Theranos Whistleblower Is Building a Better Way Forward

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During the 2021 ACFE Women’s Summit, in the first keynote of the day, the ACFE’s Director of Research, Andi McNeal, CFE, CPA, introduced two women who have been championing the work of whistleblowers, sharing their stories and working to erase the stigma behind whistleblowing.

Erika Cheung and Cynthia Cooper engaged the virtual audience in an enthralling conversation about the ethical underpinnings that drive people to speak up when they see wrongdoing within a company. Cheung was one of the first whistleblowers who reported the medical malpractice at Theranos, which ultimately led to the shutdown of their medical lab. Cooper played a pivotal role in uncovering fraud at WorldCom and is now an influential speaker, consultant and author.

Cheung’s whistleblowing journey
Theranos emerged in 2003 during the burst of innovative and dynamic startup culture in Silicon Valley. Headed by Elizabeth Holmes, the company hoped to make medical technology more accessible and affordable by rethinking the blood diagnostic process. The goal was to create bloodwork diagnostic machines that could conveniently be located within pharmacies nationwide. Holmes had amassed a reputable circle of powerful people who believed in her vision for healthcare and supported her financially. Right after graduating from the University of California – Berkeley, Cheung was absolutely sold on the company’s ambitions and went to work in their research and development branch.

Looking back, Cheung has been able to determine the pinnacle moment when the company went wrong; she says once Theranos made a contract to distribute to Walgreens, it entered into a regulated space, which required active testing on live patients instead of working on their biotech devices within a lab setting.

In the lab, red flags were everywhere. Cheung noticed researchers deleting outliers from data sheets because they didn’t fit the narrative the employees needed to submit to the Food and Drug Administration and other regulators. “This was something that was very concerning to me, because anyone who has studied the scientific method or process knows that you have to maintain the data because this is the only thing that gives you a realistic picture about what’s going on,” Cheung said. By tampering with the data, they were presenting an unrealistic picture of how the technology actually worked. Failure to include the discrepancies in data could have led to false diagnoses for patients, thereby prompting inaccurate prescriptions for medication that could potentially be life-threatening. Additionally, Cheung observed scientists using a different device for their testing than the device that was being sent to regulators, essentially lying to the regulators who had no clue what was actually happening behind the lab’s closed doors.

Cheung became concerned for the health of their patients, which led her to research reporting options. Initially, she shared her worries with the COO, whose response was that she was young and didn’t know enough to make the claims she was making. She was also told to process patient samples at any cost.

Next, Tyler Shultz, Cheung’s friend and fellow whistleblower, spoke with Shultz’s grandfather, who was on the Theranos board. He told them if they were concerned with what was happening there, then maybe they should consider other job opportunities.

Cheung decided to quit, and soon after, Theranos went on a “witch hunt to attack former employees,” she told the virtual audience. Feeling threatened, Cheung contacted a lawyer who told her she could reach out to regulators to sound the alarm on Theranos. This led to an investigation that eventually shut down Theranos’ labs, thereby preventing the company from providing false and potentially dangerous medical results to thousands of patients and validating Cheung’s long-term claims of their ethical failure.

What keeps people from speaking up?
A general culture of fear and silence can make it difficult for truth to prevail. Cheung signed a nondisclosure agreement (NDA) while interviewing for the job at Theranos and another when she started working there, and she was constantly reminded of the NDA and the fact that there would be retaliation if she disclosed insider knowledge. She noted other extremes the company took to keep people silent, acknowledging that there needs to be a shift in company culture that allows people to speak up.

Cheung offered three reasons why people don’t speak up when they see wrongdoing:

  1. They believe there is no use in speaking up. If they report, nothing will be done to fix the situation.

  2. Fear of retaliation. Worry that lawyers will have to be involved and they could lose their jobs.

  3. Social rejection. Ostracization from peers and being called a “snitch.”

Lessons for potential whistleblowers
Cooper praised Cheung for telling her story and shared, “There is something very therapeutic and helpful about talking to another whistleblower who has gone through a lot of the same things.” By combining their knowledge and passion, they answered questions from the virtual attendees about how to find ways to support fellow whistleblowers and build a “speak-up” culture.

