Elizabeth Holmes case (2015-2021)
Theranos downfall
Elizabeth Holmes (2015-2022)
Abstract
The Elizabeth Holmes Case involves Elizabeth Holmes, a Stanford University drop-out and former executive of the Health Technology Corporation Theranos. She founded the blood testing company in 2003, the test required taking small samples of blood to detect abnormalities. Holmes intent in the beginning was not malicious. The controversy with her company began in 2015. The testing machine results were considered unreliable by a Wall Street Journal investigation; her company ended in 2018. Holmes deceived her customers and stakeholders by supplying them with false information about the results of the test not following Individualism. Her involvement in the company led to her being charged with fraud. Kantianism was not followed as Holmes lied and manipulated her clients and stakeholders into believing her product was reliable. Her character traits did not follow the theory of virtue, she was considered selfish and a con artist, her actions resulted in putting lives in danger. This case began on June 18th of 2018. This case was brought to trial in August 2021 and was ongoing until November 18th, 2022, in which she got her final sentence. Initially, she was charged for her involvement in the promotion of Theranos, Inc.; a consumer healthcare technology start up. She was then charged with 11 counts of fraud. The jury, after a long debate, found Holmes guilty of 4 of the 11 charges including investor fraud, wire fraud and conspiracy.
Ethics Case Controversy
Initially the goal of this company was to revolutionize health care. The main goal of the company that goes along with revolutionizing healthcare was to develop a method for blood
diagnostic testing. In 2003, Holmes, who attended Stanford University but later dropped out after starting her company. Her company began to raise millions of dollars. Holmes and her associates marketed her product as one prick of the finger could offer 240 tests; getting the results in only a few hours. The primary technology was called the Edison, named after the inventor Thomas Edison. Holmes objective was to help with the discomfort of having blood taken. Both Holmes and her COO Sunny Balwani started the company with good intentions. (Beltran) Her company began to raise millions of dollars. The technology soon caught people’s attention and it began to be marketed in news magazines and on television shows. They would talk about how successful it was. Holmes was able to get society to believe in her company and soon after was backed by investors who saw potential in the technology she created. The company was now valued at 9 billion dollars.
Ethically things began to change, an investigation revealed they were given false information on how accurate the blood testing was. Elizabeth Holmes was seen to be a phenomenally successful intelligent woman until she started manipulating people that had less knowledge about the blood sampling technology. The Wall Street Journal published an article about an investigation of the company. The article was written in 2015 by John Carreyrou,a journalist with the Wall Street Journal. He stated that investors have invested over 400 million dollars in the Theranos technology. The article mentioned how they struggled with putting technology into reality. A former employee from Theranos, Inc. spoke with Carreyrou about the accuracy of the test and that he and other employees felt the same way. Soon after other employees accused them of failing to give test results back. This was the beginning of unethical behavior. This got people questioning the accuracy of the technology.
The medical testing device being used was deceptive and did not give accurate testing results which caused controversy within the Wall Street Journal and other news outlets. More questions began to be raised about Holmes’ creditability and deception about her technology. The United States Attorney's office states, “As alleged in the operative indictment, Holmes and Balwani used advertisements and solicitations to encourage and induce doctors and patients to use Theranos’s blood testing laboratory services, even though, according to the government, the defendants knew Theranos was not capable of consistently producing accurate and reliable results for certain blood tests. It is further alleged that the tests performed on Theranos technology were likely to contain inaccurate and unreliable results.” (“Northern District of California | U.S. v. Elizabeth Holmes, et al.”) The fact that Holmes was aware that the technology did not work as they said but continued to make people think it did shows how unethical her behavior throughout the entire process was.
Holmes downfall
Stakeholders
Holmes initially targeted family and friends to help fund her company. The company had about 700 million put forth by investors. Investors were not given accurate information on her revenue. They were deceived by her technology just as much as society was. When being a stakeholder for any type of company you should always have all the information and they have the right to ask any questions about the company. There were so many secrets that Holmes hid from them that was not right. Some of her highest profile stakeholders were Rupert Murdoch, Tim Draper, Larry Ellison, and Walgreens.
