Long before he wrote Bad Blood: Secrets and Lies in a Silicon Valley Startup, John Carreyrou was exposing fraud and uncovering scandal at some of America’s biggest corporations and government programs. In 2003, Carreyrou and a team of his colleagues at the Wall Street Journal won a Pulitzer Prize for Explanatory Reporting for a series of articles “that illuminated the roots, significance and impact of corporate scandals in America.”
In 2015, he shared another Pulitzer, this time in Investigative Reporting, with his fellow investigative journalists at the WSJ for “Medicare Unmasked,” a series of articles exposing fraud and abuse in Medicare which cost taxpayers billions of dollars.
But Carreyrou is perhaps best known for his 2018 book, Bad Blood, an exposé on Theranos, the now-disgraced but once highly touted Silicon Valley biotechnology company, and its founder, Elizabeth Holmes. His book won numerous awards, including the George Polk, Gerald Loeb, and the Financial Times and McKinsey Business Book of the Year prize. Since then, numerous podcasts, documentaries, and television shows have been made on Theranos, Holmes, and her co-conspirator, Sunny Balwani.
Throughout Carreyrou’s career, one thing has remained constant–his ability to pore through millions of data points to find that smoking gun, and then of using those data to construct compelling stories and find a straighter path to the truth.
Join John Carreyrou at Everlaw Summit
As Everlaw began to plan Everlaw Summit, Everlaw’s first in-person conference this November in San Francisco, CA, the choice for keynote speaker was obvious: John Carreyrou. His entire career has been focused on turning the burden of information into narratives that change the world, and his work aligns closely with Everlaw’s ultimate mission: promoting justice by illuminating the truth.
And that–turning the burden of information into narratives that change the world–is what Carreyrou will be talking about in his keynote address at Everlaw Summit.
Whether in litigation or reporting, the discovery process can be painful and time consuming. In many ways, both are about finding that proverbial needle in a haystack.
While the story of Theranos has been told across many media–one story hasn’t been told enough. The role of ediscovery in helping crack the case.
Finding the Smoking Gun on Everlaw
In his podcast, Bad Blood: The Final Chapter, Carreyrou tells the story of the lead lawyer in the Theranos civil litigation, Reed Kathrein, a partner at Hagens Berman Sobol Shapiro, who found a note that Holmes had written to herself. Kathrein, an Everlaw user, will be joining Carreyrou at Everlaw Summit’s keynote address to talk about the high-stakes Theranos litigation and the role technology played in its outcome.
The note Kathrein found, a simple message from Holmes to herself, was just one of a million pieces of evidence that were included in discovery. One that could have easily been overlooked. As Kathrein tells it:
What we do is we load them onto a database which allows us to search the documents by all sorts of different categories. One night I was just on the database looking for things that Elizabeth Holmes might have written and I ran across this document that—it was strange—looked to be notes to herself.”
Using Everlaw’s cloud-native platform, Carreyrou was able to access his documents despite the late hour, and find this peculiar note that Holmes had emailed to herself at four in the morning:
"Really smart people picked off Mado. Not you ”
By diving into the file path metadata, Kathrein was able to find more than 40 similar documents, all potentially bolstering the case that Holmes and Balwani were well aware of the deception the company was later accused of.
Novel Approach to Securities Litigation
This discovery unfolded in the context of Kathrein and Hagens Berman’s novel approach to the Theranos civil suit. The firm was representing indirect investors in the private company. Proving financial loss to those indirectly invested in Theranos due to Holmes and Balwani’s actions was a hard task which required complicated argumentation and discovery. Neither plaintiff Robert Colman nor Hilary Taubman-Dye were direct shareholders in Theranos. They were indirectly invested in the company through participation in investment vehicles which had purchased stakes in the company (both directly and in the secondary market).
Since the plaintiffs had not received any investment solicitation appeals directly from Theranos, when they made their investment decisions, they claimed to have relied on Theranos, Holmes, and Balwani’s statements to the public and company press releases. Even though it was clear the plaintiffs didn’t purchase Theranos stock directly, the court allowed their motion to proceed under Section 25400(d) of the California Corporations Code, stating that the “purpose of Section 25400(d) is [to] prevent the manipulation of the market by fraud, and it focuses on the actions of the seller of the securities, not the relationship between seller and buyer.”
During the suit, the parties argued over class-action status, and faced limbo in attaining class certification, causing new challenges and questions over the viability of the litigation to emerge. After the court initially denied the plaintiff’s motion for class certification, finding too many differences amongst investors in different funds, the plaintiffs sought a narrower certification, which remained pending when discovery began. Making the task harder was the fact that Theranos was not exactly cooperative, leading Judge Nathanael Cousins to accuse the defense of playing “litigation games” and hiding discovery.
Through this all, Kathrein and Hagens Berman proceeded with document review. Amidst mountains of data and millions of documents, lay the notes which Kathrein found on Everlaw, arming him with the evidence he needed to help build a compelling case—and eventually obtaining a favorable outcome.
Ultimately, the case was settled before Theranos went into bankruptcy, giving a win to the plaintiffs and Hagens Berman’s unique legal approach.
Using the Right Technology
The right technology and platform can give litigators powerful tools to change outcomes for their clients and pursue justice. The impact of Kathrein’s shrewd review on the trajectory of the case cannot be overstated. Finding Holmes’ notes to herself was a key element to proving out the case.
This is why we’re so excited for Everlaw Summit, where Carreyrou and Kathrein will join each other to talk about this case and discuss turning noisy data into one singular path to the truth!
Join them in San Francisco, Nov. 2-4, 2022. Registration remains open for a limited time. Save your spot here.