Elizabeth Holmes indicted on wire fraud charges, steps down from Theranos

Theranos founder Elizabeth Holmes has been indicted on federal wire fraud charges, the office of the United States At...

Posted: Jun 17, 2018 3:36 AM
Updated: Jun 17, 2018 3:36 AM

Theranos founder Elizabeth Holmes has been indicted on federal wire fraud charges, the office of the United States Attorney for the Northern District of California announced Friday.

Holmes and former Theranos COO and president Ramesh "Sunny" Balwani allegedly engaged in a multi-million dollar scheme to defraud investors, as well as a scheme to defraud doctors and patients, according to a release from the US Attorney's office.

Holmes and Balwani are charged with two counts of conspiracy to commit wire fraud and nine counts of wire fraud. The indictments happened Thursday and were unsealed on Friday. If convicted, they each face a maximum sentence of 20 years in prison and a fine of $250,000, plus restitution for each count of wire fraud and each conspiracy count, according to the US Attorney's office.

Holmes and Balwani were accused of knowingly misrepresenting the capabilities of Theranos' proprietary blood testing technology. The two allegedly knew there were "accuracy and reliability problems," and that it "could not compete with existing, more conventional machines," the US Attorney's office said.

Minutes before the charges were made public, Theranos announced that Holmes has stepped down as CEO. The company's general counsel, David Taylor, will take over as CEO. Holmes will stay on as chair of the company's board.

An attorney for Holmes did not immediately respond to requests for comment.

Balwani's attorney, Jeffrey B. Coopersmith, said in a statement his client is innocent. "Mr. Balwani committed no crimes. He did not defraud Theranos investors, who were among the most sophisticated in the world. He did not defraud consumers, but instead worked tirelessly to empower them with access to their own health information. Mr. Balwani is innocent, and looks forward to clearing his name at trial," the statement said.

A lawyer for Theranos said the company had no comment.

Theranos was once valued at as much as $9 billion.

Holmes dropped out of Stanford University to launch Theranos in 2003 with a plan to offer cheaper, more efficient alternative to traditional medical tests. It promised patients the ability to test for conditions like cancer and diabetes with just a few drops of blood.

Related: 'Bad Blood' explores the culture inside disgraced startup Theranos

Holmes was once lauded as the youngest self-made female billionaire. But her net worth was revised down to nothing after Wall Street Journal investigative reporter John Carreyrou started digging into the technology behind her blood testing startup. Carreyrou's first expose on the company ran in October 2015 and Theranos voided two years of its blood tests just seven months later.

In March, the SEC announced "massive fraud" charges of $700 million against Theranos, Holmes and Balwani. The SEC said Theranos, Holmes and Balwani misled partners and investors about the company's technology, misrepresented revenue projections and falsely claimed it didn't need regulatory approval for its testing technology.

Theranos founder Elizabeth Holmes charged with massive fraud

Holmes and Theranos reached a settlement with the SEC, while the SEC said it would take its case against Balwani to court.

Coopersmith called the SEC action against his client "unwarranted."

"Sunny Balwani accurately represented Theranos to investors to the best of his ability," Coopersmith said in a statement.

Investors in Theranos included Oracle founder Larry Ellison, venture capital firm Draper Fisher Jurvetson, now Secretary of Education Betsy DeVos and media mogul Rupert Murdoch.

