i'm david muir. from all of us here at "20/20" anabc news, good night. elizabeth holmes from theranos. >> what do you have to say? >> any comment, elizabeth? >> there is no better story than the young woman at stanford who dropped out because she wanted to save peoples' lives. >> these days she's famous and parodied on social media for all the wrong reasons. >> this is the nanotainer. i developed it in my high school chemistry lab. >> now, as it turned out, theranos was science fiction. >> people want to know it's 100% accurate, that it can actually do what it says it will do. >> did ms. holmes know at the time that theranos could not do all those tests? >> yeah, she knew. >> i -- i don't know specifically. i'm not sure.

i -- i don't know exactly. >> now she's got a limited scripted series about her in the works. >> you've got intrigue. you've got sexual attraction. you've got deceit. you've got fantasy. it's all there. >> and action! >> if you are what you eat, what are you? >> green juice. >> best word to describe you. >> mission-oriented. >> favorite place to visit? >> my office. >> you're like, who's in there? i would be shocked if she didn't finish the theranos saga behind bars. ♪ i've been a business reporter for more than two decades. through the great recession, wall street booms and busts. in all that time, i've never

seen a story like this one. when i started a podcast called "the dropout," we had no idea how far that story would take us. i'm rebecca jarvis. this is the story of elizabeth holmes. maybe to understand elizabeth holmes, you need to read her notes to herself. i am never a minute late. all about business -- that's in caps. i show no excitement. i know the outcome of every encounter. >> anything you want to say? anymore regrets? >> well, not this one.

that driving ambition of hers seems to have started early, like, in elementary school. when elizabeth holmes was 9 years old, she wrote a letter to her father. what i really want out of life, she said, is to discover something new, something that -- >> -- 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. >> at a young age, she's asked by a relative, what do you want to do when you grow up? she answers immediately, i want to be a billionaire. and the relative says, don't you want to be president? and she says, no, the president will marry me because i'll have a billion dollars. >> elizabeth's family used to have money. she is the great, great, great granddaughter of charles

fleischmann -- as in fleischmann yeast. they had a 42-room mansion, polo, safaris. they bought an island off the coast of hawaii where shirley temple had a birthday party. but by the time elizabeth was born that fortune was long gone. her mom was a congressional staffer, her dad was a vice president at enron, the energy company. and when elizabeth goes to school megan long runs track with her. and one memory really stands out. >> typically, when you run a 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, and then you'd hear the announcer say, don't cross the track, there's still a runner on the track. that runner was elizabeth. she was determined to do it. >> a tutor comes to the house for language lessons, and elizabeth talks her way into college-level chinese classes,

even though they're not open to high school students. >> and she convinced people that, you know, let her do it. she talked mandarin on the phone to them, and they were stunned, and she got in. >> when you look at her high school yearbook page, it says, 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 ♪ >> and she picks stanford, which is kind of an obvious choice if you are interested in becoming an entrepreneur. >> 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. >> dr. phyllis gardner, a stanford professor of medicine, has no trouble remembering her. >> i met elizabeth holmes in 2003 in my office at stanford. so, 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. and i kept saying to her, it's not feasible. and it just went to deaf ears. it was just a 19-year-old talking who'd taken one course in microfluidics, and she thought she was going to 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. >> robertson is the head of the department. he never allowed freshman in this advanced course. and she persuaded him that she was capable of doing it, and, in

fact, she was. >> this used to be my advisor's office, and i would sit here, literally here 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. >> 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. >> 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. >> elizabeth dropped out of stanford at age 19. she was a sophomore. she had rudimentary knowledge in

engineering and no knowledge of medicine. >> so, one person she went to was this guy tim draper, 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. >> elizabeth calls her company theranos, a combination of the words "therapy" and "diagnosis." >> 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. >> ultimately it was to do diagnostics, blood diagnostics and other diagnostics through sort of a "star trek" idea, something that people have heard about since the '60s. >> that sample goes into a cartridge, and the cartridge goes into a little box

to process. and that's all from the finger, no needle in your arm like you're all used to. >> 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. >> she doesn't just want to change medicine. it looks like she wants to change herself. maybe into steve jobs. steve jobs with a lower voice. >> do everything you can. >> when she came to me, she didn't have a low voice. >> she didn't? >> no. >> low voice, black turtleneck and, the hype begins. i got what it takes ♪ ♪ i will never break ♪ wt the say ♪g hard ♪er ♪ i got what it takes. >> i said, this could be the holy grail. as it turned out, theranos was science fiction. ♪ ("it's not unusual" by tom jones) ♪ ♪ ♪ jones!

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i've asked myself why she was so persuasive so many times, because it's just bizarre. she didn't graduate from stanford with some science degree or ph.d. >> i couldn't think of anything that was more meaningful than being able to change what people go through when they say good-bye too soon. >> one thing that i found after a period of time was that i found that she repeated herself a lot. over and over again, at ted talks, on panels --

>> a world in which -- in which you don't have to say good-bye too soon. a world in which people don't have to say good-bye -- good-bye too soon. >> stories that seemed very heartfelt, and very emotional started to feel more calculated. >> she was a good storyteller. that's part of her seductiveness, which is why she was able to raise all this money. >> and suddenly, investors were willing to do business with a 20-year-old. mark zuckerberg took advantage of that, and so did elizabeth holmes. the fundamental difference was that mark zuckerberg's vision didn't require you to rewrite the laws of physics. >> investors want to believe. in miracles, and she certainly provided that. >> by february 2005, she has already raised about $6 million. and she named her device edison, after an inventor who changed everything. >> i think she bought into the idea she was a brilliant entrepreneur that would change the world and she was like a

steve jobs. >> she had the sort of aesthetic monk-like thing that steve had going on. i think she played that really well. >> 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 the one bedroom. the refrigerator just had bottled water in it. she had a lot of green drinks 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. >> avie tevanian essentially retires as head of software at apple.

he's steve jobs' right hand guy, and he comes out of retirement to advise elizabeth holmes. >> 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 impactful. >> so you joined the board. >> joined the board. >> she got ph.ds from apple. she got marketing people from apple who came along and -- and once one person came along, other people came along. >> how she initially attracted them, i think it was they fell into her vision. >> she hires ana arriola, a woman who helped design the iphone. >> elizabeth and her reality distortion field has instilled in us that this was a once in a lifetime opportunity to jump ship, and we jumped ship. >> ana may have left apple, but steve jobs looms large at theranos. in fact, he is the inspiration for elizabeth wearing black turtlenecks. >> we made a decision to expand our test menu.

