Elizabeth Holmes’ Former Aide Reveals ‘Red Flags’ at Theranos Before its Downfall: ‘Culture of Secrecy’

With her promise to revolutionize healthcare, Elizabeth Holmes‘ billion-dollar biotech startup Theranos managed to attract multiple high-profile supporters, from late former secretary of state Henry Kissinger, who was a board member, to Walgreens, which was a major investor. But one former employee exclusively tells Globe there were multiple red flags as early as 2009.

“There was definitely an aura of culture and secrecy,” says the former employee, who worked directly with Holmes, now 42, at the startup, which was supposedly creating a small device that could use a single drop of blood — instead of vials – to perform multiple diagnostic tests.

The company “barely had a website,” the former employee points out to Globe, adding that Holmes seemed to be “trying to collect people with a lot of prestigious backgrounds” to boost credibility.

But “the key things were that there were no medical experts on the board or in any major advisory roles,” notes the former employee.

Another red flag was open discussion among the staff about the potential windfall from the product.

“A lot of the employees that were there were older gentlemen who were very much aligned with the scientific field, and they were pretty openly talking about how wealthy they were going to be and their stock options,” explains the employee, who had worked at other Silicon Valley startups and “had never really experienced an office culture like that.”

“It just seemed really, to me, like putting the cart before the horse, in that we had just gotten a new office, we’d just gotten funding. It just seemed really odd to me, especially considering it was a healthcare product,” the former employee continues. “A lot of the ethos around the product was to be for the greater good of the health industry, so it just seemed really misaligned to me that they would be cavalierly talking about money.”

The former employee’s suspicions were also raised after being told that the device was being tested by “scientists and engineers” at a lab in another location. “Given that we were a small startup with limited funds and, you know, trying to save money, it seemed odd that there would be an office team and a lab team and that they would be very much kept apart.”

“I can only guess that it was to increase the intrigue and also keep factions from talking to each other,” adds the former employee. “So keeping the left hand from knowing what the right hand is doing in a lot of ways.”

Another concern was Holmes’ close relationship with Sunny Balwani, who joined the firm as president and chief operating officer in 2009.

“I had access to her home, because I was picking up dry cleaning and dropping things off,” the former employee reveals to Globe. “I was aware that she was living with Sunny at the time. And I now, based on things I’ve read after the fact, I have since learned that nobody else was aware that she was involved with him on a personal level. So the staff was not aware that she was living with him, but I was.”

The former employee left the company at the end of 2009 after just three months. In 2015, The Wall Street Journal published an exposé about how Theranos’ technology didn’t work, and Holmes and Balwani, now 61, were later accused of defrauding investors, doctors and patients.

At her 2021 fraud trial, Holmes tearfully testified that she had been emotionally and sexually abused by Balwani during their nearly 10-year relationship, per NPR.

Balwani was convicted on 12 fraud counts and sentenced to nearly 13 years in prison, per the U.S. Attorney‘s office. Holmes was convicted on four fraud counts and sentenced to 11 years behind bars, but is expected to be released early for good behavior in 2032, per People.

— Reporting by Lindsay Hoffman