Theranos Whistleblower Tyler Shultz: Elizabeth Holmes 'A Very, Very Charismatic Person'
SAN JOSE (CBS SF) -- Like many people she came into contact with during her heyday as the darling of Silicon Valley, Tyler Shultz was at first mesmerized by Elizabeth Holmes, but soon realized something wasn't quite right with Theranos and her claims about the company's allegedly revolutionary blood-testing technology.
On Monday, a jury of eight men and four women split on two of the major federal fraud counts filed against Holmes, ruling she defrauded investors of millions of dollars but did not mislead patients and doctors as to the accuracy of her failed startup Theranos' blood testing technology. She also was found guilty of three counts of wire fraud.
It was a stunning conclusion to the high-flying career of a woman who was once called the next Steve Jobs. Holmes was the subject of business magazine cover stories describing her as the youngest self-made female billionaire in history.
"Elizabeth is a very, very charismatic person," Shultz said in an interview with the CBS Morning News Tuesday. "When she speaks to you, she makes you feel like you are the most important person in her world in that moment. She almost has this reality distortion field around her that people can just get sucked into."
Her tumble from grace and tech stardom began shortly after a series of articles critical of Theranos was published by Wall Street reporter John Carreyrou in 2018. Schultz became a valuable confidential source for that reporting.
Shultz was an employee at Theranos in 2014 when he emailed Holmes to complain that the company had doctored research and ignored failed quality-control checks.
"Even when I was working with the product every day, seeing it fail time after time after time, I could go have a five-minute conversation with Elizabeth and feel like I was saving the world again," he said. "It's really a hard phenomenon to explain, but she sucked a lot of people into that."
But as his disenchantment grew, Shultz decided to complain to his grandfather, former U.S. Secretary of State George Shultz, who was on the Theranos board. He wanted to save his grandfather from any embarrassment the company's failure would bring.
What followed was a nightmare that caused a chasm in their relationship which continued almost up to George Shultz's death last year.
Ultimately, Tyler Shultz would use an alias to complain to the New York state's public-health lab about results misreporting from Theranos and also become a valued confidential source for Carreyrou.
When he became suspected as a source, Shultz was ambushed in his grandfather's living room by Theranos lawyers and threatened with lawsuits if he kept talking about the company.
"This whole saga has taken a financial, emotional toll on my relationships," Shultz told CBS Morning News. "The toll that it took on my grandfather's relationship was probably the worst. It's tough to explain. I had a few very honest conversations with him. We ultimately did reconcile, he never quite apologized, but he at least admitted that I was right about what I saw and he congratulated me for doing the right thing."
Shultz was rumored to be among the prosecution's rebuttal witnesses at the Holmes trial but never was called to the stand as the federal lawyers simply rested their case.
"I would have been happy to testify, to get up there and have the opportunity to tell my story under oath," he said.
"Whether Elizabeth Holmes spends time in prison doesn't really affect my life," he added. "I'm happy that she was found guilty for these crimes. I feel I got my vindication from that and I feel good about that. As far as the jail time, whether it's one, five, 10 years, I don't really care as much. I'm just happy she was found guilty, I won, I'm vindicated."
"I thought the jury was very thoughtful in their verdict," said legal analyst and former prosecutor Michele Hagan.
Holmes will serve time behind bars, but Hagan said most likely far less than the maximum of 20 years per charge. She called the case a tragedy for Holmes and her family.
"Her idea was a good one, but the problem is she wasn't able to execute it. And you just can't dupe people," said Hagan. "You can't dupe them out of money. And you can't dupe them on a vision that you can't prove."
The court is expected to set a date for a sentencing hearing next week.