Is 'The Dropout' true? Episode 5 of Elizabeth Holmes Theranos drama

SAN JOSE, Calif. - Evan Sernoffsky is an investigative reporter for KTVU who covered the four-month-long Elizabeth Holmes fraud trial from gavel-to-gavel. Email Evan at evan.sernoffsky@fox.com and follow him on Twitter @EvanSernoffsky.
 

SAN JOSE - In Episode 5 of Hulu's miniseries the Dropout, Elizabeth Holmes turns from truth stretcher to full-blown fraudster. 

We're now in 2013 – an important year when Holmes began committing some of her most devious deceptions and crimes she was later convicted of. 

Whether she was as callous as she's portrayed in the series, we'll never know. But facts are facts and there's no disputing many of the decisions she made in 2013, which could lead to a lengthy prison sentence. Obviously, this article contains spoilers. For the rest of you, here’s what we know:
 

Episode 1: "Flower of Life"

Did Walgreens really invest $140 million into their partnership with Theranos?

As we discussed last week, Theranos' partnership with Walgreens would prove to be the company's undoing. In Episode 5, "Flower of Life," we learn from former Walgreens exec Wade Miquelon (later witness for the U.S. Attorney's Office) that the pharmacy company had invested $140 million in the partnership even before launching its wellness centers.

Miquelon testified at trial that Walgreens invested $100 million in Theranos before adding another $40 million around the time Safeway dodged a bullet and backed out of its deal. This was all as executives allegedly had no clue Theranos wasn't actually going to be using its proprietary analyzers to test patients' blood.

Was Theranos's relationship with Chiat\Day really so chaotic?

First let's remember how important Chiat\Day is to the whole Silicon Valley mythos. They're the add agency that produced the famous "1984" Apple ad that launched the company's first personal computer and with it the career of Steve Jobs. 

And though she idolized him, Theranos' founder and CEO proved to be no Steve Jobs. 

In one scene, we see Theranos attorneys tell Holmes she needs to change several claims about the company on its website (Chiat\Day was involved in the company's marketing, including its website).

This was discussed at trial when Holmes herself was asked about many of the claims she made about the company – specifically that Theranos could do all the tests available on commercial analyzers, only faster, cheaper and more accurately. It goes without saying that was nowhere near the truth. 

When others in the company saw the same claims she was making to investors about to be published on the company's own site for the world to see, they scrambled (too late) to save Holmes from herself. 

Did Ian Gibbons really kill himself?

Sadly, Ian Gibbons died by suicide in May 2013 amid a falling out with Holmes and pending subpoena to testify in the deposition for the patent lawsuit against Richard Fuisz (William H. Macy). 

Gibbons was named on many of Theranos' patents and was the company's chief scientist beginning in 2005. Many of the details about his time at Theranos were excluded from the trial and many of the details about his suicide were never revealed in court. 

Did Elizabeth Holmes hire her brother Christian and give him major responsibilities at Theranos?

As jurors saw in email after email in the federal fraud trial against Holmes, her brother was high up the chain of command inside the company. The series interjects him (and what would likely be an awkward presence among the staff) in a couple important and uncomfortable scenes. 

We see a conflicting dynamic when Sunny Balwani is yelling at Holmes and her brother step up to defend her (we'll never know if this actually happened). He also pops up to tell her "Uncle Ron" is sick and then dead. Holmes later used "Uncle Ron" to explain her passion for Theranos. Watch her famous TedTalk here. It's unclear if Holmes was just using her uncle Ron's story, or whether she was indeed really close with him. The show and many others, however, have suggested it was all an exaggeration for a better origin story.

We know it's also true that Christian Holmes went to Duke, as he says, because he also got his college buddy Dan Edlin a job as product manager. Edlin later testified against Holmes. 

Was Theranos losing as much money every year as the episode suggests?

Sunny Balwani exclaims that Theranos lost $92 million in 2013 and dumped another $57 million in 2012. According to the company's balance sheets that were entered into evidence, this is true. Former corporate controller So Han Spivey, aka Danise Yam, testified the company was burning through $2 million-a-week at times in 2013. 

Was famed attorney David Boies a Theranos board member and company attack dog?

For the first time we meet David Boies, played by Kurtwood Smith (the dad from That '70s Show), but this won't be the last we hear from him. The episode gives us a great primer on who Boies is, including his history representing former presidential candidate Al Gore in Gore v. Bush and disgraced Hollywood producer Harvey Weinstein. 

We begin to see Boies' shrewdness during his deposition of Richard Fuisz. But there's a lot more to come, including his future tactics against the companies' whistle-blowers, which have since tarnished his reputation even more. 

Did Holmes and Balwani really try to hack the Siemens machines?

Holmes and Balwani's decision to modify third-party analyzers was a step too far for many – including the jury that convicted Holmes earlier this year. 

It's clear in this episode that Theranos's Edison analyzers were not ready for the Walgreens launch in September 2013, so Holmes and Balwani pivoted. 

They decided they would roll out the modified Siemens' technology in two phases. Phase one would involve taking blood at Walgreens stores in Arizona and California and shipping the samples back to the labs in Newark. 

But what they didn't tell Walgreens is that they were diluting samples so they could be analyzed on the Siemens machines, which required a larger amount of blood than Holmes claimed her technology needed. But of course the analyzers were not able to test the diluted samples accurately and the whole things was a disaster.

Holmes later testified in her SEC deposition and in her criminal trial that she and Balwani kept the Siemens machines a secret because they were "trade secrets." We'll see if Balwani gives that same ridiculous excuse at trial, which began this week.

Did Holmes really hold company rallies like that and enjoy bouncy castles?

Yes. Watch and see for yourself.

Catch up on previous episodes….

EPISODE 4 - "OLD WHITE MEN"

EPISODE 3 - "GREEN JUICE"

EPISODE 2 - "SATORI"

EPISODE 1 - "I'M IN A HURRY"