Three months after the Securities and Exchange Commission filed civil charges against former Theranos CEO Elizabeth Holmes and former COO/boyfriend Ramesh “Sunny” Balwani, federal prosecutors from the US Attorney’s office in San Francisco filed criminal charges against both former executives following a two-and-a-half-year investigation that was sparked by articles published in the Wall Street Journal.
According to the Washington Post,the two were indicted on nine counts of wire fraud and two counts of conspiracy to commit wire fraud, the Department of Justice announced Friday. The indictment alleges that the two used marketing, press interviews and financial statements to defraud investors, as well as patients and doctors.
Shortly before the charges were filed, Theranos announced that Holmes would officially step down as CEO (shocking everybody who naturally had assumed she’d left the company before now) and be replaced by the firm’s general counsel, who is no doubt only there to oversee the final wind-down of the company, which only has a handful of employees left.
Just days ago, we reported that Holmes was traipsing around Silicon Valley looking for investors despite having very publicly been accused of fraud by the Securities and Exchange Commission, and with most observers expecting federal prosecutors to secure an indictment in the near future. Now that day has finally arrived – a day that Holmes has, we imagine, been dreading since the day WSJ published its first in a series of stories that blew the lid off her multi-million dollar fraud.
Holmes famously dropped out of Stanford to start the company at the age of 19. She developed an irresistible pitch that centered around her fear of needles, and the possibility of more frequent early detection using a machine that could test for more than 200 illnesses with just a fingerprick. The company earned a flood of investment capital after it inked a deal to roll out its finger-stick tests at Walgreens stores in California and Arizona. The company eventually shot to a valuation of $9 billion, making Holmes a billionaire and a media celebrity. She made sure to look the part, wearing a uniform of black turtle neck with a black vest that earned her comparisons to Steve Jobs.
But in reality, Holmes’s finger-stick device was unreliable and only used for a small fraction of the more than 240 tests the company offered consumers. Behind the scenes, Theranos performed most of its tests with commercial analyzers purchased from the rivals it sought to unseat.
What’s worse, Theranos modified some of those analyzers in ways that their manufacturer – nor the FDA – had authorized. These modifications are believed to have led to inaccurate test results, and Theranos was eventually forced to void and refund some 76,000 Arizonans who used their service. The company’s investors have included the heirs to Walmart, media mogul Rupert Murdoch, Atlanta’s Cox family and the family of Betsy DeVos, the Secretary of Education. Each of them lost at least $100 million. Murdoch lost his money while allowing John Carryrou, a WSJ reporter, to continue with his investigation.
Now we wait and see if Holmes and Balwani face jail time for their actions, or merely get off with a slap on the wrist? We suspect, given the money involved and the elite-ness of the board who now look like bumbling old idiots…
Here we see Elizabeth Holmes looking at what’s left of her credibility.
* * *
Finally, here is a “brief” recap of all the fawning coverage the objective media had given to Theranos and Holmes in the years ahead of her spectacular collapse:
August 30, 2013 “Theranos: The Biggest Biotech You’ve Never Heard of.”
San Francisco Business Times. By Ron Leuty. Here.
September 8, 2013 “Elizabeth Holmes: The Breakthrough of Instant Diagnosis.”
The pivotal Wall Street Journal article, by Joseph Rago. Here
A Stanford dropout is bidding to make tests more accurate, less painful – and at a fraction of the current price.
September 9, 2013
“Secretive Theranos emerging partly from shadows.”
SF BizJournal, SF/Biotech, by Ron Leuty, subtitled, “The biggest biotech you’ve never heard of.” Here.
October 9, 2013 “Just a Drop Will Do.”
Pediatric News. By William Wilkoff. Here.
November 6, 2013
“What Heath Care Needs is a Real Time Snapshot of You.”
Hematology Reports (Open Access Journal). Full article PDF: Here.
Chan SM, Chadwick J, Young DL, Holmes E, & Gotlib J (2014). Intensive serial biomarker profiling for the prediction of neutropenic fever with hematologic malignancies undergoing therapy: a pilot study. Hematology Reports 6(2).
Forbes [blog 7/2, and Issue, 7/21], by Mathew Herper. Here.
June 3, 2014 US Patent: “Systems and Methods of Sample Processing and Fluid Control in a Fluidic System.”
PDF, Patent 8,742,230 B2, 80 pp.. Here. “This invention is in the field of medical devices…portable medical devices that allow real-tie detection of analytes from a biological fluid…for providing point-of-care testing for a variety of medical applications.”
June 20, 2014 “Theranos: Small Sample, Big Opportunity.”
Decibio [Consultancy blog]. By Eric Lakin. Here.
July 15, 2014 “Meet Elizabeth Holmes, Silicon Valley’s Latest Phenomenon”
San Jose Mercury News, by Michelle Quinn. Here.
July 15, 2014 “Theranos bringing 500 new jobs to Scottsdale’s SkySong.”
Phoenix Business Journal. By Angela Gonzales. Here. [SkySong is an ASU-affiliated tech park].
July 21, 2014 “Meet Elizabeth Holmes, the Youngest Female Self-made Billionaire Changing the World with Medical Technology.”
Women’s ILAB, by Katherine Melescuic. Here.
August 11, 2014
“Ignoring Lab Industry, Theranos Goes Its Way.”
“My Visit to Walgreens for Theranos Lab Tests.” DARK REPORT (Paper by subscription only). Table of contents here.
September 8, 2014
TechCrunch / Youtube Interview with John Sheiber. VIDEO. Here.,For further details, see here.
