Theranos founder Elizabeth Holmes charged by US regulators with yearslong fraud

Theranos founder Elizabeth Holmes charged by US regulators with yearslong fraud

As part of a settlement agreement, under which neither Holmes nor Theranos is required to admit wrongdoing, Holmes will surrender voting control of Theranos and comply with a 10-year ban from serving as director or officer of a public company.

Unfortunately, the miraculous Theranos blood tests were not miraculous at all and today the Securities and Exchange Commission filed fraud charges against Holmes and Theranos. The charge also highlights the company's declaration that it would make more than $100 million in revenue in 2014; in reality Theranos made less than $200,000 in revenue from operations that year, according to the release. The numerous victims of Theranos' phony technology, however, may have a less charitable view.

The corporate watchdog says Holmes, Balwani, and Theranos were all aware that clinical Theranos" proprietary analyser performed only around 12 tests of the over 200 tests it claimed in its "patient testing menu' and that it was using specially modified third-party machines to hide these shortcomings.

- April 17, 2017: Theranos settles with the Centers for Medicare and Medicaid Services, paying the government agency $30,000, giving $4.65 million to Arizona customers, and vowing to stay out of blood testing for two years. State and federal authorities started investigations into the accuracy of the company's blood testing work. Theranos and Holmes pushed back hard, and for months refused to acknowledge that its machines were effectively a sham.

Theranos' intrigue went beyond just investors and the media. Since then, Theranos has settled a number of lawsuits and raised $100 million to get the company through 2018.

Nonetheless, Holmes is losing her company, a great deal of income and stock that was once worth billions, and her ability to head up any company at all for another decade.

Theranos compiled a binder for investors that included reports on clinical trials it said it had performed with pharmaceutical companies. This way, she cannot profit in the event the company sells, unless the $700 million it raised has been paid back.

Director of the SEC's San Francisco office Jina Choi said: "The Theranos story is an important lesson for Silicon Valley".

The SEC also alleges that Holmes, Balwani and Theranos claimed that their products were used on the battlefield in Afghanistan by the US Department of Defence (DoD) and that the company would generate $100m in revenue in 2014. Holmes has already said she plans to give away shares to the "most significant shareholders".

But in 2015, a series of Wall Street Journal articles revealed the company's technology to be more of a parlor trick than a medical miracle.

Press queries were met with the best public relations efforts money can buy. According to charging documents, "investors believed. that Theranos had successfully developed a proprietary analyzer that could conduct the full range of laboratory testing from a small sample of blood".

But in the end, the sham was simply too big to hide. The settlements are subject to court approval. That's where SEC will litigate its claims against him.

One of the highest-profile cases the SEC brought against a biotech CEO was with Sam Waksal, the CEO of Imclone, who was accused of insider trading.

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