Elizabeth Holmes became a biotech star when she founded Theranos – now she faces charges of fraud and conspiracy, with possible jail time
Holmes is accused of falsely claiming the company had developed revolutionary technology that could quickly provide a range of clinical tests from a small drop of blood
Elizabeth Holmes, the founder of blood-testing start-up Theranos and a one-time Silicon Valley star, has been hit with criminal charges accusing her of defrauding investors and others, prosecutors announced on Friday.
The Justice Department said a federal grand jury in California indicted Holmes, 34, and Ramesh “Sunny” Balwani, 53, who had been president and chief operating officer.
The indictment claims that Holmes and Balwani falsely claimed that they had developed revolutionary technology that could quickly provide a range of clinical tests from a small drop of blood.
They not only defrauded investors, but also consumers who trusted and relied upon their allegedly-revolutionary blood-testing technology
“Today’s indictment alleges that through their company, Theranos, CEO Elizabeth Holmes and COO Sunny Balwani not only defrauded investors, but also consumers who trusted and relied upon their allegedly-revolutionary blood-testing technology,” acting US Attorney Alex Tse said in a statement.
The wire fraud and conspiracy charges could lead to prison terms up to 20 years and fines up to US$250,000 if they are convicted.
The indictment says the fraud caused hundreds of patients or their insurers to pay for blood tests and test results, sometimes following referrals from their defrauded doctors.
“In addition, the defendants delivered to doctors and patients blood results that were inaccurate, unreliable and improperly validated,” according to a statement from Tse’s office.