The Prognosis For Elizabeth Holmes And Silicon Valley | Crooked Media
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January 11, 2022
What A Day
The Prognosis For Elizabeth Holmes And Silicon Valley

In This Episode

  • Former Theranos founder and CEO Elizabeth Holmes was found guilty of conspiracy to defraud investors, last week. U.S. prosecutors declared the high-profile verdict a win, despite her not being found guilty on a number of other charges. New York Times reporter Erin Griffith joins us to discuss what’s next in the sentencing, and the case’s implications for Silicon Valley.
  • And in headlines: Several universities were sued for allegedly violating antitrust laws in order to limit student financial aid, Myanmar’s ousted civilian leader Aung San Suu Kyi was sentenced to four more years in prison, and a man received the first-ever transplant of a genetically modified pig heart.


Show Notes:



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Gideon Resnick: It’s Tuesday, January 11th, I’m Gideon Resnick.


Josie Duffy Rice: And I’m Josie Duffy Rice, and this is What A Day, where the thing we love most about tennis is wondering whether the people playing the tennis will be let into the country where the tennis is happening.


Gideon Resnick: Yup. Novak Djokovic, your vaccine antics at the Australian Open are what we call a solid rally.


Josie Duffy Rice: You can’t spell spike without spike protein. You actually can.


Gideon Resnick: On today’s show, more of what we know led to Sunday’s tragic fire in the Bronx that killed 17 people. Plus, doctors in Maryland have successfully transplanted the first heart from a pig to a human.


Josie Duffy Rice: Yeah, but first we want to tell you about what’s next after this high-profile verdict from last week:


[news clip] Elizabeth Holmes found guilty of conspiracy to defraud Theranos investors. Not guilty of conspiracy to defraud Theranos patients.


Josie Duffy Rice: That was CNBC reporting on the verdict. But Gideon, that’s not actually the end of the story, is it?


Gideon Resnick: No, far from it. So there’s some reporting and other indications that Holmes’ legal team has quite a bit more maneuvering in the works. So, according to a recent Wall Street Journal piece, her team could ask the judge to throw out the conviction, to grant a new trial, or to ultimately appeal it in the future. However, some lawyers quoted in the story suggested that the fact that Holmes was not found guilty on all counts could make it harder to argue those points about how the trial went. The jury was hung on three counts, and one of Holmes’ attorneys said that he would wait to see what happens with them before deciding on other post-trial motions. It is possible that we could see a hearing scheduled to discuss those counts this week.


Josie Duffy Rice: Yeah, and then there is the matter of her sentence, as well as the upcoming trial of Ramesh Sunny Balwani, her former business partner and former boyfriend. So what should people watch for there?


Gideon Resnick: Yeah, so a lot of this is likely to happen farther down the road. But Judge Edward Davila has said that he had thought about delaying Holmes the sentencing until after Balwani’s trial. That is tentatively scheduled for February, but could be pushed back due to COVID. So as we wait to learn more about all of this, I wanted to get a little more in depth on the trial itself and what it all means. So last week, I spoke to Erin Griffith, a New York Times reporter who has been covering the trial, and she started by explaining how the verdict was a win for prosecutors, no matter what happens afterwards.


Erin Griffith: Ultimately, she was found guilty, and so that’s not an outcome that she was hoping for or her lawyers were hoping for. And the U.S. attorneys, you know, have declared a victory in this.


Gideon Resnick: Yeah, and I’m curious on that point, too, is the sense that the defense went wrong somewhere. Is it that the case was just too strong? Is it sort of like a mixture of both?


Erin Griffith: You know, that’s a great question. There was a lot of very strong evidence in this case, and the defense certainly put up a strong defense. I mean, they grilled all of the witnesses from the prosecution. They really tried to hurt their credibility. They put Holmes on the stand and she kind of used some of that same charm that she had used to win over and impress all the investors and the media and all of the people who sort of elevated Theranos in its heyday. She really tried to use that on the jurors, but ultimately the evidence was very strong. There were emails, there were recordings, there were videos, there was this testimony of all of these investors saying, This is what she told us, and then this is what the reality was. So they didn’t buy her defense.


Gideon Resnick: Right. And it’s hard to say, of course, but what do you anticipate next year and how likely is it that Holmes actually serves time?


Erin Griffith: I do think it’s likely, but it is so up in the air, it’s so up to the judge. So that could be several months from now when we actually do get a sentence. And the judge will take a lot of things into consideration. One thing that I think hurts her is that what she was found guilty of are the largest dollar amounts that were invested that were brought as charges. And so, you know, one of them is $100 million, one of them is nearly $40 million, and so that is something that the judge is certainly going to take into account is how large the fraud was. And so that does not bode well for her.