September 8, 2014
“Elizabeth Holmes takes Theranos’ blood test to tech movers, shakers.”
Biotech SF / Bizjournals – by Ron Leuty. Discussion of TechCrunch presentation. Here.
September 29, 2014 “This Woman’s Revolutionary Idea Made Her A Billionaire — And Could Change Medicine.”
Business Insider. By Kevin Loria. Here. See also June 4, 2015.
September 30, 2014
“Queen Elizabeth: Mystique of Theranos founder grows with Forbes’ richest ranking.”
October, 2014 “Health Plans Deploy New Systems to Control Use of Lab Tests.”
Managed Care. By Joseph Burns. Here.
Does not directly cite Theranos. Cites contrasting viewpoints on the value of direct easy inexpensive test access:
October 1, 2014
“How One Entrepreneur is Transforming Blood Testing.”
Slate – by Kevin Loria. Here. [Reprint from Business Insider, 9/29, above.]
October 16, 2014 “She’s America’s Youngest Female Billionaire – And a Dropout.”
by Rachel Crane. CNN/Money. Here. [Text & Video.]
October 27, 2014 “Theranos Due Diligence: Company Profile, SWOT Analysis, Market Opportunity.”
Decibio. Consulting group profile of Theranos and its valuation and market position (73 pages; $850). Here. Table of Contents, here. Additional description here.
November 7, 2014
TEDMED – Youtube – Elizabeth Holmes at TEDMED. VIDEO. Here.,For further details, see here.
November 7, 2014 “Major Upside for Walgreens Stock”
InvestorPlace. By John Divine. Here. “The single biggest catalyst for WAG stock in the future may be the company’s decision to partner with the privately held health-tech firm Theranos.”
Video interview with Pattie Sellers. Here.
For further details, see here.
December 8, 2014 “Here’s How the World’s Youngest Self-Made Female Billionaire Shows People She’s In Charge.”
Business Insider. By Richard Feloni. Here.
December 8, 2014 “The New Yorker on the Promise, the Secrecy, and the Challenges of Super-Startup Theranos.”
MedCityNews. by Meghana Keshavan. Here.
December 12, 2014 “Behind the Curtain at Theranos.”
NBC News. (Video). Interview with Ken Auletta. Here.
For more detail, see here.
December 14, 2014 “Blood Test Innovation: Less Cost, No Big Needle”
Information Week/Healthcare. By Larry Stofko. Here.
January 28, 2015
“Elizabeth Holmes, Theranos: Transforming Healthcare by Embracing Failure.”
Youtube. Stanford Graduate School of Business. Here.
February, 2015
“Top 10 Most Innovative Companies in Health Care, 2015: #7, Theranos”
President Clinton, Fourth Annual Health Matters Activation Summit. “Access to health information is a basic human right,” said Elizabeth Holmes, a young Silicon Valley entrepreneur who founded Theranos, a blood analytics and diagnostics company. [President] Clinton, who applauded her work to provide low-cost testing to the general public, said the company is valued at $9 billion. See also at Clinton Foundation.org, here.
“Theranos is just one example among many for which major efforts and major claims about biomedical progress seem to be happening outside the peer-reviewed scientific literature…stealth research creates total ambiguity about what evidence can be trusted in a mix of possibly brilliant ideas, aggressive corporate announcements, and mass media hype.” See comment at Healthnewsreview.org here (February 23, 2015).
February 27, 2015
“Tech company Theranos pushes consumer lab-testing bill.”
For legislative text, here. For a blog on the topic, here. For cloud version of the legislative text, here. Article in March 2015 Laboratory Economics [subscription, here.]
February, 2015
“Theranos: Blood Tests that Need Just a Tiny Sample.”
Walgreens website, “At the Corner of Happy and Healthy,” accessed 2/17/2015. Here.
March, 2015
“Secret Shoppers Disappointed by Theranos.”
Laboratory Economics. By Jondavid Klipp. Here (subscription).
Summarizes experiences of “secret shoppers” from Piper Jaffray, an Arizona lab, The Dark Report, and a California lab. Most reported 3-day results and many reported standard venipuncture.
March 2, 2015
“Meet the Most Impressive Woman on Forbes’ Female Billionaire List.”
Identities.Mic. March 2, 2015. By Julie Zeilinger. Here.
March 5, 2015
“Millennials and Money: New Kids in the Forbes Billionaires Club.”
National Center for Business Journalism. By Rian Bosse. Elizabeth Holmes noted. Here.
March 6, 2015
“Theranos Files Comment In Support Of Food and Drug Administration Oversight Of Laboratory-Developed Tests.”
“Can Theranos Disrupt the Clinical Lab Testing Market? An Objective Look at Advantages, Liabilities, and Challenges That Must Be Addressed.”
[Pathology] Executive War College. By Dr. Robert Boorstein. [Deck] Here.
“My last routine blood tests, drawn at my physician’s office…cost me $433 out of pocket, even after application of my “gold”-level insurance….Had I not been insured, the lab’s price for those tests would have been $2,411, according to the explanation of benefits sent me. The same tests, according to Theranos’s price menu, would have cost me $75.”
May 7, 2015
“New Laboratory Testing Firm Seeks to Shatter Old Diagnostic Testing Model.”
“A cholesterol test is $2.99, whereas it could cost hundreds in other locations…The response from the lab industry, they have so aggressively seeded false information about us into the press, into journalists, into physicians in the market we are in.”
October 7, 2015
“Theranos Founder Elizabeth Holmes to Deliver Keynote Address at 2015 Medical Innovation Summit.”
