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Main » Feds Indict Theranos Founder Elizabeth Holmes For Wire Fraud

Feds Indict Theranos Founder Elizabeth Holmes For Wire Fraud

16 Июня 2018

On Friday, 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.

Theranos founder Elizabeth Holmes and former Theranos president Sunny Balwani have been charged with wire fraud.

"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.

In a statement, Theranos said Holmes would remain chair of the company's board and David Taylor, the firm's general counsel, had been appointed CEO. This all comes just three months after the SEC sued Holmes and the Palo Alto-based company for massive fraud.

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Holmes founded Theranos in 2003 to develop technology that she claimed was able to conduct clinical tests on small amounts of blood. But an investigation by Wall Street Journal reporter John Carreyrou exposed Theranos' claims as untrue, and its testing results as inaccurate. Federal prosecutors also brought charges against the company's former second in command.

The two also told investors their company was financially "strong and stable", and would generate more than $100 million in revenue and break even in 2014, then generate about $1 billion in revenue in 2015, according to the indictment."In truth", the indictment says, "Holmes and Balwani knew that Theranos had and would generate only modest revenues, roughly a few hundred thousand dollars or so, in 2014 and 2015". In a settlement with the SEC, Holmes agreed to pay a $500,000 fine and return 18.9 million shares of Theranos stock. Balwani, who served as one of the company's directors, president and chief operating officer, left Theranos in 2016.

The wire fraud and conspiracy charges could lead to prison terms up to 20 years and fines up to $250,000 if they are convicted. Mr. Balwani is a named inventor on numerous company's patents. Mr. Balwanibelieved so much in Theranos that over the years his own mother and other family membersused the company's lab to enable them to make informed decisions about important health carematters.Mr. Balwani looks forward to trial because he did not defraud anyone, and it will be an honor todefend him vigorously.

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Feds Indict Theranos Founder Elizabeth Holmes For Wire Fraud