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 2:36 AM
Updated: Jun 17, 2018 2:36 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.

Minnesota Coronavirus Cases

Data is updated nightly.

Cases: 448268

Reported Deaths: 6013
CountyCasesDeaths
Hennepin931011480
Ramsey40016739
Dakota33072340
Anoka30999364
Washington20164228
Stearns17871187
St. Louis13690241
Scott1195496
Wright11614104
Olmsted1048475
Sherburne821365
Carver694836
Clay653280
Rice606868
Kandiyohi554371
Blue Earth541033
Crow Wing482774
Otter Tail457167
Chisago452732
Benton420186
Winona389646
Douglas374166
Nobles370846
Mower365529
Goodhue347958
Polk328658
McLeod325345
Morrison311744
Beltrami310347
Lyon302236
Becker284939
Itasca284543
Isanti282841
Carlton280043
Steele27379
Pine266713
Freeborn245321
Todd231730
Nicollet224636
Brown215134
Mille Lacs214246
Le Sueur210015
Cass207623
Meeker199733
Waseca189316
Wabasha17083
Martin170026
Roseau165416
Hubbard149338
Redwood139727
Renville137539
Houston135913
Dodge13474
Chippewa131332
Cottonwood127218
Fillmore12355
Wadena120116
Rock110212
Sibley10857
Aitkin108433
Watonwan10668
Faribault105916
Pennington99215
Kanabec97818
Pipestone94423
Yellow Medicine93714
Murray8815
Jackson85610
Swift83418
Pope7385
Marshall70215
Stevens7018
Clearwater68514
Lac qui Parle65716
Lake63715
Wilkin6259
Koochiching59610
Lincoln4841
Big Stone4573
Unassigned43768
Grant4298
Norman4248
Mahnomen4107
Kittson37219
Red Lake3174
Traverse2503
Lake of the Woods1951
Cook1140

Iowa Coronavirus Cases

Data is updated nightly.

Cases: 305606

Reported Deaths: 4278
CountyCasesDeaths
Polk45754449
Linn17795275
Scott15444163
Black Hawk13773236
Woodbury13016175
Johnson1211749
Dubuque11387150
Pottawattamie8992112
Dallas888671
Story869434
Webster469771
Cerro Gordo466768
Sioux455157
Clinton450361
Warren443938
Marshall427761
Buena Vista393429
Muscatine390477
Des Moines381841
Plymouth350368
Wapello344198
Jasper321959
Lee317130
Marion304952
Jones271349
Henry264330
Carroll255434
Bremer245048
Crawford231022
Boone218417
Washington217632
Benton209444
Mahaska193136
Jackson192031
Tama187757
Dickinson186026
Delaware173736
Kossuth173644
Clay168820
Wright164824
Fayette162322
Hamilton160029
Buchanan159923
Winneshiek155719
Harrison155162
Hardin154729
Cedar153219
Clayton151448
Butler148224
Page144715
Floyd139636
Cherokee139027
Mills136416
Lyon135332
Poweshiek132724
Hancock130224
Allamakee127928
Iowa125422
Calhoun12279
Grundy121226
Jefferson120724
Madison12039
Winnebago119429
Mitchell116234
Louisa115030
Cass113341
Chickasaw111612
Sac111215
Emmet110831
Appanoose110538
Union108822
Humboldt105519
Guthrie103024
Shelby102926
Franklin102418
Unassigned9310
Palo Alto9079
Montgomery85622
Keokuk85026
Howard84219
Monroe81218
Clarke7957
Pocahontas77611
Ida74630
Greene6927
Davis69121
Adair68820
Lucas6508
Monona64016
Osceola6409
Worth6113
Taylor5949
Fremont5126
Van Buren49712
Decatur4894
Ringgold4389
Audubon4158
Wayne41421
Adams2963
Rochester/St. Mary'S
Clear
37° wxIcon
Hi: 37° Lo: -1°
Feels Like: 27°
Mason City
Clear
38° wxIcon
Hi: 38° Lo: 1°
Feels Like: 27°
Albert Lea
Partly Cloudy
37° wxIcon
Hi: 37° Lo: 0°
Feels Like: 29°
Austin
Partly Cloudy
39° wxIcon
Hi: 38° Lo: -1°
Feels Like: 30°
Charles City
Partly Cloudy
37° wxIcon
Hi: 38° Lo: 1°
Feels Like: 27°
A roller coaster of temperatures
KIMT Radar
KIMT Eye in the sky

Community Events