palo alto, theranos had ca erepreneur ention of pallav sharda. with a family history of diabetes, had recently upended his life when his doctor had warned him to make some serious changes. >> reporter: so you completely changed your lifestyle. >> completely changed it. so i gave it three years. i could barely run a mile and a

half. and in those three years, i became a guy who did 5ks every alternate day. >> reporter: he wanted to be sure he was on the right track. >> reporter: so you went to walgreens to take this test. >> the first thing i noticed was the phlebotomist who was taking my blood, i asked her, "well, wait. wait a minute. this is supposed to be a pin prick." but she was doing a test tube draw in the usual way. it was a little red flag. i was, like, "well, that's false marketing. >> reporter: the theranos results indicated that he was prediabetic. but before starting on medication, he was advised to retake the same tests at a different lab. within days the new results showed he was safely outside of the prediabetic range. >> reporter: how did you feel when you saw this alternate outcome? >> pissed. like, i was -- this is not right. like, you just can't lie. can you guarantee nobody took an extra shot of insulin? >> reporter: overtime the complaints from customers started pouring in.

but what these people didn't know was that employees on the inside had been having serious concerns too. >> it really ate me up inside. >> reporter: fresh out of berkeley, erika cheung started working in the lab that processed patients samples. and she says she almost immediately noticed an intense culture of secrecy. >> they would barricade certain portions of the lab so you couldn't see. when outside vendors would come in, like they always had to be escorted by security. >> reporter: at what point do you start to say something isn't right here? >> i think the transition happened when i started processing patient samples. >> reporter: so you basically start out with a base test. >> yes. >> reporter: you put that base test in your machine just to say okay, we know it's working. we know it's cleared. >> exactly. >> reporter: and what happened? >> and it kept failing and i kept running it over and over. and how it was handled totally blew me away. they took out data points and

two out of six, the way we average things. >> reporter: so you're saying essentially that you were cherry picking. >> exactly. >> reporter: the information in order to make the information make sense. >> but the thing is we were still processing patients. >> reporter: meaning those patients were taking information that you were providing to them and making medical decisions. >> yes. our quality controls were failing, at one point what seemed almost everyday. >> reporter: when erika says she raised these issues directly with sunny balwani, theranos' president and coo, she says he would become enraged. >> he had asked me so how do you like working for this company? and i said i really enjoy working for this company, but there are a lot of problems. we're having a lot of issues with our quality controls. and then he just sort of lost it at that point and he said i'm tired of people coming in here and starting fires where there are no fires. >> reporter: erika and others say elizabeth and theranos

ignored the warning signals from their own people and forged ahead. >> we've been able to serve a huge number of people in the last year and it has been phenomenal. >> there is no doubt in my mind that she knew she was crossing that line when she went live with the fingertip tests. >> did ms. holmes know that theranos could not do all those tests? >> yeah, she knew. ♪ limu emu & doug mmm, exactly! liberty mutual customizes your car insurance, so you only pay for what you need. nice! but uh, what's up with your partner? oh! we just spend all day telling everyone how we customize car insurance because no two people are alike, so... limu gets a little confused when he sees another bird that looks exactly like him. ya... he'll figure it out. only pay for what you need. ♪ liberty. liberty. liberty. liberty. ♪

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>> elizabethhis compan wnhe was raiore than $40 million. >> reporter: at 31 years old, elizabeth holmes topped forbes'

list of america's richest, self-made, women. >> this ceo is out of for blood? >> yeah. >> congratulations on that! >> reporter: she continued to be a media darling, but this dogged investigative journalist just wasn't buying it. >> i read a profile of elizabeth holmes in december 2014 written by ken auletta in "the new yorker" and one of the first things that struck me as off in that story, was this notion that she had dropped out of stanford with just two semesters of chemical engineering classes under her belt and gone on to pioneer a groundbreaking new medical science. >> reporter: john carreyrou, a reporter with "the wall street journal," had his hands on his next story. >> one of the first things that raised my eyebrows was that sunny and elizabeth were an item and i was stunned by that

