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Speaker 1: My name is Lily Maddon and I'm a proud Arunda

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Speaker 1: Bunjelung Calcottin woman from Gadigol Country. The Daily oz acknowledges

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Speaker 1: that this podcast is recorded on the lands of the

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Speaker 1: Gadigol people and pays respect to all Aboriginal and Torres

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Speaker 1: Straight island and nations. We pay our respects to the

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Speaker 1: first peoples of these countries, both past and present.

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Speaker 2: Good morning and welcome to the Daily os. It's Tuesday,

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Speaker 2: the twenty second of November.

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Speaker 3: I'm Zara, I'm.

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Speaker 1: Sam In a stunning fall from Greece. Wants a Silicon

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Speaker 1: Valley superstore. Elizabeth Holmes will spend eleven years behind Borsford

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Speaker 1: defrauding investors.

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Speaker 2: Elizabeth Holmes went from the top of Forbes' list of

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Speaker 2: the richest self made women.

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Speaker 3: I believe the individual is the answer to the challenges

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Speaker 3: of healthcare.

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Speaker 2: To facing eleven years in prison for fraud, and she said, quote,

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Speaker 2: I am devastated by my feelings. Her company, Theronos promise

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Speaker 2: to revolutionize the health tech sector by introducing medical testing

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Speaker 2: from just a few drops of blood. So what went

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Speaker 2: wrong and what could it mean for the future of

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Speaker 2: the health tech industry. We'll get into it in a

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Speaker 2: deep dive, but first Sam take us through the headlines.

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Speaker 3: Prime Minister Anthony Alberinizi has told Parliament he's focused on

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Speaker 3: stabilizing a relationship with China after meeting Chinese President Jijiping

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Speaker 3: on the sidelines of the G twenty summit in Bali,

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Speaker 3: Albinizi said the meeting with g was the most important

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Speaker 3: he had While holding bilateral talks with world leaders in Indonesia,

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Speaker 3: Thailand and Cambodia in recent weeks, it's been a busy

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Speaker 3: period for the Prime minister.

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Speaker 2: The Federal government has issued a new options paper to

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Speaker 2: address what they call regulatory gaps in the buy now,

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Speaker 2: pay later space. The paper, which is open for consultation,

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Speaker 2: proposes strongest self regulation and the inclusion of buy now,

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Speaker 2: pay later systems into pre existing legislation to ensure proper

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Speaker 2: regulation in all parts of the digital economy.

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Speaker 3: To the online world now and former US President Donald

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Speaker 3: Trump has said he's not interested in returning to Twitter,

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Speaker 3: despite new owner Elon Musk reinstating his account on the platform.

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Speaker 3: In the video address this week, Trump said he would

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Speaker 3: stick to his Truth social platform, which he created after

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Speaker 3: he was banned from Twitter following the January sixth Capitol

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Speaker 3: riots last.

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Speaker 2: Year, and the good news the US Food and Drug

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Speaker 2: Administration FDA has approved the first ever medicine to delay

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Speaker 2: the onset of type one diabetes. The drug is understood

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Speaker 2: to delay the onset of stage three type one diabetes

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Speaker 2: for patients aged eight and older. The director of Diabetes

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Speaker 2: at the FDA's Drug Evaluation and Research Center said the

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Speaker 2: treatment could offer patients months to years without suffering from

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Speaker 2: the disease. Elizabeth Holmes has been sentenced to eleven years

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Speaker 2: in federal prison in the US for defrauding investors of

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Speaker 2: hundreds of millions of dollars. I personally have been incredibly

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Speaker 2: fascinated by this story. It's the subject of a mini series,

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Speaker 2: of podcast and a book, all of which I have

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Speaker 2: consumed hungrily. It's just fascinating to see how one of

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Speaker 2: the shining stars of the business world, who was plastered

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Speaker 2: all over the fronts of newspapers and magazines has ended

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Speaker 2: up where she has.

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Speaker 3: You've been speaking to me about this case for quite

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Speaker 3: a while, Zara, so it's interesting to see a prison

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Speaker 3: sentence get handed down. Why don't we start with the

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Speaker 3: main character, who's Elizabeth Holmes.