Gideon Resnick: Yeah. Wow. There is a separate trial for Holmes’ former business partner, coconspirator Sunny Balwani, who is also facing several criminal charges. What does the result of this trial mean for that one? I think that’s what everybody sort of thinking about.


Erin Griffith: Yeah, I mean, it’s going to be interesting because he was not, you know, as high profile, not a household name, not on magazine covers like she was. So I don’t know if the media interest will be the frenzied circus that it was for Holmes, but it’s still a very high-profile case with a lot of money at stake, and Balwani was in charge of the lab. And so a lot of the stuff that was related to whether or not the technology worked, whether or not she knew, it was almost a little harder sometimes for the prosecutors to tie that to her because, you know, Balwani’s on all the emails, he’s the one who’s like technically in charge of this stuff and so they might get more into the science of the lab with him. Whereas with her, it was very easy for them, prosecutors to say, You’re the CEO, the buck stops with you, you could have fired any of these people, you know you were in charge of the board. He might be able to get off by saying, You know, I was just doing what she told me to do. And she’s now a convicted felon. She blamed him for a lot of things, and he will probably try to blame her for a lot of things, too.


Gideon Resnick: And one other thing I was thinking about is in conjunction with this, and I suppose like the Francis Haugen situation with Facebook, is there a sense that, like any of this would incentivize further whistle blowing?


Erin Griffith: I really have such a deep appreciation for the people that are willing to come forward, and I hope that it shows that these kinds of things can have an impact. But I also know that there are just a lot of people that have stories or things that they want to reveal wrongdoing that they’re seeing happening and are very, very scared because there’s a lot of money and a lot of power. It’s a huge risk and it doesn’t always work out, work out like this. People can end up being in pretty bad situations legally or with their reputation. I’ve seen it go in both directions. These are ones that had at least a little bit of justice, but it takes somebody being brave like that to actually come forward in these scenarios and make a positive difference.


Gideon Resnick: Yeah. This kind of gets at something that you recently wrote that the fraud trial and the result showed how Holmes and Theranos are indicative of Silicon Valley in a sense. Can you explain what you meant by that and what that could actually mean for other companies in the future?


Erin Griffith: She does represent this element of Silicon Valley culture that, if taken to the extreme, can be very dangerous and can lead to fraud. And so obviously, not everyone in Silicon Valley is committing fraud or even on that spectrum, but she was following the same playbook that most entrepreneurs are pushed to follow. She just crossed a line and went further into actual fraud. It is so rare for any kind of executive, but especially a tech company, especially a Silicon Valley company, to ever actually be investigated and indicted. And then it’s even rarer for them to actually go to trial, and even rarer for them to be convicted. And so I think it’ll be very interesting to see in the coming years, you know, if prosecutors are emboldened to start going after more and more of the claims that Silicon Valley startups are making.


Gideon Resnick: So Josie, that is my conversation with New York Times reporter Erin Griffith.


Josie Duffy Rice: We’ll keep following this story, and as always, we’ll have updates for you when the story advances, which should be in the coming weeks. But that’s the latest for now. We’ll be back after some ads.


[ad break]


Gideon Resnick: Let’s wrap up with some headlines.


[sung] Headlines.


Gideon Resnick: The investigation continues into the tragic Bronx fire on Sunday that left 17 people dead. New York Fire Commissioner Daniel Nigro initially confirmed 19 deaths, but Mayor Eric Adams revised the death toll yesterday due to double counting issues. The fire started with an electric space heater malfunctioned and ignited in an apartment, and fire officials say that the smoke was able to spread so rapidly because the apartment’s door didn’t close automatically as residents fled. Under New York City law, landlords are required to install self-closing doors in their apartment complexes, but this door seems to have malfunctioned. And speaking of landlords, one of the owners of the apartment complex is Rick Groper, a former member of Mayor Adams’ Housing Team. Officials also say that the space heater may have been running nonstop for several days to supplement the complex’s heating system, and tenants had complained about a lack of heat in the building months before the fire. We’ll link to an article in our show notes that lists ways you can support the victims.


Josie Duffy Rice: Myanmar’s ousted civilian leader, Aung San Suu Kyi, was sentenced to four more years in prison yesterday in the latest installment of legal cases against her. This brings her total prison term up to six years. A court found her guilty of violating COVID protocols and breaking the country’s import-export and telecommunications laws by possessing walkie-talkies. The charges were just a few of many brought against her by Myanmar’s military junta, which staged a coup last February after she won the last election in a landslide, a move that drew the condemnation of the U.N.. The verdict also comes one month after Suu Kyi was convicted and sentenced to two years in jail for inciting public unrest and a separate breach of COVID protocols. Suu Kyi faces at least seven more charges, including five counts of corruption, all of which her defenders say are, quote “bogus” and a move by the military to eliminate all opposition. The AP says that if convicted on all counts, she could spend the rest of her life in detention with a maximum sentence of more than 100 years.


