U.S. Division Of Justice: Theranos Founder Holmes, Ex-Ceo Balwani Charged Alongside Wire Fraud

From the U.S. Attorney's Office, Northern District of California:

Theranos Founder together with Former Chief Operating Officer Charged In Alleged Wire Fraud Schemes

Elizabeth Holmes together with Ramesh “Sunny” Balwani Are Alleged To Have Perpetrated Multi-million Dollar Schemes To Defraud Investors, Doctors, together with Patients.

SAN JOSE - H5N1 federal grand jury has indicted Elizabeth A. Holmes together with Ramesh “Sunny” Balwani, announced Acting USA Attorney Alex G. Tse, Federal Bureau of Investigation (FBI) Special Agent inward Charge John F. Bennett; Food together with Drug Administration (FDA) Commissioner Scott Gottlieb; together with U.S. Postal Inspection Service (USPIS) Inspector inward Charge Rafael Nuñez.  The defendants are charged amongst ii counts of conspiracy to commit wire fraud together with nine counts of wire fraud.  According to the indictment returned yesterday together with unsealed today, the charges stalk from allegations Holmes together with Balwani engaged inward a multi-million dollar system to defraud investors, together with a carve upwardly system to defraud doctors together with patients.  Both schemes involved efforts to promote Palo Alto, Calif.-based Theranos.

 Holmes, 34, of Los Altos Hills, Calif., founded Theranos inward 2003.  Theranos is a someone wellness tending together with life sciences companionship amongst the stated mission to revolutionize medical laboratory testing through allegedly innovative methods for drawing blood, testing blood, together with interpreting the resulting patient data.  Balwani, 53, of Atherton, Calif., was employed at Theranos from September of 2009 through 2016.  At times during that period, Balwani worked inward several capacities including equally a fellow member of the company’s board of directors, equally its president, together with equally its principal operating officer.

According to the indictment, Holmes together with Balwani used advertisements together with solicitations to encourage together with cause doctors together with patients to purpose Theranos’s blood testing laboratory services, fifty-fifty though the defendants knew Theranos was non capable of consistently producing accurate together with reliable results for sure enough blood tests.  The tests performed on Theranos technology, inward addition, were probable to incorporate inaccurate together with unreliable results.

The indictment alleges that the defendants used a combination of straight communications, marketing materials, statements to the media, fiscal statements, models, together with other information to defraud potential investors.  Specifically, the defendants claimed that Theranos developed a revolutionary together with proprietary analyzer that the defendants referred to past times diverse names, including equally the TSPU, Edison, or minilab.  The defendants claimed the analyzer was able to perform a amount attain of clinical tests using small-scale blood samples drawn from a finger stick.  The defendants too represented that the analyzer could make results that were to a greater extent than accurate together with reliable than those yielded past times conventional methods—all at a faster speed than previously possible.

The indictment farther alleges that Holmes together with Balwani knew that many of their representations most the analyzer were false.  For example, allegedly, Holmes together with Balwani knew that the analyzer, inward truth, had accuracy together with reliability problems, performed a express publish of tests, was slower than simply about competing devices, and, inward simply about respects, could non compete amongst existing, to a greater extent than conventional machines....

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