tonight. >> do you swear to tell the truth, the whole truth and nothing but the truth? >> i do. >> once the world's first female self-made billionaire, promising to revolutionize health care with a single-drop blood test. >> there's no better story than the young woman at stanford who dropped off because she wanted to save people's lives. >> now accused of masterminding a massive fraud. >> it was oz. and you woke up, and you realize, wow, there's no wizard. >> rebecca jarvis investigates the stunning rise and fall of a silicon darling. the dropout will be right back. right back.

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this special edition of "nightline" "the drop out" continues. here now rebecca jarvis. >> black turtlenecks. blue eyes, smoky voice. >> we will change our lives and our world. >> here it is, here's the next steve jobs. >> reporter: elizabeth jones was a tech super nova who said she had an amazing invention. >> making it possible to do any lab test from a tiny drop of

blood from a fenger. >> reporter: the youngest female self-made billionaire, ceo of her open company. >> videos, speech. >> the golden girl of silicon valley. >> part of the new "time" 100 list just out. >> i heart she wd she was trave with bodyguards and in a private jet. >> reporter: the only problem? it didn't work. >> did ms. holmes know theranos could not do all those tests? >> yeah, she knew. >> reporter: do this day, elizabeth moment denies any wrong doing. silicon valley. where everyone wants to change the world and make a billion dollars while they're at it. the allure of success drew in 19-year-old elizabeth holmes. she had just dropped outf afford and more accessible

for all. she opened her offic this building. and named her company theranos, a combination of the words therapy and diagnosis. >> we've made it possible to run comprehensive laboratory tests from a few drops of fwlood frbla finger. >> reporter: that was placed into a cartridge and placed into this portable device, which she claimed processed hundreds of blood tests. >> i said this could be the holy grail. >> reporter: elizabeth became a master at the holy fwra master. >> i couldn't imagine being able to change. >> reporter: from ted talks,

that phrase. >> a world in which no one ever has to say good-bye too soon. >> reporter: became elizabeth's mantra. >> build a world in which you don't have to say good-bye too soon. a world in which people don't have to say good bye too soon. >> she's a good storyteller. that's part of her seductiveness. >> reporter: in 2009, she was desperate any need of more money, but elizabeth had an ace up her sleeve. >> most people call me sonny. >> reporter: he was a multi-billionaire who seemingly came out of nowhere to save the day. >> i knew the mission and what the company was trying to do was paramount. so i ended up giving a $13 million personal loan. >> sonny had made his own fortune at microsoft. he had zero medical credentials and yet he became essentially the most powerful member of the

company next to elizabeth. >> reporter: they secured a meeting with pharmacy giant walgreen's. >> we were interested in partnering with walgreen's because of the retail footprint. >> the partnership with walgreen's is a huge game changer because walgreen's has wellness centers. could you change everything. >> reporter: according to walgreen's, theranos said their tomorrow had be technology had been comprehensively validated and was consumer ready. walgreen's saw the chance to be at the forefront of something huge. so they eventually cut a $140 million deal. >> elizabeth has raised more than $400 million. >> reporter: at 31 years old, era's ricst sf-made women.or>> $illionuation?

>> reporr:he continued to be aia darling, but this dogged investigative journalist just wasn't buying it. >> i raidread a profile moment. a and one of the things was that she dropped out with two semesters of chemical engineering under her belt. >> reporter: 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 sonny 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. >> were you and sonny ever engaged in a romantic relationship? >> yes.

>> when. >> for a long period of time. >> did you ever tell investors that you had a romantic relationship? >> no. >> it was concealed from the board. it was concealed from the press. it was concealed from investors. >> reporter: you think it was intentional that they hid it. >> oh, it was absolutely intentional. >> reporter: ultimately, he would find his big break in a then 25-year-old former employee. tyler schultz. but tyler wasn't just a theranos employee. he was also the grandson of one of the company's most influential board members. george schultz, the former secretary of state who was also a long-time mentor to elizabeth holmes. >> good morning, mr. schultz. >> good morning. >> reporter: what tyler would reveal was ultimately the story he would tell under oath in this deposition years later. >> can you recall any of the factually not true things that ms. holmes told you?

>> the big ones are being able to run hundreds of blood tests from a single drop of blood. my grandfather would go and get a theranos test done and he would have a needle in his arm. you know, it's like, i thought it was a single drop of blood? and there would be some excuse about why they needed to take aa venous draw from him, but from everybody else it's a finger prick. when you read it, it sounds like the tests were being run in walgreen's, but most were sent to theranos on third party machines. >> did elizabeth holmes know that the that machine could not do all those tests? >> yeah, she knew. >> reporter: of the few they were doing, he says the results were often inaccurate. >> do you any 2013 and 2014 that ms. holmes was aware that

theranos was not giving patients the right results? >> i don't know. >> what about sonny? >> based on what other people were telling me, i would say yes, he knew. >> reporter: tyler tried to voice his concerns directly with elizabeth. after attempting to set up a meeting on numerous occasion he settled for aeche-mail. >> she writes, tyler, these are very, very serious comments and allegations you are making. and she says she'll have to have teams go through this line byline. >> reporter:h, he got this pages-long e-mail from sonny who wrote in part thatatat reckless allegation 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 o taken so much time away from wor to address this personally is because you are mr. schultz' grandson. the only e-mail 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 moment and didn't belie believe him. >> my grandfather said they were being used in medevac helicopters. >> did he tell you who told him that? >> he didn't say who told him that, but i have a really good guess. >> reporter: realizing his grandfather's allegiance to elizabeth was strong, tyler put his trust in the journal. but it wasn't long before

