The Theranos Fraud

By

Leonard Zwelling

https://www.wsj.com/articles/sec-charges-theranos-and-founder-elizabeth-holmes-with-fraud-1521045648

https://www.nytimes.com/2018/03/14/health/theranos-elizabeth-holmes-fraud.html?hp&action=click&pgtype=Homepage&clickSource=story-heading&module=second-column-region&region=top-news&WT.nav=top-news

When I was a research cop, I was often accused of trusting no one. It was true. I didn’t, and with good reason. The conflicts of interest that I discovered upon taking office at Anderson were hair-raising and the violations of human subjects research protocols were common. I am sorry if you clinical investigators out there find this offensive. In 1995, it was true.

I am pleased to report that over the next nine years we made some progress in regard to violations of protocols. The IRB got stronger. The Clinical Research Committee became more rigorous and the faculty stepped up its game—big time. Maybe I helped with that a little. I hope so. The Blue Ribbon Panel that Dr. Mendelsohn charged with reviewing the performance of the clinical research infrastructure found my office to have been excessive in its zeal for control of this heavily regulated activity. Guilty. In spades. By 2004, I had had enough and donated my clinical research office to Dr. Markman who kept it—briefly. I have no idea how things are now. I am thrilled to say it is no longer my problem.

However, despite progress in the “trenches,” at the highest reaches of MD Anderson, things were going less well. Two presidents were involved with the biggest business collapse in Houston history. That was Enron on whose board both Dr. LeMaistre and Dr. Mendelsohn sat when the conflict of interest rules were suspended. The rest is history. I was also the vice president who had to answer to the press about Dr. Mendelsohn’s lack of candor with regard to his interest in ImClone whose trials were being done at Anderson without the knowledge of the human subjects that the leader of the institution where they were being treated had a vested interest in the outcome of the research his minions were overseeing.

Mendelsohn was followed by DePinho who never saw a conflict or incident of self-dealing that he could resist while Ken Shine sat on the sidelines rooting him on. The conflicts of interest at Anderson were great. I have no idea what is going on now. Again, it is no longer my problem though it was my office that established the conflict of interest review system at Anderson after the Mendelsohn ImClone debacle. So if you hate it now, you can blame me.

But, as usual, MD Anderson is not alone in its bad behavior. Now we have Theranos.

Theranos is a company started by Elizabeth Holmes, who, at the time, was a 19-year old Stanford dropout who somehow convinced the biotech and venture capital world that she really had a means to do multiple blood analyses from a few drops of the stuff. It was the Wall Street Journal who broke the story in 2015 that the golden-haired, black turtle-necked, Steve Jobs wanabee actually had no product despite having a company whose market valuation at one point was $9 billion. Half of the money was hers. She had former Secretaries of State Kissinger and Schultz on her board. David Boies, a prominent attorney, represented her and joined the board as did current Defense Secretary Jim Mattis. She duped them all. The Theranos product was what my good friend Mitch Morris used to call “vapor ware.” It was nothing.

Ms. Holmes paid a fine of $500,000 and is banned from being an executive in a public company for ten years. She’s 34 now. She’ll bounce back. They always do.

The key point is that this technology never underwent rigorous peer-review which is still the gold standard for the validity of scientific findings. How anyone could invest in an unproven technology to the tune of millions of dollars is beyond my comprehension. But then again, the Board of Regents bought the DePinho nonsense and they are supposed to be sophisticates.

It just goes to show that there really is a sucker born everyday and that might include on your birthday. Be wary. Don’t trust easily. Remember Ronald Reagan. “Trust, but verify.” No one did that for Theranos. No one did that at Enron. No one did that at ImClone. And, at least in the past, no one did that at the Board of Regents either.

Leonard Zwelling