>> we didn't know that it wasn't her voice until much later. i think it was at one of the company parties, and maybe she had a little bit too much to drink or whatnot. but she fell out of character and exposed that that wasn't necessarily her true voice. >> there's an interview with npr from 2005. you can hear an elizabeth that sounds different. >> no, it hasn't. well, 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? >> nope. >> 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 says in 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. ♪ >> this is what it looks like to be young and aggressive and start your own company. that's sort of the definition of

a girl boss. you're in charge. >> people wanted to believe this story. we wanted to believe that there would be this woman, founder, ceo. she was someone that i wanted my daughter to know about, to know about her and that she'd started this company. >> i had just gone in there with this expectation that i was meeting brilliance, the next steve jobs, the next zuckerberg, something like that. it was the opportunity to join the rocket ship, right? >> i think, in retrospect, i can look back and look at that intensity in a different light, but at the time, yeah, it was great. >> how would you describe the clture at theranos? justin? >> not a lot of camaraderie. a lot of paranoia. >> i had no experience with working in the corporate world. so i assumed that what felt like this very siloed, really encouraged not to speak to one

another environment was maybe just a typical corporate experience. they didn't want people talking to each other 'cause they didn't want people to be connecting the dots with each other. >> perhaps because they were already having trouble getting the edison to work. it's quickly obvious to justin that this isn't really what he signed up for. >> actually noticing that this person is willing to lie to me about extremely trivial unimportant things. >> one example, he says elizabeth sent him this email saying she'd left for the day. >> and she was actually just in an office right down the hall from me. >> you could see her sending you that email. >> yeah. 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. like if you've watched "the office," there was a lot of like looking at the camera in disbelief and that was all day. we were all just looking at each other like, what is going on? >> we're expecting people to prick their fingers, which is

kind of hard and scary, and then draw blood and put it in the device. and as it turned out, like, if you screwed up the introduction of the blood into this cartridge, it was like game over. >> wouldn't work? >> it would be inaccurate. >> yeah. >> you would get a wildly wrong result, right. >> 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, again, 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. i was one of the few people that stood up to her. i have told her no on numerous occasions. and i decided to resign. i just literally had nothing i wanted to do with that company anymore.

>> hi, i'm resigning. lying is a disgusting habit and it flows through the conversations here like it's our own currency. the cultural disease here is what we should be curing. i really truly believe you know it already, and for some reason i can't figure out you allow it to continue. justin maxwell. >> 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. but elizabeth took it to a level that i've never seen before. >> avie brings those thoughts 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. and i would love to stick around with you, and we probably need to revisit elizabeth's role and everything else. or if you want, i'll resign. your choice. he said, elizabeth would like you to resign from the board, cutting to the chase.

he literally said, you ask too many questions. >> so, elizabeth is acting like the machines are working. the press is acting like the machines are working. >> are we crazy now that all these people are making a big deal out of it? maybe we're crazy. >> she's called a girl boss, a pioneer, and she's becoming a star. >> please welcome the only person i know who makes me feel like a lazy bastard, elizabeth holmes. >> this is not fake it til you make it. this is just, it's fake. ut t-mo, - three...two...one... - makes as much sense as playing hide-in-seek... ready or not, here i come. ...in the desert. [sighs] really guys? t-mobile has more 5g bars in more places than anyone. and now, when you switch, you can get iphone 13 on us, on every plan. you're not going to fit in that hole. don't look any further. unlock the full power, iphone 13 on us at t-mobile. the network with more 5g bars in more places. ♪ ♪ when you shop at target, you leave with what you value most.

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comes out of nowhere to save the day. >> i knew this mission and 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 did she pick him, then? he was terse and he was a bit of a hothead. >> he brought this ruthlessness with him that the company had never seen. >> sunny has this license plate on his lamborghini. it seems to be a metaphor for

his management style. "i came, i saw, i conquered." >> we have been working hard to build something which we think is magical. >> then, in early 2010, they get a meeting with walgreens, the big national pharmacy. >> what theranos was promising according to walgreens was a device that patients could use right at a walgreens store to get an accurate result for any blood test, from stds to the earliest appearances of cancer. >> 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. >> according to walgreens, theranos says its technology has been comprehensively validated and is viable and consumer-ready.

>> this new technology that only requires a small amount of blood that, to us, it was, at the moment, a game changer. >> walgreens sees huge potential. they think theranos is ready to go. they understand what this will mean for their business, and they're ready to make a deal for $140 million. >> this was a moment in time when the world was impressed with elizabeth holmes. she was on the cover of magazines. she was the second coming of steve jobs. >> and this is how she gets errol morris, an oscar-winning documentary maker, to do these ads. >> are you one of these people that love blood tests? >> no. >> it grosses me out. >> everyone wanted to be speaking with elizabeth holmes. everyone was interested in her. so we worked with errol and it ws an incredible experience. >> well, i was wondering if you would take a blood test for us, which is one drop of blood. >> one drop? >> bring it on. >> how are you feeling? >> feeling good.