elizabeth and theranos became aware of tyler's secret conversations with the paper. >> my dad said they know. you're totally [ bleep ]. t had . we needed a second opinion. that's when our journey began with cancer treatment centers of america. stnsashow are we going to address my liver? so my doctor said i think we can do both surgeries together. i loved that. now my health is good. these people are saints. ha, they're saints. cancer treatment centers of america. appointments available now. (cat 1(cat 2) smell that? (cat 1) gravy! (cat 2) that's not gravy, that's extra gravy. (cat 1) whoa! (cat 2) that's friskies extra gravy! paté and chunky! (cat 1) gravy purr-adise. (cat 2) purr-adise? really? (vo) feed their fantasy. friskies. with the most lobster dishes lobsterfesof the yea red lobster and new ultimate lobsterfest surf and turf.

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this special edition of "nightline," the "drop out" tens. here again, rebecca jarvis. >> reporter: "wall street journal" was about to blow the lid off theranos. having gathered enough information from inside sources like schultz, he realized who hw was up against. >> the outside counsel for

theranos was david boyce. >> reporter: david boies was known for being one of the most aggressive litigators. he was on the winning side of history-making cases. >> they came to our newsroom. their demeanor was very aggressive. they proceeded to tell us that i had misappropriated theranos trade secrets, a 23-page letter comes after that. that letter is essentially a searing indictment of me as a journalist. the threat is very explicit that theranos is going to sue if we pursue any further with the story. >> reporter: but it wasn't just the journal that theranos was threatening. >> my dad asked me, have you been speaking with "the wall street journal" reporter? and i said, yes.

and he said they know. you're totally [ bleep ]. you know how aggressive they are. so then i called my grandfather, and he said there's a one-page confidentiality agreement. and if you sign it, it 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's going to talk just with 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? and i said yeah, i will definitely sign that. and he said there are two

theranos lawyers here receipt no right now, can i go get them? >> there were two theranos lawyers hidden in the house? >> yeah. >> what was your reaction to learning that? >> i was totally surprised. >> those attorneys proceed to come down and are extremely aggressive with tyler, try to get limb him to sign a document naming the journal's other sources. >> did you ever sign anythin >> never signed anything. >> tyler with stands this unbelievable pressure. >> my grandfather would say things like your career will be ruined if this article comes out. >> over the course of several months, his attorneys negotiate with theranos attorneys. ends up costing his parents close to $500,000 in legal fees. but stays firm, and in the end,

i'm able to publish. >> reporter: on october 15th, 2015, the "wall street journal" ran the first of many reports that stated among other claims that the company wasn't using its technology for all the tests it offs but instead was using traditional machines bought for of from companies like siemens to run the majority of its tests. >> i wanted to believe so badly. how great that it would be if this were true. >> this is what we call -- >> and it turned out not to be. so instead you start thinking, god, does she really believe this stuff? what do you think's going on here? >> this is what happens when you work to change things. first they think you're crazy. then they fight you. then all of a sudden you change the world. >> oh, come on, enough, enough

elizabeth holmes, enough with this belief in yourself. >> reporter: elizabeth's empire began tumbling down in a matter of months. walgreen's halted any plans to build new centers and suing theranos. the two companies settled for an undisclosed sum. federal lab inspectors issued a warning that theranos' tests poised immediate jeopardy to patient health and safety. forbes cut her net worth from $4.5 billion to 0. sonny left in may 2016. and then the biggest blow yet. >> 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: elizabeth's carefully-crafted narrative began to unravel. there were those hundreds of

blood tests she said her technology could perform. >> making it possible to do any lab test from a tiny drop of blood from a finger. >> how many tests could it run? >> i don't know exactly what the number was. there was probably tens ofens of tests. >> when you say tens of tests. you mean something less than 100? >> yes. >> reporter: and those claims she allegedly peddled to high-powered board members? >> was it deployed in emergency rooms and provider offices? >> no. >> was theranos ever deployed in the battle field? >> no. >> was it ever deployed in a medevac helicopter? >> no. >> reporter: as this divide between elizabeth's grandiose vision versus reality became clear, and after lengthy depositions with elizabeth and sonny and people on se ready t

charges. >> elizabeth holmes charged with fraud. >> raising $700 million. >> they agreed to settle the case and pay a $500,000 fine. >> reporter: elizabeth settled, with no admission of wrongdoing. >> she got off with a slap on the wrist, but the story's not over yet. >> reporter: she was about to face criminal charges for multiple counts of fraud, which casf coicted.r in jail for >> hom pleaded not guilty. >> i wouldn't be shocked if she didn't finish the saga behind bars. d bars. e, stelara® works differently. studies showed relief and remission, with dosing every 8 weeks. stelara® may lower your ability to fight infectis and may increase your risk of infections and cancer. some serious infections require hospitalization. before treatment, get tested for tb. tell your doctor if you have an infection or flu-like symptoms or sores,

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