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Speaker 2: It's the golden question that I think people are still

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Speaker 2: trying to answer. But Elizabeth Holmes is known for founding

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Speaker 2: American health tech company Theronos. She dropped out of Stanford

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Speaker 2: in two thousand and three at just nineteen years old

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Speaker 2: and went on to create this health tech company. She

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Speaker 2: quickly became a rising star of the Silicon Valley startup scene,

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Speaker 2: attracting high profile investors both from media politics. There were

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Speaker 2: some really incredible investors, and she also amassed multiple accolades,

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Speaker 2: including one of Times magazines one hundred Most Influential People

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Speaker 2: and one of Glamor Magazzines Women of the Year. In

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Speaker 2: twenty fifteen. She also topped Forbes's inaugural list of America's

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Speaker 2: fifty top richest self made women that year. At just

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Speaker 2: thirty one years of age, she was worth a whopping

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Speaker 2: four point five billion dollars.

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Speaker 3: That's some serious commercial success. What did Therenos position itself

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Speaker 3: to do?

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Speaker 2: They promised to revolutionize the health sector. Basically, they claimed

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Speaker 2: to have invented a new blood test using a machine

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Speaker 2: called the Edison, which claimed it could detect conditions like

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Speaker 2: cancer and diabetes quickly from just a few drops of blood.

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Speaker 2: The idea was supposedly built on Holmes's phobia of needles,

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Speaker 2: and in public appearances she used to say that their

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Speaker 2: technology would encourage more people to get tests. So the

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Speaker 2: logic there was that if more people were getting tested,

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Speaker 2: they'd get an earlier diagnosis if something was wrong, and

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Speaker 2: as a result, according to Elizabeth Holmes, her company could

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Speaker 2: save lives. And they raised almost one billion dollars from investors,

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Speaker 2: some of them very well known people like Rupert Murdoch

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Speaker 2: and former U S Secretary of State Henry Kissinger. In fifteen,

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Speaker 2: the company was valued at as much as nine billion

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Speaker 2: US dollars. I mean, if you're not in the world

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Speaker 2: of venture capital, just as a comparison tech company, logy Tech,

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Speaker 2: is worth nine point five billion dollars.

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Speaker 3: That's quite a fall from Grace to be the head

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Speaker 3: of a nine billion dollar company to now be sitting

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Speaker 3: in a prison cell. And I think undoubtedly the fall

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Speaker 3: from Grace is what attracts people to this story. Where

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Speaker 3: did it all go wrong?

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Speaker 2: It all started to go wrong in twenty fifteen when

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Speaker 2: the Wall Street Journal started really really looking into Elizabeth

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Speaker 2: Holmes and her claims. And I think it's really interesting

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Speaker 2: here to note that we've spoken about how Elizabeth Holmes

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Speaker 2: was on the front of all of these really prestigious

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Speaker 2: magazines and papers, and that for the most part, the

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Speaker 2: media was basically not challenging her claims. She was being

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Speaker 2: paraded around as this commercial success at such a young age.

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Speaker 2: But it was also on the flip side, then, the

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Speaker 2: media that actually undid Elizabeth Holmes with this Wall Street

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Speaker 2: Journal investigation. The journal reported that Therahos was issuing customers

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Speaker 2: with inaccurate results, knowing that there were issues with their technology,

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Speaker 2: and when questions about the actual technology itself emerge, Thehranhos

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Speaker 2: and Homes specifically were accused of manipulating the data on

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Speaker 2: how accurate the tests and the technology actually were. These

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Speaker 2: questions ultimately led to very serious allegations that resulted in

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Speaker 2: the US Securities and Exchange Commission the SEC, launching an

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Speaker 2: investigation into Theranos, and in twenty eighteen, the SEC charged Homes,

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Speaker 2: along with Fherrhos president Ramesh Balwani, with fraud.

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Speaker 3: So that's when it really started to unravel. Tell me

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Speaker 3: a little bit more about what they were specifically charged with.

