{"id":39545,"date":"2024-12-03T16:34:55","date_gmt":"2024-12-03T22:34:55","guid":{"rendered":"https:\/\/blogs.und.edu\/und-today\/?p=39545"},"modified":"2024-12-03T16:34:55","modified_gmt":"2024-12-03T22:34:55","slug":"theranos-whistleblower-ethics-above-all-including-profit","status":"publish","type":"post","link":"https:\/\/blogs.und.edu\/und-today\/2024\/12\/theranos-whistleblower-ethics-above-all-including-profit\/","title":{"rendered":"Theranos whistleblower: Ethics above all, including profit"},"content":{"rendered":"

Don\u2019t ignore wrongdoing, even while \u2018changing the world,\u2019 Olafson Ethics Symposium lecturer Erika Cheung tells UND<\/strong><\/p>\n

\"\"
Former Theranos employee turned whistleblower Erika Cheung, lectures at the 19th annual Olafson Ethics Symposium. Photo by Joe Banish\/UND Today.<\/figcaption><\/figure>\n

Last month, the UND campus community heard from a prominent whistleblower on the importance of speaking up when ethical standards are violated.<\/p>\n

Erika Cheung, best known for uncovering unscrupulous practices at the health technology startup Theranos, delivered the keynote lecture at the 19th<\/sup> annual Olafson Ethics Symposium.<\/strong><\/a><\/p>\n

The symposium \u2013 honoring the philanthropic support of UND alumnus Robert Olafson \u2013 invites speakers spanning the business community to lecture on the importance of personal and professional ethics.<\/p>\n

In her lecture, Cheung chronicled the rise and fall of her former employer. Founded in 2003 by Elizabeth Holmes \u2013 a 19-year-old dropout of Stanford University \u2013 Theranos sought to transform the traditional model of venous blood testing with a device called the Edison.<\/p>\n

Using a single drop of blood obtained via finger prick, Holmes claimed the Edison could detect a range of chronic conditions including diabetes, cancer and autoimmune diseases.<\/p>\n

Investors were bullish. At the company\u2019s height, Theranos was bolstered by hundreds of millions in venture capital, and a board of directors including former U.S. Secretaries of State George Shultz and Henry Kissinger, and former Secretary of Defense James Mattis.<\/p>\n

Cheung called this period \u2013 spanning roughly 2013-2015 — Silicon Valley\u2019s heyday, when the tech industry was lionized by the public.<\/p>\n

\u201cYou had people coming from all over the world, trying to get jobs,\u201d she said. \u201cThere were huge campuses where they would do your laundry, give you free food. What was exciting was it was a whole mindset \u2013 they were about making money and<\/em> changing the world.\u201d<\/p>\n

In addition to support from luminaries in the business and political arenas, Cheung said, Holmes had the backing of the media. She appeared on the cover of magazines such as Forbes and Fortune, and Theranos was billed as a company poised to revolutionize its industry.<\/p>\n

\u201cHolmes was the darling of Silicon Valley,\u201d Cheung said. \u201cEveryone wanted to see her succeed \u2013 they wanted to see Theranos be the next Apple or Google.\u201d<\/p>\n

Cheung herself was such a believer of Theranos\u2019 mission, that she sought employment with the company. After graduating from the University of California-Berkeley in 2013 with a degree in molecular and cell biology, she accepted a position as an entry level lab associate with the company.<\/p>\n

\u201cI had anticipated to work at Theranos for the next decade of my life,\u201d she added. \u201cThis was a problem I wanted to solve. She (Holmes) seemed like a female founder I wanted to back, to encourage the next generation of scientists and engineers.\u201d<\/p>\n

In her role, Cheung was responsible for validating test results on Theranos\u2019 Edison machine. Just months after starting, however, she noticed warning signs.<\/p>\n

Cheung said she and other employees were encouraged to delete test results deemed outliers \u2013 a practice she called antithetical to the scientific principle of data integrity.<\/p>\n