>> the reason i got involved in theranos, and i think errol did and a lot of other people, was that we felt like this was something that was going to be a revolution in healthcare, and something that was going to help people. because that's what we were being told. >> our work is in the belief that access to health information is a basic human right. >> this is an inspiring story people want to hear, including bill clinton, who has her on stage at the clinton global initiative. >> you founded this company 12 years ago, right? >> yeah. >> tell them how old you were. >> i was 19. >> don't worry about the future. we're in good hands. >> i thought, she is a phenom. a $9 billion-valued company that she built herself. >> she's invited to a white house state dinner for the prime minister of japan. she's an ambassador for a white house business program.

>> i'm the founder and ceo of theranos. >> i mean, how many 20-somethings are on the cover of "fortune"? >> the article says that she can run 200 blood tests without needing a syringe, but she won't say how. >> she wouldn't show any of that. she wouldn't show data. she would call it 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. >> 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. >> the publicity is one thing. but of all the things that help elizabeth raise money, the kind of ace up her sleeve is that all-star board of directors. >> her board was made up of some of the biggest names in history. >> hands down, the most important person on theranos' board is george shultz. >> the former secretary f state, the guy who many people credit with winning the cold war. he met elizabeth holmes back in 2011. >> she's a dropout. she left after her sophomore year. >> he then introduced her to all these other aging ex-statesmen. bill frist. >> i was impressed with the technology. >> admiral roughead. >> i just saw this potential that was there and was intrigued by it. >> she's got walgreens, she's

got shultz. she has 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. >> just because you can negotiate a mideast peace agreement doesn't mean you know anything about technology. it's just fascinating. >> they just fell for it. now, why? i cannot say. >> 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. >> if you wanted to do something that was a fraud, you would get an incredibly persuasive ceo, a board of directors who have enormous gravitas, and you would present a miracle. >> outside theranos, it is all about the amazing machine. but inside, it's all about the secrecy. many employees can't even look at the edison. >> it was always brushed off as we wouldn't understand it anyways. we were always asking, could we see the technology?

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elizabeth holmes came along at the perfect time. it would not have been possible for any entrepreneur to raise $700 million even a couple years earlier than that. she had the whole package at exactly the right moment. >> there was this fear of missing out and this idea that if you knew someone who knew someone who put money in theranos, it must be good. >> they were not typical venture capitalists, silicon valley venture capitalists. >> these were home offices, family offices, or individuals. they were not the type of investor that typically would do substantial due diligence.

>> the founders of walmart invest $150 million. media mogul rupert murdoch, invests $125 million. the devos family, including former education secretary betsy devos, $100 million. >> 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 about, can i see the machine? no, you can't. and then downstairs in the basement was the secret place you couldn't go. >> now that they've got the walgreens deal, they want the world to know the name theranos, and they need ads. and she hires chiat-day, which is the same agency that did steve jobs' apple campaigns.

>> 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 pomp and circumstance around it, it was really like, is -- what is this product? >> the first thing that you'll -- if you ever meet elizabeth that you notice is her voice. >> i'm not in a position to do that. >> it's extraordinarily deep. it sounded like she was a man or a robot or both, a man-robot. and so you were kind of struck. so we thought something really special was going to happen. >> so theranos pays this giant $6 million retainer to chiat/day, and chiat/day delivers with a huge and splashy bunch of ads. >> before those ads go live, chiat/day, like all ad agencies, has to protect itself legally, has to confirm that any claims theranos make are, in fact,

true. otherwise it's false advertising. >> these ad guys actually ask direct questions. mike, you sent over this claims messaging 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. 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, then 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 do it. >> i asked, where is the lab in phoenix? just because i was curious where it was. and i was told, oh, we haven't built it yet. but you're doing the tests. how do you do the tests then? >> and this is great. >> and then it was like, oh, well, we fedex them up to palo alto. >> this is a bombshell. theranos isn't going to be putting its devices inside of walgreens.

that would require fda approval, which, right there in the fine print, they don't have. so they take advantage of a legal loophole and they ship, by fedex, these samples to a central lab. >> mike and i looked at each other, and there was two problems with that. one was the speed. the other 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 box was. it was portable. you could run tests really 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 they couldn't manufacture it. >> she had said that the box had been field-tested in afghanistan. and it got to a point where, like, okay, maybe this whole thing is some sort of cia -- i mean, and i'm kind of joking, but i'm also not joking. i'm like, what's going on here? >> and then theranos goes

completely dark on them, and chiat/day is kind of relieved. >> people are walking into walgreens. people are taking theranos tests. >> real patients. real problems. >> you're saying, why is this value so abnormal right now? and am i missing something? >> and there's a secret in the palo alto lab. >> it was oz. and you got behind the curtain and you realized, "wow, there's no wizard." straight talk wireless now has the new iphone 13. hey! cheer up, hun. this'll be fun. with features like cinematic mode, for dramatic shifts in focus. all on the largest, most dependable networks. so you can share the most unbelievable moments... ...from the most unbelievable places. we found an ice cave! get our 45-dollar silver unlimited plan on the iphone 13 with nationwide 5g. straight talk wireless.