because in "the new yorker" story the clear implication was that she was single. >> i had heard through the grapevine that she had a boyfriend. i thought oh that's a weird little lie to tell. >> when she was 18, he had been around 38 or so. >> i met ms. holmes in 2002. >> we were in the same stanford program at beijing university. >> the entire department knew about her chinese, her skills. and so that's how -- when i -- when i first met her, i'm like, "oh, you must be the elizabeth holmes." >> were you and sunny balwani ever engaged in a romantic relationship? >> yes. >> when? >> for a long period of time. >> for the majority of that time were you living with ms. holmes? >> yes. >> did you ever tell investors that you had a romantic relationsh relationship? >> no. >> it was concealed from the board. it was concealed from the press, it was concealed from investors. >> you think it was intentional that they hid it? >> it was absolutely intentional. >> reporter: carreyrou dug deeper, contacting a number of theranos employees, but many had signed confidentiality

agreements and feared the repercussions of violating them. >> the threat of litigation was always in the air when you worked at theranos. elizabeth had sued former employees in the early years of the company. she had been very ruthless. >> reporter: ultimately, carreyrou would find his big break in a then-25 year-old former employee: tyler shultz. >> i noticed he checked out my profile on linkedin. so i in-mailed him. >> i ignored it for a few weeks. >> i was beginning to lose hope that he would ever make contact. >> why did it take you so long? >> i was afraid all this would happen. >> and then one day i pick up the phone and it is tyler. he was calling me from a burner phone because he didn't want our communications to be traced. >> reporter: tyler wasn't just a

theranos employee. he was also the grandson of one of company's most influential board members, george shultz, the former secretary of state who was also a longtime mentor to elizabeth holmes. >> good morning. >> good morning. >> have you ever been deposed before? >> nope. >> reporter: what tyler would reveal to carreyrou was ultimately the story he would tell under oath, in this deposition, years later. >> did you develop an impression of ms. holmes as a person? >> i was in love with her vision. i thought she was brilliant. >> did your impression of ms. holmes change from the time that you started at theranos through present day? >> yes. >> how did it change? >> i felt like she was very manipulative. >> what do you mean by that? >> she's really good at telling you what you need to hear to

keep going. she definitely did that a lot with my grandfather. she would just feed him things that were completely factually not true. >> people can come in and do full service laboratory testing with a stick from the finger, as opposed to having tubes and tubes taken from your arms. >> can you recall any of the fano. u? a single drop of blood. >> my grandfather would go get a theranos test done and he would have a needle in his arm and i thought this was a single drop of blood. there would be some excuse about why they needed to take a venous draw for him, but for everyone else it's a finger prick and he continued to buy into that. >> when you read the articles, it sounds like the tests were being done at walgreens, but they were really being sent to theranos and t

tests were being run on third-party machines. >> did ms. holmes know at the time that theranos could not do all those tests? >> yeah, she knew. >> reporter: and of the few tests they were running on theranos devices, tyler says the results were often inaccurate. >> i think that at the end of the day, everyone was concerned that we were not giving patients the right results. >> do you think in 2013, in 2014 that ms. holmes was aware that theranos was not giving patients the right results? >> i don't know. >> what about mr. balwani? >> based on what other people were telling me, i would say that, yes, he knew. >> reporter: tyler tried to voice his concerns directly with elizabeth. after attempting to set up a formal meeting on numerous occasions, he settled for an email. she responded later that evening. >> and she writes tyler these are very, very serious comments and allegations that you're making. and then she says that she will have to have the teams go through this line by line. so it will take some time before i get back to you on this.

>> reporter: but rather than a follow-up from elizabeth, tyler got this pages' long email from sunny balwani, who wrote in part, "that reckless comment and accusation about the integrity of our company, its leadership and its core team members based on absolute ignorance is so insulting to me that had any other person made these statements, we would have held them accountable in the strongest way. the only reason i have taken so much time away from work to address this personally is because you are mr. shultz's grandson. the only email on this topic i want to see from you going forward is an apology." tyler responded with his two weeks' notice and says he went to meet with his grandfather. >> tyler tried to make him realize that this was a fraud and his grandfather had sided with elizabeth holmes and didn't believe him. >> he said they're trying to

