Theranos founder Elizabeth Holmes and former COO and president Ramesh “Sunny” Balwani were indicted Friday on 11 counts of wire fraud.
The indictment accuses Holmes (who stepped down as CEO on Friday) and Balwani of engaging in a multimillion-dollar scheme to defraud investors, doctors and patients, wildly overstating Theranos’ revenue, contractual relationships, and the capabilities of their technology.
None of which they could deliver on
The company, which at one point had a valuation of $9B, claimed their devices could test for a variety of health issues with just “one tiny drop [of blood].”
But, according to the US attorney’s office, Holmes and Balwani were fully aware of the device’s “accuracy and reliability problems,” and that it “could not compete with existing, more conventional machines.”
Now, the DoJ is out for more than ‘one tiny drop of blood’
If convicted, the duo will face fines of $250k per count, over $100m in restitution, and potentially decades in prison.
The maximum statutory penalty for both conspiracy to commit wire fraud and for actual wire fraud is 20 years per count, and each count could be served consecutively.