Cooper and Cheung told the virtual audience that they both didn’t consider themselves whistleblowers until the media assigned the label to them. When both women spoke up in their respective cases, they didn’t contemplate being called whistleblowers. Instead, they both felt like they were simply doing what was right. Stereotypes exist that paint whistleblowers in a negative light, but Cheung championed that they are selfless and ethical. Whistleblowers are average people going to work and wanting to do the right thing, and they feel a strong conviction that even if reporting comes at a personal cost to themselves, there will be a greater benefit to the organization as a whole, and even the general public.

The reaction to a situation can make all the difference when a whistleblower notices fraud or malpractice. As Cheung explained, “Mistakes are a fact of life, but it’s the response from those errors that really counts.”  When Cooper questioned how Cheung found the fortitude to speak up at her young age, she recounts that it was an easy choice. She anchored herself on the conviction that she needed to safeguard patients who might use this technology, and she had the insider knowledge to be able to do that. She blew the whistle on Theranos because equitable health care for all was a core value she wanted to uphold. She was guided by the same mission she had when she first started working there.

Instilling skills to recognize ethical dilemmas
Since Cheung had just graduated from college when she started working at Theranos, Cooper asked how her university experience prepared her for ethical dilemmas. The combination of a technical education and a critical analysis mindset, Cheung noted, are what served her most. Her background of the scientific method allowed her to know when information was being fabricated, and her professional skepticism urged her to uncover curiosities around her.

Cheung and Cooper both believe, however, that organizations and universities can do more to teach individuals how to engage with ethical dilemmas, such as:

  • Placing value on speaking out and emphasizing that whistleblowers are doing the right thing.

  • Encouraging students to ponder what drives them to make the decisions they do and how they want to orient their moral compass.

  • Allowing students the space to write their own mission statements.

  • Teaching the emotional drivers of fraud.

  • Exposing students to real stories and whistleblower role models.

  • Supporting individuals who are speaking out in order to propagate that culture.

Cooper especially championed the idea of presenting whistleblower narratives to students. “The more students are exposed to listening to real-life stories and then working on defining their values and having a model, the more likely they are to step up to the plate and find their voice to speak truth to power.” Hearing the detailed version of a reported case can teach people the emotional drivers of fraud, such as greed, pride, fear and misguided loyalty. Moreover, stories can catalyze tough questions about ethics that will encourage students to discuss their own mission statements.

Building a speak-up culture
The “growth at any cost” mindset of Silicon Valley at the time of Theranos’ inception, Cheung believes, played a large role in its fate. Cheung hopes that organizations and startups will start having whistleblower policies in their employee handbooks, as well as offering third-party channels where workers can report fraudulent activity. Cheung also noted a need to reconfigure the ways decisions are made and to support communication between all levels of an organization.

Additionally, Cooper and Cheung agreed that critical policy changes, especially in fast-moving companies, need to occur. For example, companies should constantly remind employees that there will not be retaliation if they speak up; they should engage in external audit processes often; and they should celebrate people who do speak up about discrepancies.

While the experience of speaking out and risking social and occupational standings can be traumatic, as Cooper and Cheung admitted, sharing their stories has helped them move forward. “I realized I could let this consume and ruin my life, or I could find a way through it and move in a different direction,” Cooper reflected. Both women have made it a mission to share their experiences with others and to help communities and individuals build resiliency skills. Countless people can recognize bits and pieces of their own stories in the narratives shared by Cheung and Cooper, which can inspire people to stay grounded in their own values when faced with an ethical challenge. Their stories also remind us that we can transform a difficult situation into something positive — an opportunity to build a better future.