convince me that you're stupid, but they can't do that. they can however convince me that you're wrong and in this case i do believe you're wrong. >> and my grandfather said that the theranos device was currently being used in medivac helicopters. >> did he tell you who had told him that? >> he didn't say who had told him that, but i have a really good guess. >> he also said they were being used in operating rooms. >> i remember saying that that couldn't possibly be true because the devices were barely working in the walls of theranos. >> reporter: realizing his grandfather's allegiance to elizabeth was strong, tyler put his trust in john carreyrou and the journal. but it wasn't long before elizabeth and theranos became aware of tyler's secret coersations tharyrou. >> my dad said, they know, you

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>> reporter: "wall street journal" investigative reporter john carreyrou was about to bloe like tyler shultz, carreyrou was ready to publish. but he says he underestimated who he was up against. >> good afternoon, my name is david boies. >> the outside counsel for theranos was david boies. >> it's a wonderful day for america. >> reporter: david boies was known for being one of the most aggressive litigators of his time. >> one of weinstein's lawyers, high powered attorney -- >> reporter: he was on the winning side of history making cases. >> for theranos employees he was a scarecrow. they thought if they expressed their misgivings, that it would be david boies and his law firm that would be coming after them.

>> they get him to take on "the wall street journal" and any other news outlets that even came into the crosshairs of theranos. >> david boies and two of his associates at boies schiller came to our newsroom. their demeanor was very aggressive. they had proceeded to tell us that i had misappropriated theranos trade secrets. a 23-page long letter comes a few days after that and that letter is essentially a searing indictment of me as a journalist angd the and the threat is very explicit that theranos is going to sue if we proceed any further with this story. >> reporter: but it wasn't just the journal that theranos was threatening. >> did theranos have a private investigator follow at any time to your knowledge? >> yes. >> tyler emails me to let me know that theranos lawyers knew

that he and i had met. >> my dad asked me have you been speaking with a "wall your honor journal" reporter. i said yes. he said they know. you are totally [ bleep ]. unhow aggressive they are. so then i called my grandfather. and he said, "there is a one page confidentiality agreement, and if you sign it, they will make everything go away." and i said, "that sounds fine, but can i come talk to you in person first, without any lawyers around?" and he said, "yes." >> tyler shows up at his grandfather's place and he thinks he is going to talk just to his grandfather. >> i reiterated my concerns. and he continued to believe in

what elizabeth had told him. and then, he just says, whatever the case may be, will you just sign this one page document to make everything go away? i said yeah, i will definitely sign that. he said there are two theranos lawyers here right now. can i go get them? >> there just happened to be two lawyers hidden somewhere in the house? >> yeah. >> and what was your reaction to learning that? >> yeah, i was totally surprised. >> those two attorneys proceed to come down and are extremely aggressive with tyler. they tried to get him to sign a document naming "the journal's" other sources. >> did you ever sign anything? >> never signed anything. >> tyler withstands this unbelievable pressure. >> my grandfather would say

things like your career will be ruined if this article comes out. >> over the course of the next several months, his attorneys negotiate with theranos attorneys. ends up costing his parents close to a half million dollars in legal fees. but, stays firm and in the end i am able to publish. >> reporter: on october 15th 2015, "the wall street journal" ran the first of many bombshell reports that stated, among other claims, that the company wasn't "using its technology for all the tests it offers" but instead, was using "traditional machines bought from companies like siemens" to run the majority of its tests. >> at first, people kind of didn't know what to make of it. there's ten years of articles saying that this is the greatest company that ever set forth in silicon valley and this is the greatest ever had.

and then there's this wall street journal article saying, "no, none of that is correct." >> i found myself thinking ah, man. i hope that reporter's wrong. i wanted to believe so badly how great it would be if this were true. but it turned out not to be. and so, instead, you start thinking, god, does she really believe this stuff? >> elizabeth, i have to tell you in all my years i can't recall a private company that i think candidly many have never heard of getting this kind of attention and scrutiny. what do you think is going on here? >> this is what happens when you work to change things and first they think you're crazy. then they fight you. then all of a sudden you change the world. >> oh, come on. no. no, enough. enough elizabeth holmes. enough with this belief in yourself. >> i have to say, i personally was shocked to see that "the journal" would publish something like this. >> enough with this insanity in the face of an article that

basically says listen this company is a fraud. >> reporter: but elizabeth's next fight wouldn't just be in the court of public opinion. >> do you swear to tell the truth, the whole truth, and nothing but the truth? >> i do. ( ♪ ) only tylenol® rapid release gels have laser drilled holes. they release medicine fast, for fast pain relief. tylenol®.

