Theranos Chief Executive Elizabeth Holmes Charged With Massive Fraud

Carolyn Y. Johnson, reporting for The Washington Post:

Elizabeth Holmes, founder and chief executive of the blood-testing company Theranos, has been charged by the Securities and Exchange Commission with an “elaborate, years-long fraud” in which she and former company president Ramesh “Sunny” Balwani allegedly “deceived investors into believing that its key product — a portable blood analyzer — could conduct comprehensive blood tests from finger drops of blood,” the SEC said.

Holmes agreed to a $500,000 penalty and a 10-year ban on serving as an officer or director of a public company to settle the charges, but she did not admit or deny the allegations.

The whole thing was just a fraud:

The company fell from grace in a snarl of regulatory problems and the revelation that its proprietary technology was not even being used in its blood tests, first reported by the Wall Street Journal.

The SEC alleges that Holmes, Balwani and Theranos raised more than $700 million from investors by misrepresenting the capabilities of the proprietary blood-testing technology that was at the core of its business — as well as by making misleading or exaggerated statements about the company’s financial status and relationships with commercial partners and the Department of Defense.

On that latter point, the saga involves the Trump kakistocracy because of course it does:

The SEC also alleges that Holmes claimed to investors that Theranos technology was being used by the Defense Department on the battlefield in Afghanistan and on medevac helicopters. Those statements “were important to potential investors because these relationships lent legitimacy to Theranos’ business and its proprietary analyzer,” the SEC alleges.

That technology was never deployed on the battlefield by the Defense Department, even though Marine Gen. Jim Mattis, who then led the U.S. Central Command, personally pushed for it. Regulatory officials in the military had flagged problems with Theranos’s approach. Mattis later joined Theranos’s board; he resigned to become defense secretary.

More on Mattis’s ties to Theranos here.

★ Wednesday, 14 March 2018