Theranos Founder and Former Chief Operating Officer Charged In Alleged Wire Fraud Schemes
Elizabeth Holmes and Ramesh “Sunny” Balwani Are Alleged To Have Perpetrated Multi-million Dollar Schemes To Defraud Investors, Doctors, and Patients.
SAN JOSE - A federal grand jury has indicted Elizabeth A. Holmes and Ramesh “Sunny” Balwani, announced Acting United States Attorney Alex G. Tse, Federal Bureau of Investigation (FBI) Special Agent in Charge John F. Bennett; Food and Drug Administration (FDA) Commissioner Scott Gottlieb; and U.S. Postal Inspection Service (USPIS) Inspector in Charge Rafael Nuñez. The defendants are charged with two counts of conspiracy to commit wire fraud and nine counts of wire fraud. According to the indictment returned yesterday and unsealed today, the charges stem from allegations Holmes and Balwani engaged in a multi-million dollar scheme to defraud investors, and a separate scheme to defraud doctors and patients. Both schemes involved efforts to promote Palo Alto, Calif.-based Theranos....MUCH MORE
Holmes, 34, of Los Altos Hills, Calif., founded Theranos in 2003. Theranos is a private health care and life sciences company with the stated mission to revolutionize medical laboratory testing through allegedly innovative methods for drawing blood, testing blood, and interpreting the resulting patient data. Balwani, 53, of Atherton, Calif., was employed at Theranos from September of 2009 through 2016. At times during that period, Balwani worked in several capacities including as a member of the company’s board of directors, as its president, and as its chief operating officer.
According to the indictment, Holmes and Balwani used advertisements and solicitations to encourage and induce doctors and patients to use Theranos’s blood testing laboratory services, even though the defendants knew Theranos was not capable of consistently producing accurate and reliable results for certain blood tests. The tests performed on Theranos technology, in addition, were likely to contain inaccurate and unreliable results.
The indictment alleges that the defendants used a combination of direct communications, marketing materials, statements to the media, financial statements, models, and other information to defraud potential investors. Specifically, the defendants claimed that Theranos developed a revolutionary and proprietary analyzer that the defendants referred to by various names, including as the TSPU, Edison, or minilab. The defendants claimed the analyzer was able to perform a full range of clinical tests using small blood samples drawn from a finger stick. The defendants also represented that the analyzer could produce results that were more accurate and reliable than those yielded by conventional methods—all at a faster speed than previously possible.
The indictment further alleges that Holmes and Balwani knew that many of their representations about the analyzer were false. For example, allegedly, Holmes and Balwani knew that the analyzer, in truth, had accuracy and reliability problems, performed a limited number of tests, was slower than some competing devices, and, in some respects, could not compete with existing, more conventional machines....
Well, so much for "Theranos CEO Elizabeth Holmes Is Allegedly Looking to Start Another Company"
And I guess that's a wrap for Equality Day here at Climateer Investing.
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