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>> reporter: elizabeth holmes was the darling of sill valley was in a precarious spot. a bombshell article came out of accusing her >> elizabeth went on th on th oh

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. >> [ bleep ] you carreyrou is what we chanted. fists in the air and saying it.

>> let's not let the facts 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 'm not the lab direy 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 an 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 e 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... with drivewise. it lets you know when you go too fast... ...and brake too hard. with feedback to help you drive safer. giving you the power to actually lower your cost. unfortunately, it can't do anything about that. now that you know the truth...

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once touted as silicon valley's sweetheart. >> she was able to put a magic spell on people with her big blue eyes and her deep voice. >> >> she would have been the next steve jobs. >> reporter: now worth nothing. her carefully constructed world was crumbling around her. >> the theranos lie was unraveling. >> the department of justice announced they were filing criminal charges against elizabeth holmes and sunny balwani. >> she could end up going to >>old mesh balwani have pleaded not guilty. >> reporter: by september of 2018 theranos was officially out of business. and hundreds of millions of dollars from some of the wealthiest and connected individuals on the planet, wiped out. >> everyone who invested lost it all. >> reporter: reed kathrein is one of the attorneys who sued theranos on behalf of investors. >> i think it's probably the most interesting fraud case i've dealt with. bernie madoff would be second.

>> reporter: bernie madoff, the now infamous financier, who's serving life in prison. >> i spent six hours in jail interviewing him. >> you think they're similar people? people. smart charming bullies. >> reporter: and just like madoff, it wasn't just the ultra-wealthy investing. >> i was told it was going to be the next big thing. >> reporter: eileen lepera, a retired executive assistant ultimately invested $100,000 in theranos. >> it was the biggest investment of my life. >> and what did you expect? >> a new house. >> reporter: while she didn't know a lot about theranos, eileen thought she knew enough about the people who were vouching for elizabeth. >> well i was trusting the knowledge and the expertise of who i bought it from. and i'm not placing any blame because everybody pretty much got snookered from big muckety mucks. >> reporter: in the end eileen lost that $100,000. >> if you could say something right now to elizabeth holmes?

>> send me that $100,000 back please. please. i'll never earn that much money back in my life. i don't have enough years. it's a hard pill to swallow. >> reporter: elizabeth and her counsel did not respond to our repeated requests for comment. but the attorney for sunny balwani wanted to defend his client. >> does he feel in any way that he was duped by elizabeth holmes? >> no. mr. balwani believed in elizabeth holmes and her vision for the company. he tried to execute that plan with her to make it a success. >> if you were going to give him a grade on the job he did at theranos, what would that grade be? >> i would give him an a plus for dedication and effort but obviously when we look at this after the after the fact, it has been a business failure. and you know mr. balwani is very so tha >> reporter: but among the allegations from the department of justice against elizabeth and sunny were those false and misleading statements they made about their so-called

turns out the majority of their tests were actually being run on devices they purchased from other companies. >> don't you think that walgreens would have wanted to know what device you were using to process these samples? >> i am not aware that they were very focused on what hardware that we were using. >> why use a third-party product, if you're charging for that cutting edge technology? >> right, good question. the concept was to collect the samples from the walgreens stores and transport them to the central lab where they'd be tested. if you have lots of samples being collected you need machines that are going to have higher throughput. >> machines from other companies. >> right. >> did theranos ever disclose to walgreens what devices it was using to run different test types? >> no. we would never do that. >> why not? >> well there was a lot of trade secrets here. >> there was no secret that theranos was doing traditional blood testing. >> except for the fact that the advertising itself suggested you could have your tests done with a prick of blood. >> i was wondering if you would

