Published: Sat, June 16, 2018
Money | By Armando Alvarado

Theranos’ Holmes indicted by feds over blood-test ‘fraud’

Theranos’ Holmes indicted by feds over blood-test ‘fraud’

Holmes, meanwhile, remains chairman of the board.

The two have each been charged with nine counts of wire fraud and two counts of conspiracy to commit wire fraud.

David Taylor, Theranos' general counsel, has been named CEO.

Holmes, 34, who had presented herself as a new Steve Jobs - down to the black turtleneck - had in March been fined $500,000 by the Securities and Exchange Commission which alleged she had committed a "massive fraud" that saw investors put $700 million into the firm.

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Elizabeth Holmes, the founder of the embattled health startup Theranos, on Friday was charged in federal court with wire fraud with prosecutors alleging that the company was a "multi-million dollar scheme to defraud investors".

According to the indictment, Holmes and Balwani encouraged doctors and patients to use the company's blood testing services even though the defendants knew Theranos was not capable of consistently producing accurate and reliable results for certain blood tests, the department said in a statement.

"For example, allegedly, Holmes and Balwani knew that the analyzer, in truth, had accuracy and reliability problems, performed a limited number of tests, was slower than some competing devices and, in some respects, could not compete with existing, more conventional machines", it said in a statement. At one point, it was valued at $9 billion, but in recent months it has laid off most of its employees and is pleading with investors for more cash as it faces setbacks in the lab on its Zika virus test. As part of a settlement, Holmes paid a fine and can not be a director or officer of a publicly traded company for 10 years.

Holmes's departure as CEO marks the end of a saga that began when she dropped out of Stanford as a 19-year-old sophomore to found Theranos.

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