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Theranos CEO Elizabeth Holmes charged with criminal fraud
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NEW YORK (AP) — Federal prosecutors indicted Elizabeth Holmes on criminal fraud charges for allegedly defrauding investors, doctors and the public as the head of the once-heralded blood-testing startup Theranos.
Federal prosecutors also brought charges against the company's former second-in-command.
Holmes, who was once considered a wunderkind of Silicon Valley, and her former Chief Operating Officer Ramesh Balwani, are charged with two counts conspiracy to commit wire fraud and nine counts of wire fraud each, the U.S. Attorney's Office for the Northern District of California said late today. If convicted, they could face prison sentences that would keep them behind bars for the rest of their lives, and total fines of $2.75 million each.
Prosecutors allege that Holmes and Balwani deliberately misled investors, policymakers and the public about the accuracy of Theranos' blood-testing technologies going back to at least 2013. Holmes, 34, founded Theranos in Palo Alto, California, in 2003, pitching its technology as a cheaper way to run dozens of blood tests.
Holmes said Theranos had discovered a new way of doing blood testing, one able to do dozens of tests with just a prick of a finger and few droplets of blood. A notoriously secretive company, Theranos shared very little about its blood-testing machine, nicknamed Edison, with the public or medical community. Holmes said she was inspired to start the company in response to her fear of needles.
She carefully crafted her image as well, wearing almost entirely black turtleneck sweaters that earned her the moniker in Silicon Valley as "the next Steve Jobs."
Investors bought what Holmes was selling and invested hundreds of millions of dollars in the company. At one time, Theranos was worth more than $10 billion and Holmes the youngest self-made female billionaire.