She not only gave investors false information about her product, but she also jeopardized the health of individuals. It states that “According to the Journal, part of Holmes’ strategy was to secure investments from private donors as part of an effort to keep Theranos a private company.” (Keown). She was good at becoming close with her investors and making them trust her. She was smart and knew the type of people to surround herself with would make her more powerful. Yes, she was able to keep these investors close but by lying to the people she needed most to keep her business running. She clearly was not thinking about the interest of the investors, she just wanted their money.
Individualism
Libertanism.org defines Individualism in ethics as “holds that the primary concern of morality is the individual, rather than society, and that morality primarily concerns individual flourishing, rather than one's interactions with others.” Elizabeth Holmes was seen as a con-artist and a woman who used her image to gain people’s respect and have power over them. She knew her drug testing product was a failure but continued to gain investors by lying about the reality of the product. Holmes lived her life in secrecy and paranoia because she knew what she was hiding was just a matter of time before it was released.
Holmes should have used her platform to maximize her ability to help people instead of manipulating them. She was seen as being a feminist, but she used to be a female towards her advantage that made people feel empathy for her throughout her trails. Individualism is being selfish, knowing what you should do to help the company but choosing to do what you think is going to benefit yourself instead. As it was said in an article written about her, “She relied on the language of gender when it suited her, but set out to emulate Steve Jobs and amass as much personal power as possible.” (Sommer). This Shows just how selfish she was and how other people thought of her. It is simple to understand that you should not use your gender to gain respect, instead follow the moral principles to gain people's respect towards you. She did not act in moral ways so using her profile to her advantage was what she decided to do. Her expectation was to be a leader and someone to look up to for other women who saw her as a tremendous success, but she took advantage of her power in the wrong ways.
Kantianism
When talking about ethics Kantianism is “a set of universal moral principles that apply to all human beings regardless of all contexts or situations.” (CFI Team) Elizabeth Holmes's actions are not ethical when talking about how she got her company to be worth billions and how she considered herself successful. When it comes to making decisions based on success, one should look at what is going to be the right move through other people's view not your own self's perspective. There are rules that need to be followed through all business no matter the situation. Holmes broke these rules. Her motive was not always to break rules, but after a few issues, she thought there was no other way than to lie to the public. She was held by such a high standard in the public eye but that only pushed her in the wrong direction. She was such role model towards women which made them choice to trust her. When you are a woman that has so much power over others you can begin to feel like the universal moral principles do not apply to you.
You start to see how unmoral she was throughout her documentary when she decided to opt out of any unbiased scientific review of her product in fear of customers finding out that her product was not giving them accurate results. She used manipulation to make people believe Theranos was correct and real. It took until her getting caught to admit what she had done, but she made it seem she never did anything morally wrong. Many employees spoke up about feeling they were being used in this process to benefit Holmes. Her morals are unacceptable and unethical in so many ways. It is interesting when you hear that she kept so much information hidden and never answered certain questions asked about the technology. You can begin to question why it was not talked about sooner but the only reasonable explanation you can get was that her standard was set so high that no one thought she would do anything like this. Her unethical behavior was not one to be let go of and if only it was found out sooner it would not have affected so many people.
Virtue Theory
The virtue theory in ethics is defined as “doing someone else's duties or acting as they say to you following your own morals towards what you think is right.” Simply it is whether someone acts virtuous or not. Another way to look at virtue can be having to act in rational ways to live a good life. Elizabeth Holmes was not one to show high moral standards. Her company dealt with people's lives; it was important for her to care about her customers. She hid information from investors that would have made them rethink their decision to invest. The only way to be considered in the virtue theory is to follow the four main virtues which by doing so your company is considered ethical without following these virtues you are considered unethical. They are honesty, justice, temperance, and courage. Her actions were very selfish as they only helped her. When talking about honesty, she did the opposite, tricked everyone around her and was never honest with anyone. Holmes wanted people to believe she was changing the world with her technology, but the virtues were not followed. The only justice involved in this case was her being shut down. She used people as her way of becoming who she is, there was no virtue behind what she was doing, it was only about herself. Temperance is using power for the good of others. You can see that this was not done by her. Yes, she used her power, but she used it in a way to manipulate people and not to help others' lives. Many people relied on her including her family but that did not make her change her ways, she continued knowing the position it could put her in. Being involved in such a large company it is important to have reliable investors, which Holmes was able to get. What the investors did not know was how they were being lied to through fake statements and fake information on the technology being used. These false statements were what brought investors towards Theranos.
