Carreyrou praises whistleblowers for their contributions to exposing Theranos' fraud.

New details about what happened at Theranos were revealed during the Elizabeth Holmes trial, including Adam Rosendorff's role as a key whistleblower. During a fireside chat at Compliance Week's National Conference on Wednesday, John Carreyrou, whose reporting exposed the blood-testing company as a fraud, discussed the critical role Rosendorff and his other colleagues who came forward played.

From the beginning of his investigative reporting, Carreyrou, a two-time Pulitzer Prize winner and author of "Bad Blood," explained the importance of Rosendorff, who had been the lab director at Theranos for almost two years, as a source.


"He was perfectly placed to know whether there were shenanigans going on there or not," Carreyrou said. "When I first got him on the phone, he was incredibly stressed, nervous, and anxious because he had left the company about six weeks prior, and the company was coming after him."


Rosendorff had signed a nondisclosure agreement with Theranos before leaving, but forwarded himself emails and other work documents for protection, according to Carreyrou. The company that tracked communications was aware of his actions and began applying pressure that was not present when the two first met.

"That was the beginning of a monthslong process where we got to know each other. And he gave me more and more details," Carreyrou continued, "from that foundation, I then reached out to other sources, also anonymous, and corroborated what he had to say. But he was my first and most important primary source, and he’s arguably the person without whom none of this would have come to light "


In his book, Carreyrou used the pseudonym Alan Beam to refer to Rosendorff.


"He’s (Rosendorff) arguably hero No. 1 in this and the story," the author said, praising Erika Cheung and Tyler Shultz's contributions as whistleblowers.


When asked what can be done to make whistleblowers' lives easier, Carreyrou described how Theranos' regulatory counsel ignored Rosendorff's concerns.


"One interesting anecdote in relation to (Rosendorff) is that shortly before he quit the company and started talking to me, he went to the offices of one of the lawyers at Theranos, the regulatory counsel, and sat down on the couch in the lawyer’s office," Carreyrou said. "Before he said anything, he asked the guy, ‘Whose (interest) do you represent, the company’s or the employee’s?'"


Rosendorff quit within days after the regulatory counsel told him that the company was their first priority, according to Carreyrou.


Carreyrou said he is not sure how to best instill a good speak-up culture, claiming that because Theranos was essentially controlled by just two people who were "perpetuating a crime together and who were corrupt," it was nearly impossible for someone on the inside to thwart the company's eventual demise.


"“Is it an anonymous tip system, either via phone or email, or is it a person, one of the compliance team people, that a person can go to? I’m skeptical of that ," Carreyrou stated. "She (Holmes) had 99.7 percent of the voting rights. Sunny (Ramesh Balwani) was her enforcer. I don’t think there was really any viable method internally for a whistleblower to be heard at that company. But I think it’s different than being publicly traded Fortune 500 companies."

By fLEXI tEAM