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( ♪ ) (chiming) ( ♪ ) (laughter) ( ♪ )

♪ walgreens booths, that's the largest. they have decided that your way is the way to go. >> by 2015, theranos was in about 40 walgreens stores in california and arizona. >> access for every person means rolling this out, ultimately, within five miles of every person's home. >> and people weren't just investing their money, they were now potentially putting their lives on the line as they turned to theranos to test for hundreds of diseases, everything from cholesterol to cancer. and holmes says the next step is to have theranos centers nationwide. >> when will i have that opportunity to go use a small test like that and find out data for myself? >> working on it as fast as we can.

i can tell you our next states are under way. >> one of the new patients was sheri ackert, a wife and grandmother when she began the fight of her life. >> i first was diagnosed with breast cancer back in 2013. i had the bilateral mastectomy in the beginning of reconstruction. i had four months of chemotherapy. i managed well through the treatments, and i just kind of went back to life. kind of my new normal, i guess. >> the new, normal after a patient has recovered or been treated for cancer often involves some form of surveillance testing to check and see if it's possible that something has recurred. >> my ob-gyn said, do you want to try one of the theranos labs? i think walgreens has a great reputation. so, oh, they're willing to bring theranos in. they must be okay. all right. this is the walgreens where i

had the infamous blood draw. they seemed to know what they were doing, and that was that. >> but things take a really terrifying turn when sheri gets her results. >> i will never forget that day when i saw that the estradiol 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. >> that's where your alarm buttons kind of signal more, because then you're saying, why is this value so abnormal right now? did something happen between then and now? and am i missing something? >> the doctor recommends she go to a non-theranos lab in order to get another test. >> it was about a week later i got the call from my doctor, and he said, congratulations, your estrogen is basically nonexistent.

>> there's no new tumor, no cancer. the tests were off by hundreds of points, and sheri says she reaches out to the company and doesn't hear anything back. >> no one from theranos ever called me to apologize. that's the least you can do when you mess up so badly. not okay. >> and it turns out this isn't an isolated incident. retired dentist mehrl ellsworth needs to get his psa level checked to screen for prostate cancer. >> my physician said, there's a group called theranos at walgreens.prun by and get your pricked. a normal reading for psa tests is you wanna keep it under 4. the results were 26.1. >> very concerning when you see a value that jumps up that much. >> to suddenly be confronted with something that was about 1,300% off normal, that was kind

of not the happiest news when i heard the first time. four days later at the urging of my physician, i was retested. and lo and behold, the results were in a very normal range. >> out of an abundance of caution, his doctor suggests a third test. >> test number three which was again up in the 20s. something's not right. >> for his fourth test, theranos takes a tube of blood from his arm instead of a drop from his finger. >> the vein draw was .95, which was the lowest of the bunch. >> it is not normal to get four tests to confirm a result. the accuracy of these tests is incredibly important and it can be really life changing. >> over time, the complaints from customers start coming. what those customers don't know is that employees on the inside are having real concerns, too. >> erika cheung starts working in the lab in 2013. and this is your first job out of berkeley? >> first job out of berkeley. >> at what point do you start to

think, something isn't right here? >> i think the transition happened is when i started processing patient samples. >> so you basically start out with a base test. >> yeah. >> you put that base test in your machine just to say, okay, we know that it's working. we know it's cleared. >> exactly. >> and what happened? >> and it kept failing. i kept running it over and over and over. and how it was handled totally blew me away. they took out data points and said, oh, well, this is the best 2 out of 6, the way we kind of average things. >> so you're saying essentially that you were cherry picking the information. >> right. >> -- in order to make the information make sense. >> but the thing is, is we were still processing patients. >> meaning those patients were taking information that you were providing to them and making medical decisions. >> right. our quality controls were failing, at one point, what seemed almost every day. it really ate me up inside. i had a conversation with

sunny balwani, the c.o.o. of the company. 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's like, i'm tired of people coming in here and starting fires where there are no fires. >> erika and others say elizabeth and theranos ignore the warning signals from their own people and forge ahead. >> we've been able to serve a huge number of people over the course of the last year, and it has been phenomenal. >> elizabeth holmes is about to face her undoing. >> no one would believe it if you just wrote the script, but the anonymous whistleblower was george schultz's grandson. >> did ms. holmes know at the time that theranos could not do all those tests? >> yeah, she knew. >> and while she won't get a hollywood ending, elizabeth's story will certainly get the

hollywood treatment. >> action! >> with oscar nominee amanda seyfried channeling elizabeth holmes. >> anybody who doubts my company doubts me. >> part of the human trait being fascinated by a train wreck. you can't peel your eyes away.

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♪ she looks straight at you. you want to believe what she says. she looks innocent. >> breaking news this evening in the trial of elizabeth holmes. the jury has reached a verdict. >> media and spectators from all over the world showing up just to get a look at the infamous dropout, elizabeth holmes. is wonderful story of a female founder/ceo doing something that was really going to help people. i think people were just fascinated with the dupe, fascinated by the fact that a woman could do this. >> throughout it all, elizabeth has been seemingly living life to its fullest. she started a new relationship. >> she had a baby.

>> it's a good way to get sympathy with the jury. >> and she's gone from being the talk of silicon valley to the talk of hollywood. >> and action! >> does anybody here doubt me? >> i want to see her in an orange jumpsuit with a black turtleneck. oh, i just think that would be perfect. ♪ >> if you have followed the story of elizabeth holmes, we all have this image in our mind of a woman with her blonde hair, her eyes are wide, unblinking. she's wearing a black turtle neck. well, now it's amanda seyfried playing that role as elizabeth holmes in a new scripted limited series on hulu. >> i'm going to dropout of stanford. this machine is going to change the world. what are we going to show at the demo? we're going to tell them that we don't have a working prototype. right?