Terre Haute
Clear
65° wxIcon
Hi: 92° Lo: 68°
Feels Like: 65°
Robinson
Clear
64° wxIcon
Hi: 91° Lo: 66°
Feels Like: 64°
Indianapolis
Scattered Clouds
70° wxIcon
Hi: 93° Lo: 72°
Feels Like: 70°
Rockville
Clear
65° wxIcon
Hi: 91° Lo: 68°
Feels Like: 65°
Casey
Clear
69° wxIcon
Hi: 90° Lo: 68°
Feels Like: 69°
Brazil
Clear
65° wxIcon
Hi: 91° Lo: 68°
Feels Like: 65°
Marshall
Clear
65° wxIcon
Hi: 91° Lo: 68°
Feels Like: 65°
Hot Holiday Weekend
WTHI Planner
WTHI Temps
WTHI Radar

WTHI Events

 

Illinois Coronavirus Cases

(Widget updates once daily at 7 p.m. CT)

Confirmed Cases: 144013

Reported Deaths: 6951
CountyConfirmedDeaths
Cook909114581
Lake9752418
DuPage9083472
Kane7733271
Will6744320
Winnebago304695
McHenry206197
St. Clair1906136
Kankakee128565
Kendall96320
Madison94769
Rock Island94729
Champaign88012
Boone59521
DeKalb55818
Peoria49928
Sangamon43132
Jackson33219
Randolph2877
Stephenson2745
McLean26113
Ogle2614
Clinton23717
Macon23122
LaSalle21917
Union19119
Whiteside19115
Coles17017
Grundy1674
Iroquois1575
Warren1380
Tazewell1378
Knox1320
Cass1302
Morgan1283
Monroe12713
Williamson1204
Jefferson10717
McDonough10115
Lee972
Adams931
Henry881
Pulaski760
Marion660
Vermilion662
Perry541
Douglas520
Macoupin523
Unassigned500
Jasper467
Livingston452
Jo Daviess441
Montgomery441
Christian434
Jersey351
Ford331
Woodford332
Bureau292
Menard250
Fayette233
Alexander220
Franklin220
Mason220
Wabash220
Carroll212
Johnson200
Mercer200
Piatt200
Washington200
Hancock191
Crawford180
Moultrie180
Shelby181
Fulton150
Logan150
Clark140
Wayne141
Bond131
Massac130
Schuyler130
Cumberland120
Effingham121
Brown100
Edgar100
Greene90
Saline90
Henderson80
Marshall80
Lawrence70
De Witt60
Hamilton50
White50
Richland40
Stark30
Clay20
Edwards20
Gallatin20
Pike20
Calhoun10
Hardin10
Out of IL10
Pope10
Putnam10
Scott00

Indiana Coronavirus Cases

(Widget updates once daily at 8 p.m. ET)

Confirmed Cases: 46387

Reported Deaths: 2662
CountyConfirmedDeaths
Marion11434680
Lake4985241
Elkhart313343
Allen2695117
St. Joseph185766
Cass16369
Hamilton1502100
Hendricks1371100
Johnson1244118
Porter69037
Tippecanoe6598
Madison64363
Clark62744
Bartholomew58044
Howard55057
LaPorte54125
Kosciusko5003
LaGrange4646
Jackson4583
Vanderburgh4576
Noble45128
Delaware42949
Boone42743
Hancock42535
Marshall4183
Shelby41825
Floyd37044
Morgan32331
Montgomery29020
Grant28726
Clinton2812
Monroe26328
Dubois2616
White25910
Decatur24732
Henry23615
Lawrence23624
Vigo2278
Harrison20822
Warrick20729
Dearborn20622
Greene18432
Miami1802
Jennings16911
Putnam1658
DeKalb1594
Scott1557
Daviess13916
Orange13323
Wayne1296
Franklin1248
Steuben1242
Perry1239
Ripley1148
Jasper1132
Carroll1092
Wabash1092
Fayette967
Newton9610
Whitley814
Randolph774
Starke773
Huntington702
Wells681
Jay670
Fulton661
Jefferson661
Washington651
Knox630
Pulaski621
Clay594
Rush563
Benton480
Adams471
Gibson462
Owen451
Sullivan441
Brown381
Blackford372
Posey360
Spencer331
Tipton301
Crawford290
Fountain292
Switzerland260
Martin220
Parke220
Ohio140
Warren141
Union130
Vermillion130
Pike80
Unassigned0193