- Theranos founder Elizabeth Holmes and former Theranos president Sunny Balwani have been charged with nine counts of wire fraud and two counts of conspiracy to commit wire fraud.
- The charges stem from allegations that the two engaged in a scheme to defraud investors and a separate scheme to defraud doctors and patients while at the blood-testing company, the Department of Justice said in June 2018.
- In September, Theranos shut down. Theranos is the focus of “The Inventor: Out for Blood in Silicon Valley,” a new documentary on HBO from award-winning director Alex Gibney.
- Holmes and Balwani are slated to appear again in court on April 22.
In 2018, a final reckoning came for the blood-testing company Theranos, its founder Elizabeth Holmes and former Theranos president Sunny Balwani.
In June 2018, the Department of Justice charged the two with nine counts of wire fraud and two counts of conspiracy to commit wire fraud, stemming from allegations that the two engaged in a scheme to defraud investors and a separate scheme to defraud doctors and patients while at the blood-testing company. Balwani and Holmes have pleaded not guilty to the DOJ’s charges. And after 15 years, Theranos officially shut down.
The blood-testing startup had racked up a $US9 billion valuation with its big vision to test for a number of conditions using just a small sample of blood, and its CEO, Elizabeth Holmes, was featured on the covers of business magazines and included on lists of top executives. Holmes herself had a net worth of about $US5 billion.
Then in October 2015, questions started being raised about how the company’s technology worked, prompted by investigative stories from the Wall Street Journal reporter John Carreyrou.
The final year
In March 2018, the SEC charged Holmes and Theranos with “massive fraud.” The company and Theranos settled with the SEC, and as part of the settlement, Holmes paid a fine and cannot be a director or officer of a publicly traded company for 10 years. Balwani, who employees saw as an “enforcer,” left the company in May 2016 after working there for seven years. He has also been charged with “massive fraud” by the Securities and Exchange Commission.
Facing setbacks in its Zika test development in the spring of 2018, Theranos laid off the majority of its remaining employees and appealed to investors for more funding.
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Holmes stepped down as CEO of Theranos in June the same day the DOJ charged Holmes with wire fraud. The company officially shut down in the fall of 2018. Vanity Fair’s Nick Bilton reported that in the final days of the company, Holmes got a Siberian husky puppy named Balto, who accompanied her to work but wasn’t potty trained, making a mess of the company’s offices and labs.
The DOJ said in June that Holmes and Balwani could face up to 20 years in prison each, and a $US250,000 fine plus restitution for each count on which they’re convicted.
Holmes, based in San Francisco, and Balwani await trial. Their next court appearance is slated for April 22.
This article was initially published in June 2018 and has been updated.
- Read more:
- The reporter who broke the Theranos saga wide open pinpoints the moment he knew he had a big story on his hands
- The rise and fall of Theranos, the blood-testing startup that went from Silicon Valley darling to facing fraud charges
- The mysterious story of former Theranos President Sunny Balwani, who former employees saw as an ‘enforcer’ and now faces criminal charges of wire fraud
- From Betsy DeVos to Rupert Murdoch to the Walton family, here are the investors who lost hundreds of millions investing in Theranos