Mik Masoud
September 15, 2021
Earlier this month, the trial of one of the biggest healthcare frauds in U.S. history has started. The currently available information is scary, serious, and alarming. It is the Theranos scandal.
On Oct. 16, 2015, John Carreyrou, twice-Pulitzer-prize-winning journalist of The Wall Street Journal, published a report in the Wall Street Journal alleging that Theranos is a fraud. Regulators validated those allegations and found them true. In 2018, Elizabeth Holmes, founder and CEO of Theranos, stepped down, Theranos was closed by regulators, and Ramesh Balwani was charged with criminal fraud, having allegedly misled investors and deliberately made false claims made about the efficiency of the company’s blood-testing technology.
Elizabeth Holmes Exposed: The $9 Billion Medical ‘Miracle’ that Never Existed
Last month the 60 minutes Australia published an episode about the Theranos fraud. I was sad when I watched it because of the following:
1- Ms. Holmes founded Theranos in 2003 and started operations in 2013. It took almost ten years. Two questions popped up in my mind: (a) where were the auditors?, and (b) where were the regulators?
2- The composition and structure of the board of directors of Theranos attracted my attention!!! Public figures and celebrities should watch out when they show support for anything. Due diligence is a precautionary measure that one should pursue under such circumstances.
3- What are those patents Theranos registered in the U.S.? Read the WSJ report.
Theranos Board of Directors
On Mar 19, 2019, Lydia Ramsey Pflanzer reported in the Insider that “Holmes’ board going into the scandal included an unusual roster of names for a healthcare startup, with leaders who had more experience in politics and government than healthcare.
The list included:
- George Shultz, former US secretary of state
- Gary Roughead, a retired US Navy admiral
- William Perry, former US secretary of defense
- Sam Nunn, a former US senator
- James Mattis, a retired US Marine Corps general who went on to serve as President Donald Trump’s secretary of defense
- Richard Kovacevich, the former CEO of Wells Fargo
- Henry Kissinger, former US secretary of state
- William Frist, a heart and lung transplant surgeon and former US senator
- William H. Foege, former director of the Centers for Disease Control and Prevention
- Riley P. Bechtel, chairman of the board of the Bechtel Group Inc. at the time.
Holmes served as chairman of the board and CEO.
What Did the Board Do? The Boards’ Liability
Brent T. Wilson, the Deputy Chief Compliance Officer at the University of Utah Health, discussed thoroughly the board duties and concluded that ” the $9 billion Theranos fraud demonstrates a corporate board’s vital role in compliance oversight. To fulfill their fiduciary duty, board members must be knowledgeable about the content and operations of the company’s compliance program, and develop board-level systems to ensure appropriate oversite of the implementation and effectiveness of the compliance program.”