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Speaker 2: Homes and Bahlwani were charged with raising more than seven

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Speaker 2: hundred million dollars from investors. That is so much money,

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Speaker 2: seven hundred million dollars well.

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Speaker 3: Especially for an idea that didn't have the data behind

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Speaker 3: it that it was working.

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Speaker 2: Lots of confidence, but they were charged with raising this

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Speaker 2: money by either exaggerating the truth or outright lying. And specifically,

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Speaker 2: Homes faced eleven charges of fraud and was found guilty

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Speaker 2: on four counts. Two were for wire fraud, which is

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Speaker 2: fraud committed via a phone or other technology, and then

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Speaker 2: the other two were counts of conspiracy to commit fraud.

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Speaker 2: She knew that the technology that Therenos was promising was flawed,

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Speaker 2: but still convinced dozens of investors, including really really prominent

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Speaker 2: public figures, to invest hundreds of millions of dollars into

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Speaker 2: the company. The court also highlighted how she misrepresented the

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Speaker 2: company's finances. The trial heard, for one example, that Holmes

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Speaker 2: told an investor in twenty ten that the projected revenue

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Speaker 2: for Therhnose for the coming year was two hundred and

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Speaker 2: twenty three million dollars, when in reality, revenue was falling

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Speaker 2: and had gone from two point eight million dollars in

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Speaker 2: two thousand and nine to less than six hundred thousand

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Speaker 2: dollars in twenty eleven. And I mean, of course that's

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Speaker 2: only looking at the finances. That's putting aside all of

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Speaker 2: the other claims about saving people's lives and testing their blood.

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Speaker 2: She was even lying about the finances too. After the

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Speaker 2: charges were brought against her, Holmes agreed to give up

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Speaker 2: control of the company, which and went on to collapse.

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Speaker 3: So the news this week was that Holmes was finally sentenced.

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Speaker 3: How long is she behind bars?

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Speaker 2: For more than eleven years if we're being very specific here,

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Speaker 2: eleven years and three months. Holmes's lawyers had requested an

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Speaker 2: eighteen month house arrest, while prosecutors were asking for fifteen

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Speaker 2: years in prison, So it does look like they fell

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Speaker 2: more towards the side of the prosecutors than Holmes's lawyers.

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Speaker 2: But she's pregnant, right, She is pregnant, and that's what

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Speaker 2: her lawyers were arguing was a mitigating factor behind why

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Speaker 2: she needed to have a shorter sentence. In a statement

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Speaker 2: following the trial, US attorney Stephanie Hines said that quote,

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Speaker 2: for almost a decade, Elizabeth Holmes fabricated and spread elaborate

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Speaker 2: falsehoods to draw in a legion of capital investors both

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Speaker 2: big and small, and cause the loss of hundreds of

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Speaker 2: millions of dollars. Her sentence reflects the audacity of her

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Speaker 2: massive fraud and the staggering damage she caused.

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Speaker 3: We're going to take a short break. We'll be right back, Zara.

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Speaker 3: Do you think this type of case has an impact

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Speaker 3: on the investment community going forward?

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Speaker 2: Well, we've raised capital obviously on a much smaller scale

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Speaker 2: to Elizabeth Holmes and hopefully in more honest manner.

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Speaker 3: Yeah, when you're in a situation where you're having trusting

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Speaker 3: conversations with somebody, you're trying to get onto your side

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Speaker 3: eventually if they really believe in what you're doing because

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Speaker 3: of what you're telling them, and there's other people who've

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Speaker 3: also invested.

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Speaker 2: I think that's the really interesting thing. It was like

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Speaker 2: a domino effect. Once one powerful person was in the

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Speaker 2: rest we're in without any kind of legitimate questions taking place.

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Speaker 2: It was all of these really powerful people just going

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Speaker 2: along for the ride.

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Speaker 3: Thanks for joining us on the Daily OS today. If

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Speaker 3: you learn something from today's episode, don't forget to subscribe.

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Speaker 3: So there's a TDA episode waiting for you every morning.

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Speaker 3: We'll be back again tomorrow until then have a great day.