>> action. >> i was blown away when i walked onto the set of "the dropout." it was surreal how much amanda seyfried fully embodied elizabeth holmes. >> if you are what you eat, what are you? >> green juice. >> best word to describe you. >> mission-oriented. >> favorite place to visit? >> my office. >> hulu's a division of disney, abc's parent company. and the hulu series is a dramatic version of the holmes story based on our podcast. from abc audio, this is "the dropout." no story comes close to the saga of elizabeth holmes. all these years that i've covered elizabeth holmes, she still is this enigma. and people ask me all the time, who's elizabeth holmes? how do you answer that question? >> the short answer is i have no idea. she's really good at hiding.

i think that's part of what makes her so fascinating is that, like, you're like, who's in there? >> here at theranos we believe that every person should have access to actionable health information. >> they meticulously recreated the office, the lab. so this is it. the office of elizabeth holmes, chief executive officer. >> she had these chairs. i sat at this desk quite a bit. i can look everywhere and this is theranos. >> this is an inspiring step forward. >> how did you get to the voice? >> well, i think it's just mainly -- it's my own version of it. >> we were beginning to engage. >> i listened to the deposition tapes over and over and over again. >> do you swear to tell the whole truth and nothing but the truth? >> i do. >> it really packs a punch. >> you're on a need to know basis.

>> i'm the head of chemistry! >> go! now. >> naveen andrews, who is famous for the show "lost," stars as holmes's former business partner sunny balwani. >> there's a tragic inevitability about the entire story. it's not going to end well. >> it's part of the human trait of being fascinated by a train wreck. can't peel your eyes away. >> the train wreck for elizabeth holmes began in 2014 with an investigative journalist named john carreyrou. >> i read a profile of elizabeth holmes 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. >> he begins his reporting and stumbles upon an intriguing piece of information. >> 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 met ms. holmes in 2002. >> were you and sunny balwani ever engaged in a romantic relationship? >> yes. >> when? >> for a long period of time. >> you say for the majority of that time, were you living with ms. holmes? >> yes. >> 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. >> you think it was intentional that they hid it. >> h, it was absolutely intentional. >> carreyrou digs deeper, contacting a number of theranos employees, but a lot of them had signed confidentiality agreements and were scared of what would happen if they violated them. >> ultimately, carreyrou will find his big break in a former employee, then 25 years old, tyler shultz. >> tyler shultz was the grandson of a very high ranking member of the theranos board,

george shultz >> he's a former secretary of state. >> what tyler will reveal to carreyrou is ultimately the story he will tell under oath in a deposition years later. >> did your impression of ms. holmes change from the time that you started at theranos to the present day? >> yes. i felt like she was very manipulative. 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, like, 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 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 get a theranos test done, and he would have a needle in his arm. it's like, well, i thought this was a single drop of blood. and there would be some excuse about why they needed to take a venous draw for him. but, you know, 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 in walgreens. they were really being sent to theranos, and then most of the tests were being run on third-party machines. >> did ms. holmes know at the time that theranos could not do all those tests? >> she -- yeah, she knew. >> tyler tries to voice his concerns directly with elizabeth, but he's told in an aggressive email that the concerns are unfounded. and that email doesn't come from elizabeth but from sunny balwani.

>> tyler responds 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. >> my grandfather said that the theranos devices were currently being used in medivac helicopters. 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 within the walls of theranos. >> and it's not long before elizabeth and theranos are onto tyler's secret conversations with carreyrou. >> my dad said, they know, you are totally [ bleep ]

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john carreyrou, at the wall street journal, is ready to blow the lid off of theranos. with the help of inside sources, like tyler shultz -- remember,

he's the grandson of board member george shultz -- carreyrou is ready to publish. >> but theranos is playing hardball. >> my dad asked me, have you been speaking with a "wall street journal" reporter? and i said, yes. and he said, they know. you are totally [ bleep ] you know how aggressive they are. >> they tried to get him to sign a document, you know, naming "the journal's" other sources. >> did you ever sign anything? >> never signed anything. >> over the course of several months, his attorneys negotiate with theranos attorneys. ends up costing his parents close to $500,000 in legal but stays firm, and in the end i'm able to publish. >> the article in "the wall street journal" was published in october of 2015.

>> it's the first of many stories that say, among other things, that theranos isn't using its technology for all the tests it offers, but instead it's using traditional machines bought from companies like siemens to run the majority of its tests. >> basically saying the emperor has no clothes. >> we absolutely stand by our reporting. >> it caused a sensation. >> and i gather the story's not over yet. >> it is not. i don't think at is. >> i was elated because it showed that i wasn't crazy. there was a real problem. >> in a large staff meeting setting, elizabeth told employees, this is all not true. it was really felt like gaslighting. it was very destabilizing, and it was difficult to know whom to trust. should you trust elizabeth, or should you trust the press that was starting to come out? >> and that's when elizabeth holmes goes on the offensive with the public. ♪ >> 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. and then, all of a sudden, you change the world. >> she bridled when you asked her tough questions. she was used to being fawned over. and you couldn't fawn over elizabeth holmes after you read those articles. >> elizabeth goes on cnn to make excuses for why patient results were off. >> there's this man who goes by the initials rc, who is suggesting the lab results that he got from theranos were not accurate, and a month later, he ended up having a heart attack. >> i'm not the lab director. >> i know, but you're the ceo and founder of the company, and this is as serious as it gets. >> what i know is that i put the best people in place to be able to investigate every aspect of this. i know they're doing that. >> things swiftly began to fall

apart with theranos. >> federal lab inspectors issued a warning that theranos tests pose immediate jeopardy to patient health and safety. >> walgreens ended the relationship. >> and amidst all of this, sunny and elizabeth call it quits. sunny leaves theranos in the spring of 2016. >> and then the biggest blow yet. >> anything you want to say? anything at all you want to say? >> ms. holmes, please raise your right hand. >> she's finally forced to answer to the securities and exchange commission. she's being investigated, and they allege an elaborate fraud, one that's gone on for years. >> do you swear to tell the truth, the whole truth, and nothing but the truth? >> i do. >> she was a very different person in those depositions. >> i don't know specifically. i'm not sure. i -- i don't know exactly. >> very evasive. she did not have the command of the room that you saw when she'd go in front of the press and journalists.