This was the tiny thread that started to unravel the company\u2019s artfully constructed tapestry, Cheung said.<\/p>\n

The Edison\u2019s results were wildly inconsistent, sometimes approaching a 50% failure rate on quality control exercises \u2013 exercises where Theranos employees knew the concentration of samples being tested, she said. Despite these issues, Cheung\u2019s daily workload increased from 10 patient tests to 2,000, due to a partnership Theranos had entered with Walgreens Pharmacy.<\/p>\n

Cheung eventually took her concerns to Theranos chief operating officer Ramesh \u201cSunny\u201d Balwani. Cheung said Balwani questioned her understanding of statistics and gave her a command: do the job I pay you to do without question.<\/p>\n

\u201cAt this point, it became clear to me that they knew what was going on, but weren\u2019t doing anything about it,\u201d she said. \u201cPeople often ask me, \u2018When did you know something was really wrong?\u2019 This was the stomach-flip moment where I said, \u2018What the hell did I just get myself into?\u2019\u201d<\/p>\n

Cheung then spoke with her friend and co-worker Tyler Shultz \u2013 grandson of George Shultz. Tyler Shultz had also found inconsistencies with lab results during his work, and invited Cheung to have dinner with him at his grandfather\u2019s house.<\/p>\n

Cheung reiterated her concerns to George Shultz, who dismissed them by telling her, \u201cI\u2019ve brought a lot of smart people into this deal, and they all say it works. Maybe you should look for another job.\u201d<\/p>\n

Discouraged and conflicted, Cheung resigned from Theranos. Shortly thereafter, she was contacted by the Wall Street Journal and served as an anonymous source for reporting that began to uncover the company\u2019s deceptive practices.<\/p>\n

After Theranos\u2019 practices began to be scrutinized, Cheung said she was harassed and intimidated by lawyers hired by the company. She eventually moved to Hong Kong in an attempt to put the experience behind her, largely staying out of the public eye until her name was leaked via public records.<\/p>\n

Later, Cheung and Tyler Shultz were called upon to testify in criminal proceedings against Holmes and Balwani.<\/p>\n

The latter pair were eventually convicted of wire fraud and defrauding investors, and sentenced to about 10 years in federal prison.<\/p>\n

Cheung, who\u2019s now executive director of a nonprofit called \u201cEthics in Entrepreneurship,\u201d opined that Theranos\u2019 status as a biotech innovator gave it \u201cmoral license\u201d \u2014 an ability to operate seemingly beyond reproach.<\/p>\n

\u201cWe were in the healthcare industry \u2013 one of the most benevolent of industries,\u201d she said. \u201cIt basically gave us credence to hide all of the horrible misconduct happening behind closed doors.\u201d<\/p>\n

Cheung added that the topic of business ethics is particularly salient, given the rapid rise of industries such as artificial intelligence, robotics and cryptocurrency.<\/p>\n

\u201cThese are areas that are primed for these types of scandals to happen, because they\u2019re operating in territory where it\u2019s not very clear where the rules of engagement are,\u201d she said.<\/p>\n","protected":false},"excerpt":{"rendered":"

Don\u2019t ignore wrongdoing, even while \u2018changing the world,\u2019 Olafson Ethics Symposium lecturer Erika Cheung tells UND<\/p>\n","protected":false},"author":26,"featured_media":39542,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[2],"tags":[1125,17],"class_list":["post-39545","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-around-und","tag-learning","tag-ncobpa"],"acf":[],"yoast_head":"\nTheranos whistleblower: Ethics above all, including profit - UND Today<\/title>\n<meta name=\"description\" content=\"Theranos whistleblower Erika Cheung delivers annual Olafson Ethics Symposium lecture\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/blogs.und.edu\/und-today\/2024\/12\/theranos-whistleblower-ethics-above-all-including-profit\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Theranos whistleblower: Ethics above all, including profit - 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