Despite 20 years of experience in the healthcare space, Brian Grossman fell prey to Theranos and invested $96 million on Elizabeth Holmes’ provided information including the fake financial models of the company.
Grossman relied on the information that Theranos’ CEO, Elizabeth Holmes, provided to him. She told him that Theranos could give head-on competition to its competitors like Labcorp and Quest Diagnostics.
“That was a really big statement” to explain how much he has achieved to date, said Grossman.
Allegedly, Theranos claimed to have experience in medivacs and on the battlefield. What further impressed Grossman was how several drug companies got their test done from there to verify experimental products. Since Grossman has significant experience in this field, he knew how crucial it is to get products approved to bring them into the business.
“What better application for a technology like this than in a military setting under harsh conditions like one would expect in a place like Afghanistan or Iraq?” said Grossman.
“Something over $200 million in revenue from the Department of Defense,” Theranos claimed to receive.
The 2014 financial reports that Theranos provided to Grossman saw a $30 million cash inflow coming from pharma organizations.
Of course, none of the information provided was authentic, nor did they have any revenue in 2014 from pharma companies except for 2012 and 2013.
According to Grossman’s statement, Holmes and her co-defendant Sunny Balwani claimed that it takes just 4 hours to get a test result at Theranos about which the whistleblower Erika Cheung had doubted was not accurate.
After the meeting, Grossman followed up with a detailed list of due diligence questions. For instance, he asked what tech restrictions on the tech were.
“Holmes and Balwani were ‘emphatic’ that their devices were labs shrunk down to the size of a box.”
Holmes was “very clear that this technology was not a point-of-care test, not a point-of-care testing platform, it was a miniaturized lab” he added.
Throughout the meeting session and e-mail exchange, neither Balwani nor Holmes mentioned that the company is capable of doing just a handful of tests. Nobody even bothered to say that the company uses third-party equipment to perform the tests.
The company’s alleged relations with Walgreens further gained Grossman’s confidence. However, Balwani got squirrely when Grossman asked him that he would love to meet Walgreens representatives.
He escaped the scene by saying he would be “uncomfortable with that,” testified Grossman.
After an impressive deceptive representation of the company, Grossman finally invested though, there were so many red flags but Grossman was too dazzled with their words and fake information that he shrugged them off and made a $96 million investment.
