Former US Secretary of State George Shultz’s support of Elizabeth Holmes and her fraudulent blood testing company, Theranos, which devastated his family and sparked a bitter feud with his grandson, is being scrutinized again in a biography published Tuesday.
Shultz was Ronald Reagan’s top diplomat at the end of the Cold War. Prior to that, he served as Secretary of the Treasury and Secretary of Labor under Richard Nixon. He is now the subject of In the Nation’s Service, written by Philip Taubman, a former New York Times reporter.
Shultz joined Theranos’ board of directors in 2011.
Taubman tells how Shultz—then in his 90s and with no biomedical expertise—was impressed by Holmes’ startup and its promise to revolutionize blood testing. He helped the young entrepreneur form a board of directors and raise money from heavyweight investors, including Rupert Murdoch.
“Shultz repeatedly told friends that Holmes was brilliant,” Taubman writes. “In time his associates became alarmed, fearing that his enthusiasm was colored by personal affection for Holmes. He talked to her by phone almost every day and invited her to the Shultz family’s Christmas dinners. She encouraged his attention by leaning close to him when they sat together on benches.”
Shultz rejected skepticism regarding Holmes’ claim that he had devised a quick and easy blood test that would dramatically simplify healthcare, Shultz encouraged his grandson, Tyler Sultzto do a summer internship at Theranos and become a full-time employee.
But Tyler Shultz began to suspect that Holmes was overselling her technology and took his concerns to the Wall Street Journal. Holmes suspected the younger Shultz to be the whistleblower and set her lawyers on him and put him under surveillance. Alarmed, Tyler Shultz went to his grandfather for help.
Taubman writes, “Instead of embracing his grandson and disowning Holmes, Shultz wavered. He unsuccessfully tried to mediate between Tyler and Holmes.”
When that attempt failed, Shultz refused to cut ties with the businesswoman. He told Tyler, “I am over 90 years old. I’ve seen a lot in my time, I’ve almost always been right and I know I’m right about this.”
Tyler felt betrayed. In a 2020 podcast, Thicker Than Water, he imagined three reasons why his grandfather sided with Holmes.
“One is that you were corrupt and invested so much money in Theranos that you were willing to make ethical compromises to see a return on your investment. The second is that you are in love with Elizabeth.
“So no matter how many times she lies to you, no matter how many patients she injures, and no matter how much she hurts your family, you will put her above all else. The final possibility is that you’ve completely lost your mental edge and despite a plethora of data proving she was a criminal, you’re somehow unable to connect these very, very big dots.
Taubman also suggests motives: financial gain, as Shultz’s stake in Theranos stock soared before Holmes’s fall from grace, peaking at $50 million; or personal loyalty to Holmes, just as Shultz showed to Richard Nixon during the Watergate crisis and Reagan during the Iran-contra affair.
The author writes: “Shultz’s performance destroyed his family. Bereaved friends and associates attributed the behavior to his advanced age.”
In 2018, Holmes was charged with defrauding investors and defrauding patients and doctors. Last year, she was sentenced to more than 11 years in prison, a symbol of Silicon Valley ambition that devolved into deceit.
Shultz attempted to mend the rift with his grandson, stating that he had “made me proud” and had shown “great moral character”. Tyler Shultz said his grandfather never apologized, but their relationship “began to heal”. Taubman notes that the Holmes case “remained unfinished business” when Shultz died in 2021 at the age of 100.
The biography was written over 10 years and is based on exclusive access to Shultz’s papers. It explores his involvement in the summits between Reagan and Soviet leader Mikhail Gorbachev that ended the cold war, the Iran-Contra affair, and IRS investigations into Nixon’s “enemies.”