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Theranos founder Elizabeth Holmes charged with $700 million fraud, receives $500k fine

By midian182 ยท 11 replies
Mar 15, 2018
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  1. The story of blood-testing company Theranos was one of the biggest scandals to hit the tech and health care industry in decades. Now, years after the SEC started looking into the startup, the agency has charged founder Elizabeth Holmes and former president Ramesh “Sunny” Balwani with massive fraud.

    According to the SEC, the pair raised over $700 million from investors on the back of “false statements about the company’s technology, business, and financial performance.”

    Theranos claimed its portable analyzer could conduct a huge number of blood tests using just a few drops of blood. The SEC writes that in reality, the machine could complete only a tiny percentage of these tests, while the vast majority were carried out on "modified and industry-standard commercial analyzers manufactured by others."

    Holmes and Balwani also falsely claimed that their company’s products were deployed by the U.S. Department of Defense on the battlefield in Afghanistan and on medevac helicopters. Furthermore, they added that Theranos would generate more than $100 million in revenue in 2014. The truth is that its technology was never deployed in Afghanistan and it generated just over $100,000 in revenue that year.

    Image credit: WSJ

    Theranos and Holmes have agreed to resolve the charges against them, though neither has admitted nor denied the charges. In addition to paying a $500,000 penalty, Holmes has been barred from serving as an officer or director of a public company for ten years. She must also return her 18.9 million remaining shares she obtained during the fraud and give up majority voting control of Theranos. Should the firm be acquired or liquidated, she won't profit until more than $750 million is returned to defrauded investors and preferred shareholders.

    Through investors such as Rupert Murdoch and board members that included Henry Kissinger, Theranos reached a $9 billion valuation, leading to Holmes being dubbed “the next Steve Jobs.” But a series of reports from the Wall Street Journal in late 2015 marked the beginning of the end for Theranos, which closed its labs and Wellness Centers and terminated half its workforce in October 2016.

    Permalink to story.

  2. koblongata

    koblongata TS Addict Posts: 212   +66

    She should have Kickstarted....
  3. VitalyT

    VitalyT Russ-Puss Posts: 4,531   +3,113

    Thou shallt not bullshit investors.
    Last edited: Mar 16, 2018
    Hexic likes this.
  4. Impudicus

    Impudicus TS Addict Posts: 148   +116

    So, 500k to make 700 Million, sounds like a good investment.
  5. "Through investors such as Rupert Murdoch and board members that included Henry Kissinger, Theranos reached a $9 billion valuation"
    so much for the genius of the market.
  6. Who said crime doesn't pay?
    oranuro likes this.
  7. maikal

    maikal TS Rookie Posts: 32

    Like always, a slap in the wrist and no jail time! White, pretty, female=no jail! Who knows how much cash she hid away for a rainy day!
  8. captaincranky

    captaincranky TechSpot Addict Posts: 15,074   +4,081

    Allright, if we're going to go "all biblical" on our replies, see above! ^^^ FIXED!
    VitalyT likes this.
  9. captaincranky

    captaincranky TechSpot Addict Posts: 15,074   +4,081

    They should put her in the same cell as Bernie Madoff, and let him make her his b!tch...:cool::D
  10. yes, this is very sad. If most committed a single offence, we'd be in jail. Her actions were not one bad decision that was illegal, there was a large amount of time and effort put into this crime over a long period of time. It deserves a fairly severe punishment. Many people were affected also. The amount of money is also amazing and to think that she essentially just walks is offensive.
  11. kapital98

    kapital98 TS Guru Posts: 324   +256

    Venture capital is always high-risk, high-reward. It's why only incredibly wealthy people do it in the first place.

    If you have 10 failures and one Facebook, you just made an incredible profit. You also have another aspect of this: Guys like Kissinger make a small fortune out of being on the board of directors but really having no duty towards the company. He's on a dozen boards. He makes money and they get to sell his name to investors. It's all theater and pretty pointless -- but it does, overall, make investors cash.

    The funny thing about most of this company is it's rich people playing with other rich people's money. Some middle class people were hurt (for instance, by Theranos crowding out alternatives) but mostly it was just millions/billions being traded back and forth between people who would notice no real impact on their wealth by winning or losing.
    senketsu likes this.
  12. Jules Mark

    Jules Mark TS Enthusiast Posts: 56   +20

    Another day, another BitConnect.

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