take a blood test for us which is one drop of blood. >> one drop? >> bring it on. >> well that was -- it never said that's the only way it would go. when they did the draw they did do it in a way that drew less blood that was a little less painful and difficult. >> reporter: but the impact of theranos' alleged crime goes far beyond corporate fraud. lives were potentially put at risk. tens of thousands of patients test results had to be voided. >> how can you claim that the technology is accurate when the company itself theranos is withdrawing those results? >> mr. balwani was doing everything he could to make sure the testing was accurate by hiring the very best people. he had to rely on his scientists. >> are you suggesting then that it wasn't possible for sunny balwani to know whether the technology actually worked? >> i mean -- >> the head of the laboratory? >> of course it was possible to

know and he did think it worked >> our quality controls were failing. at one point what seemed almost everyday. >> reporter: recall those scientists, like erika cheung, who said they tried to speak to out but were angrily brushed off by sunny. >> we've heard from some employees that the scientists were those who were most afraid of sunny balwani. >> i just don't think that's accurate. >> when it comes to our health, people want to know it's 100% accurate day one. they want to know that what's inside of a walgreens or at their doctor's office can actually do what it says it will do. >> of course that's true. i think though the unfortunate thing is that in our system of health care there's mistakes that are made every day. there's no perfect answer. >> i think people may accept that mistakes happen but if you know that something is systemic, that's a problem. >> of course that is a problem. that's not what happened here

though. >> should someone go to jail for this? >> no. i think this is a business failure. it's not fraud and i'm very confident that when the jury hears the whole story you're going to see an acquittal in this case, acquittals. >> reporter: what does life look like now for the fallen former billionaire. >> and i looked over to my left, and at a bar table, staring right at me, it was elizabeth check it out, our unlimited plan on the brand new samsung galaxy s10. oooh. premium entertainment on the infinity screen! people have seven different premium entertainment options to choose from. 'cause people are different. like how you cut the crust off of your sandwiches, and i eat them. and i'm pretty laid back and casual, and you... iron your jeans.

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>> reporter: once a blazing star, elizabeth holmes has all but disappeared from the public eye. >> i never really expected to ever see her again in person. >> reporter: michael craig had only heard whispers about his former boss until one chance encounter at a bar in sausalito. >> i looked over to my left, and at a bar table, staring right at me, i realized it was elizabeth holmes. and then she got up and came over. >> reporter: but she wasn't the poised woman he once revered. >> she looked like a fraction of that former self. she was always in the steve jobs black thing. always very made up. she didn't have any makeup on.

she was in a dark hoodie and jeans. she introduced her friend as her fiancé. and i was like, "i wonder what story she has been telling him, and herself, really." >> reporter: the elizabeth holmes story has had an undeniable impact on those left in her wake. like whistleblower tyler shultz. he and his grandfather, george shultz, have since made amends. the former theranos board member, told abc news that his grandson, "did not shrink from what he saw as his responsibility to the truth. even when he felt personally threatened and believed that i had placed allegiance to the company over allegiance to higher values and our family." as for tyler's confidant john carreyrou, he wrote a bestselling book, "bad blood." ♪ but what remains to be seen is whether the story of elizabeth holmes is one of misguided ambition or deliberate deceit.

>> there is this argument that she's trying to change the world, and it's not easy to change the world. >> we could all have a great idea. we're going to have a car that flies tomorrow. that's a great idea. the great ideas are a dime a dozen, but it's how you implement them. >> do you think it's humanly possible that elizabeth holmes wasn't aware of what was going on at her company? >> no. no. she knew what was going on. so many people wind up in jail for little things. this is not a little thing. >> reporter: to this day elizabeth holmes denies any wrongdoing. >> last i heard about elizabeth holmes is that she is currently in silicon valley, trying to start a new company and seeking funding for it. >> was elizabeth a sociopath? i think history speaks for itself. >> reporter: as elizabeth herself once declared at a forbes conference, elizabeth holmes is not a woman who will go down without a fight. >> you will get knocked down over and over and over and over

again and you win by getting back up. i would start this company over 10,000 times if i had to. muslims in the bay area

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