Justificiated Ethics Evaluation
Justification in ethics is defined as “finding a reason that justifies your actions or decisions.” The choices you make seem good even when you know they are not. Idealistically, she had a promising idea. If her product were reliable and helped people, it would have been a great concept. Changing the way blood tests are done to better the world was a brilliant concept. Making someone's life easier by including a procedure that caused less pain, time and cost would have been a win for all. Holmes herself was not a fan of needles and her thought was that others like her would compromise their health if they needed to get lab work but with her technology it would be painless. Little did her patients know that the testing they had been promised would not be correct. She could not make her products live up to her promises and only thought of ways to manipulate people into thinking they worked as well as she said. Even when she began her case in court, she was thinking of ways to get away with it and convince the jury that she was innocent. She had asked the jury to overturn her conviction with the reasoning that there was not enough evidence to convict her and asked for a new trial with new evidence. This did not help her case though it only pushed people further into digging up information that would be valuable against her in court.
The Theranos Company
Conclusion
Elizabeth Holmes was a con artist, a very smart one at that. She spent most of her career lying to society about her product, the Edison, by giving false information on how well it worked. Her actions throughout her trials along with what she was doing before she got caught was unethical. It is hard to imagine how such a smart women got herself into the situation she is in now but after reading all about her case you really see how good of a con artist she was. She seemed to have gotten herself in this situation by thinking she was better than other people and could do what she wanted, which clearly did not work out for her. “In conclusion, Elizabeth Holmes deceived and acted in bad faith by making decisions that did not pass multiple ethical principles. “Her actions hurt thousands of customers, deceived scores of stakeholders, caused the loss of hundreds of jobs and lost hundreds of millions of dollars in investments.” (Betran) It is clear that she was short sighted and acting only in the best interest of herself doing more harm than good.” ( Beltran). She will begin her sentence of 11 years in April 2023
References
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Hart, Hanna. “What Can Theranos' Elizabeth Holmes Teach Us about Feminism?” Forbes, Forbes Magazine, 1 Apr. 2019, www.forbes.com/sites/hannahart/2019/03/31/womens-history-what-does-theranos-elizabeth-holmes-tell-us-or-not-about-feminism/?sh=734d30e033f4.
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Libertarianism.org, www.libertarianism.org/topics/individualism-political-and-ethical#:~:text=Ethical%20individualism%20holds%20that%20the,than%20one%27s%20interactions%2.
“Northern District of California.” United States Department of Justice, 16 Nov. 2022, www.justice.gov/usao-ndca.
Person. “Hot Startup Theranos Has Struggled with Its Blood-Test Technology.” The Wall Street Journal, Dow Jones & Company, 19 Nov. 2022, www.wsj.com/articles/theranos-has-struggled-with-blood-tests-1444881901.
“U.S. v. Elizabeth Holmes, et al.” Northern District of California, 21 Nov. 2022, www.justice.gov/usao-ndca/us-v-elizabeth-holmes-et-al#:~:text=Elizabeth%20A.,hundreds%20of%20millions%20of%20dollars.
“Elizabeth Holmes.” Encyclopædia Britannica, Encyclopædia Britannica, Inc., https://www.britannica.com/biography/Elizabeth-Holmes.
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“What Were Aristotle's Four Cardinal Virtues?” TheCollector, 27 Apr. 2022, https://www.thecollector.com/aristotle-four-cardinal-virtues/.
Keown, Alex. “Rep for Wealthy Theranos Stakeholder Describes Holmes' Investor Courting Practice.” BioSpace, BioSpace, 27 Oct. 2021, https://www.biospace.com/article/wealthy-theranos-stakeholder-describes-meeting-with-holmes-ahead-of-100-million-investment/.
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