Gideon Resnick: Wow.


Josie Duffy Rice: Unbelievable.


Gideon Resnick: Those of us who thought sending at least two famous moms to jail would make college admissions fair were sorely mistaken.


Josie Duffy Rice: Shocking.


Gideon Resnick: Just yesterday, five former students of several universities, including Yale, Georgetown and Northwestern—go cats!—sued their schools for allegedly violating antitrust laws to get the upper hand on students in financial aid negotiations. The Wall Street Journal broke the story, and it reports that the plaintiffs accused 16 schools of price fixing as well as sharing a single method to calculate an applicant’s aid package. They say that practice meant that schools could potentially sync-up their aid offers instead of competing with each other to give some students more. Representatives from several of the accused schools have pushed back against these claims, Josie, but this isn’t the first time that colleges have faced lawsuits for stuff like this. In 1991, Ivy League schools and MIT were charged with price fixing for allegedly comparing the aid packages they each gave to students who were accepted into multiple schools. For this new lawsuit, the plaintiffs’ lawyers say more than 170,000 former undergrads of these schools could potentially join their case. Uh, if the plaintiffs’ lawyers would like to get their 170,001, I know a guy.


Josie Duffy Rice: Yeah, I am shocked, absolutely shocked to hear that colleges may be /cheating students. Who knew? A recent breakthrough is making doctors say the three most beautiful words in the English language: “that’ll” “do”, and “pig.” At the University of Maryland Medical Center, a man received the first ever transplant of a genetically modified pig heart. And as of yesterday was reportedly doing well three days after his surgery. Animal to human organ transplants have been attempted before, but failed due to the patient’s immune response to the implanted organ. This time, surgeons used a donor pig who had undergone gene editing so it would not produce antibodies that provoke rapid organ rejection—I don’t even know how to process this story, Gideon. The results could have huge implications for the over half a million Americans on organ transplant waiting lists, and they’re particularly relevant to individuals who are too sick to qualify for organs from human donors, like the patient in this landmark surgery. Of the operation, the chief medical officer of the United Network for Organ Sharing said quote, “this is a watershed event. Doors are starting to open that will lead, I believe, to major changes in how we treat organ failure.” A reminder to all farm animals that may be listening: the pig in this story is a hero, but you all are still perfect and heroic, even if all you do is eat slop and lay on the grass.


Gideon Resnick: Yeah!


Josie Duffy Rice: Gideon, I feel like this is one of the few stories where it could be the premise to a horror movie, but actually is maybe just great news. Just phenomenal news.


Gideon Resnick: It feels like it could teeter after a week or so in said horror set up.


Josie Duffy Rice: Yeah!


Gideon Resnick: You know?


Josie Duffy Rice: Yeah.


Gideon Resnick: Like we’re three days in, we’re like, The doctors think it’s going great.


Josie Duffy Rice: True, true.


Gideon Resnick: I’m really happy for this particular situation. And I do want to reiterate again, if you’re a pig who holds on to your heart and you’re hanging out on the farm—.


Josie Duffy Rice: You’re doing a great job.


Gideon Resnick: You’re beautiful. If you give your heart up to it, human man, you’re also beautiful. We love all of you, at WAD.


Josie Duffy Rice: Exactly.


Gideon Resnick: The producers are pulling my mic as we speak, and those are the headlines. That is all for today. If you like the show, make sure you subscribe, leave a review, say the three most beautiful words in the English language to a pig that you love, and tell your friends to listen.


Josie Duffy Rice: And if you’re into reading, and not just stories of hero farm animals like me, What A Day is also a nightly newsletter. So check it out and subscribe at I’m Josie Duffy Rice.


Gideon Resnick: I’m Gideon Resnick.


[together] And thank you pigs.


Gideon Resnick: That’s all we got to say.


Josie Duffy Rice: Amazing.


Gideon Resnick: We want to thank all the pigs out there.


Josie Duffy Rice: Yep.


Gideon Resnick: Shout out to pigs.


Josie Duffy Rice: Shout out to pigs.


Gideon Resnick: What A Day is a production of Crooked Media. It’s recorded and mixed by Bill Lancz. Jazzi Marine and Raven Yamamoto are our associate producers. Our head writer is Jon Millstein, and our executive producers are Leo Duran and me, Gideon Resnick. Our theme music is by Colin Gilliard and Kashaka.