>> she claims ignorance more than 660 times. >> i would be speculating. i just don't know. >> and this is when elizabeth's carefully crafted narrative just begins to unravel. there are some just deadly admissions in which she notes that statements that she made at a certain time were actually not true. >> like 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? >> i don't know exactly what the number was. there was probably, um -- tens of tests. >> so when you say tens of tests, you mean something less than 100? >> yes. >> those claims that she allegedly peddled 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 medivac helicopter? >> no. >> after these lengthy depositions with elizabeth and other people on the inside, the s.e.c.'s ready to bring civil charges. >> elizabeth holmes charged with massive fraud, her company theranos. >> raising more than $700 million from investors. >> now, she and the company agreed to settle the case and pay a $500,000 fine. >> elizabeth settles the s.e.c. case with no admission of wrongdoing. >> it didn't seem like a big enough fine to me. >> she got off with a slap on the wrist, but the story's not over yet. >> theranos founder elizabeth holmes has been indicted on federal wire fraud charges. >> quite a dramatic fall from

grace for her and her company. >> experts say she could face significant prison time. >> really there's no getting out of this one for holmes. >> i want to see her in an orange jumpsuit with a black turtleneck. oh, i just think that would be perfect. lothes that just don't smell clean? what if your clothes could stay fresh for weeks? now they can. downy unstopables in-wash scent boosters keep your laundry smelling fresh waaaay longer than detergent alone. pour a cap of downy unstopables into your washing machine before each load. and enjoy fresher smelling laundry. if you want laundry to smell fresh for weeks make sure you have downy unstopables in-wash scent boosters. shop online for downy unstopables, including our new, lighter scent. frank is a fan of fast. he's a fast talker. a fast walker. thanks, gary. and for unexpected heartburn... frank is a fan of pepcid.

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in june 2018, the department of justice announces they are filing criminal charges against elizabeth holmes and sunny balwani. >> the u.s. attorney's office is charging her with massive fraud. >> she faces multiple fraud charges and significant jail time. >> holmes and ramesh balwani both pleaded not guilty. >> i've rarely seen this in silicon valley type cases. but she didn't just fool investors, she's fooled the press, patients, doctors, and an esteemed board of directors. >> she even put on a fake voice when she was doing business. how does somebody do that i wonder? >> this was the hot topic. we talked about it on our show. >> she was 19 when she dropped out of stanford to found this company. everyone was just really surprised that this young woman could dupe so many influential investors. >> everything about this woman was a fraud. >> by september of 2018, theranos is officially out of

business. >> it was a large company-wide meeting, and elizabeth made the announcement. and then basically everyone went to their desks and gathered their things and left. >> and hundreds of millions of dollars from some of the wealthiest and most connected individuals on the planet are wiped out. >> everyone who invested in theranos lost it all. >> 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. >> bernie madoff, as in the now infamous financier who died last year in prison. >> i spent six hours in jail interviewing him. >> you think they're similar people? >> i think they're very similar people. smart, charming, bullies. >> back in 2019, elizabeth and her counsel did not respond to our repeated requests for comment, but the attorney for sunny balwani wanted to defend his client. >> obviously when we look at

this after the after the fact, it has been a business failure. and you know mr. balwani is very sorry about that, but that is not the same as fraud. >> 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. >> you know, rebecca, 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, but 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.

>> while she waits for the trial to begin, elizabeth's been seemingly living life to its fullest. she started a new relationship with a hotel heir nearly a decade her junior. >> she is seen in a video captured by "inside edition," with her new boyfriend billy evans, ditching that signature black turtleneck for a white t-shirt and a baseball cap. the two had been seen together at burning man, a big party out in the desert, when theranos shut down. >> a lot of people think it was heartless that you were partying at burning man when your company was closing its doors. >> but perhaps the biggest twist of all, as the story of theranos approaches its final chapter, is elizabeth's latest news. >> the criminal fraud trial of theranos founder elizabeth holmes could be delayed yet again because she is pregnant. >> she is expecting her first child. >> she had a baby. based on that, her lawyers asked that the trial be postponed a

couple of months to allow that to settle in. >> i think that might have been planned. it's a good way to get sympathy with a jury. it's a great way to get sympathy of a jury. >> more than three and a half years after being charged, elizabeth holmes will finally face trial. >> it was in many ways, a soap opera. >> the first day was crazy. >> i've got black turtlenecks, i've got blond wigs. >> i would be shocked if she didn't finish the theranos saga behind bars. why choose proven quality sleep from sleep number? because every great day starts the night before. the sleep number 360 smart bed is really smart. it tracks your circadian rhythm, average heart rate, and breathing rate. so you know exactly how long, how well and when you slept. it's even smart enough to sense your movement and automatically adjust to help keep you both comfortable all night. it's also temperature balancing, so you stay cool. don't miss our weekend special, save up to $700 on sleep number 360 smart beds. sleep number takes care of the science. all you have to do is sleep.

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now to the highly anticipated trial of elizabeth holmes. >> people are even lining up outside to see this trial. >> any comments, elizabeth? >> elizabeth holmes' opening statements set to be delivered today as the former billionaire and founder of theranos faces fraud charges. >> elizabeth, 12 jurors deciding your fate. do you have anything to say? >> any comments? >> the first day was crazy. there was this huge line. everybody was buzzing. the energy was buzzing. >> people were arriving in the middle of the night, standing outside the courthouse trying to get in. >> there's a frenzy around the trial. >> i take off my black sleeping turtleneck. >> girl bosses support girl bosses. tongue-in-cheek satirical cottage industry that pops up

with people buying "girl boss" merchandise and fake theranos gear, and you can find it all over etsy and ebay. >> i've got black turtlenecks. i've got blonde wigs. >> one day there's a young woman outside of the court house selling the full elizabeth holmes look for 100 bucks. >> who is a better businesswoman, you or elizabeth holmes? >> of course myself. >> elizabeth would arrive every day usually between her mom and her partner, billy evans. >> it really became quite clear that they were creating an image with respect to elizabeth holmes. >> how are you feeling, elizabeth? >> we see a gentler and softer side. no more black turtleneck. >> she had to come in the same door everybody else did and go through security. >> god bless you, girl boss. she is the boss. girl boss. >> in federal court, no cameras are allowed. i go in and sketch what's

happening in the courtroom. i was in the first row right behind elizabeth. her body language, unlike anybody i've ever seen before. she sat straight up, not touching the back of her chair the entire time. >> the prosecution had a hard road, because those fraud cases are very difficult to prove. >> the hallmark of a wire fraud count is intent to deceive. >> the prosecution's case was this successful entrepreneur. she had raised all this money. she had these aspirations and goals and then found that she wasn't able to deliver them. so she was out of time, she was out of money. so she began to lie and cover up. and once you start lying, the lies get bigger and bigger and bigger. >> the criminal activity in the theranos case happened when she stopped projecting it as a vision and she started making

factual statements of, here is what my machine can do today. not next week, not in several years, but today. and it was completely false. >> the prosecution has 29 witnesses testify over the course of their case. investors, patients, even one of the most high powered board members, general james mattis. general mattis testified that holmes personally pricked his finger to demonstrate the technology. and they also call former employees, like whistleblower erika cheung. >> she really did her best to convey to the jury how stressful it was working at that company, how they kept trying to tell elizabeth holmes they didn't feel the machines could do what they were being promoted to do. >> making it possible to do any lab test from a tiny drop of blood on a finger. >> the prosecution's case really shone a light on what was going on behind the scenes at theranos, and it was an absolute mess.

>> what theranos was actually doing was using third-party machines. but the reason that the board members and investors didn't know this, at least as elizabeth holmes claimed at trial, was because they were trade secrets. i think that's a complete phony excuse. you cannot use trade secrets as an excuse to lie. >> every investor who testifies says that had they known theranos was using third-party machines, they probably wouldn't have invested. >> the government also brings out an important piece of evidence in the form of an investor call, and it's the first time the jury hears her voice. >> it's wonderful to speak with you all. >> there's just no substitute for hearing elizabeth holmes' own voice in the context of her speaking to investors. >> we had created an infrastructure that could, in fact, make it possible to get rid of the big tubes of blood

that are drawn from the arm in its entirety. >> the investors bought into this idea that turned out not to be true. at most, they were able to do 12 tests on that machine. >> one of the most jaw-dropping pieces of evidence was these three reports that elizabeth gave investors. each report had a logo from a major pharmaceutical company, and that led investors to think the reports came from those companies. but in reality, they came from theranos and elizabeth had just slapped the logos up top all by herself, no permission. >> the doctored documents were a huge smoking gun. when you're actually taking an affirmative step to alter documents, that is a big red flag for jurors that her state of mind was deception. >> these reports were included in investor packets which also had glowing press articles and stunning revenue projections. >> those projections were at

best ambitious and at worst just clearly false and misleading. >> it is something that really stood out to the jury. >> it was hasty. they shouldn't have given these statements to the investors promising them, basically, what they would be looking at in a couple of years. >> she would claim that they had hospitals and drug companies as customers and also claimed that the department of defense was a customer. >> military is a big deal for us. the ability to take a technology like this and put it in flight, specifically on a medevac, has the potential to change survival rates. >> certainly the investors found that to be incredibly compelling. >> and then they bring in patients, the people who put their wellbeing in the hands of theranos and ultimately got inaccurate results. >> it was interesting to look over and see elizabeth holmes.

there she is, and there i am, and i'll tell the truth. >> the judge properly really limited their testimony. they couldn't talk about their emotional reaction to getting these bad test results. so that had all been very sanitized. >> the prosecution rested after almost four months of testimony. >> any comment, elizabeth? >> the big question that remained unanswered is, would elizabeth holmes testify? >> court's over at 4:00, and it was like 3:10. and all of a sudden the defense calls elizabeth holmes. >> my jaw dropped. >> oh, my goodness. >> you could hear a pin drop in this courtroom behind me when elizabeth holmes took the stand in a surprise move by the defense. >> i believe elizabeth thinks that she could convince the jury that she was innocent. sion: stand up to moderate to severe rheumatoid arthritis.

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♪ it's now late in the day on friday, and the defense then calls elizabeth holmes to the stand. >> that was a brilliant move, and i think was the only move that the defendants really had in their arsenal. >> she has incredible hubris, so i think it would have been difficult for her not to take the stand. >> and it was really the first time the jurors would have had the opportunity to even see her full face, because even as she would come and go from the courthouse, she was always masked. >> and she is really quite friendly and relaxed. i mean, like, kind of, overly happy, you know? and she smiled, like, a couple times like this. and i was shocked, because in general, nobody smiles on the witness stand. >> the defense had to start to create that humanizing of her.

she's not the cold woman with her hair pulled back, in a black turtleneck, raising millions of dollars. >> the defense is trying to establish elizabeth's state of mind, right off the bat, that she wanted this to work. she had this great idea, and she connected with smart scientists and engineers to make it happen. >> they had her testify that she relied on others. that she was a big picture person. she relied on sunny balwani. >> she places the blame on scientists or engineers or the lab directors, basically anyone but her. >> the defense's rebuttal of the prosecution's case here was to try to show that there were kernels of truth to almost everything that elizabeth holmes said. perhaps it was just a matter of a misunderstanding. >> that theme that this was aspirational, that she truly believed in the technology, that she did not intend to defraud, was something that was very

important to get on. >> there is this mic-drop moment when elizabeth confirms she's the one who added the pharmaceutical logos to the top of those reports that investors got. >> she just flat out said she was the one who did it and explained that she did this because they had been in a partnership and she wanted to make sure they got the credit. >> i think that really kind of sealed the government's case right there. >> finally, after her third day on the stand, elizabeth's attorney turns to the topic of sunny balwani. >> they had a romantic and a sexual relationship, and she talked about how that evolved in a way that he was very controlling, that he was psychologically dominating her. >> the defense enters into evidence a schedule that elizabeth wrote down that she said was set for her by sunny. >> starting at 4:00 in the morning, recitations of certain mantras about how to focus, how to present oneself, what to eat,

how to interact with people. >> there were also tenets on the notes, such as, i do not react. i speak rarely. when i do, crisp and concise. my hands are always in my pockets or gesturing. >> the defense shows text messages of sunny criticizing her. he says, in one, you're speaking with everyone in your giddy voice. excessive use of awesome. you're rambling now. let's stay focused. they also try to show that elizabeth's self worth was all wrapped up with sunny. she writes in one message, what you say to me equals my confidence. >> the text messages indicate that elizabeth holmes really cared deeply about what sunny balwani thought of her, and really would take whatever he had to say as gospel. >> and then elizabeth shares her biggest bombshell on the stand. >> a stunning new revelation out of the fraud trial of elizabeth

holmes today. >> she says balwani frequently forced himself on her sexually. >> she claims that at times throughout their decade long relationship, that sunny would sexually abuse her. and it's something he's strongly denies. >> she actually took notes on her iphone after some of the alleged incidents, and that was very compelling evidence. >> the note reads, don't enjoy literally anything about it or who i am if i did. it hurts so much, so, so much. can't focus on anything except why -- why hurting myself. she concludes this really dramatic testimony by saying, sunny impacted everything about who i was, and i don't fully understand that. but then despite this testimony, elizabeth admits on the stand that sunny didn't force her to make statements to investors or journalists and didn't control her interactions with them. >> when elizabeth is cross-examined by the prosecution, it's very reminiscent of her deposition

with the s.e.c. where she said, "i don't know" over 600 times. >> i -- i don't know specifically. i -- i'm not sure. i don't know exactly. >> the fact that elizabeth holmes had a bit of a faltering memory on cross-examination, but under questioning by her own attorneys, she had vivid recollections, i don't think played in her favor. >> two jurors told abc news they had a ranking system from one to five for credibility and gave elizabeth a two. most people got fours or fives. >> and then in contrast to the defense, the prosecution paints a different picture of the relationship, pointing out that of the 12,000 messages between the two, the word "love" appears 594 times. sunny writes in one, i have never prayed with this intensity in my life for anything and anyone. you will shine. and elizabeth replies, i love this. it is us together. perfection and divinity.

my nirvana. sunny responds, you are god's tigress and warrior. you are extraordinary. and then she texts back, coming from my tiger, means the whole universe to me. i love you. >> these exchanges from the government's perspective helped to support the conspiracy account. and from the defense perspective, often tried to show the control that he might have had over her. >> elizabeth spends seven days testifying on the stand, and once she's dismissed, the defense rests its case and they leave her fate up to the jury. >> ultimately the defense decided to keep the case very simple, rely primarily on her as an individual and her telling her story, trying to convince the jury to find her not guilty. >> my lingering question after closing was, well, was there enough evidence to prove beyond a reasonable doubt that she really had the intent to

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we are closing in on judgment day. we are getting closer to a verdict. >> this trial wasn't about the culture of silicon valley. this trial was not about the business practices of the venture capital industry. this trial was about elizabeth holmes. >> the case went to the jury at the tail end of december. >> in the jury's hands, deliberations set to get underway. >> the jury has begun their second week of deliberations. >> at 4:00 p.m. on the seventh day, the jury came in. >> breaking news in the trial of theranos founder elizabeth holmes. the jury has reached a verdict. >> the jury finds elizabeth holmes guilty on 4 of 11 criminal fraud charges for knowingly misleading investors about her company's blood-testing technology.

>> i felt like, actually, maybe justice can be done in this world once in a while. >> the jury remains deadlocked on three counts related to specific investors. the judge declares those a mistrial, and the government eventually drops them. >> she's found not guilty on all four counts related to theranos patients. >> i was not happy that the patients didn't seem to count. she ran the company, said she was responsible, and she was guilty of not directing things properly. in my mind. >> between now and sentencing, she is out on bail. >> the split verdict will make it very difficult for an appeal. it shows that the jurors were very deliberate in their consideration, were not swayed by any sort of emotion. >> even though this was a split verdict, as a practical matter, it's not going to make much of a difference when it comes to sentencing than if she had been convicted on all counts.

so i think she's looking at several years in prison and perhaps more. >> so, now elizabeth, 38 years old, celebrated less than a decade ago as the next steve jobs and once the youngest self-made female billionaire, waits. she's not in custody, but she's no longer free. >> after the verdict, tyler shultz posts that he's happy that justice has been served and that he is proud of the impact that he and fellow whistleblower, erika cheung, had. >> tyler had eventually made amends with his grandfather, who told abc news in 2019, two years before his death, 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 in our family. if she was sitting here today, what would you ask elizabeth holmes? >> i -- i would ask her, you

know, what she would do differently. >> do everything you can. >> people have short memories. and i think america loves a redemption story. and so is it possible to imagine her doing something really productive afterwards? definitely. is she up to that? is she capable? i have no idea. >> as she once declared at a forbes conference, elizabeth holmes is not a woman who ever gives up. >> 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. as of now, elizabeth holmes is scheduled to be sentenced in late september, and the trial of sunny balwani is set to begin this march. and "the dropout" is now airing on hulu. >> from all of us here at abc

news and "20/20," good night.

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