Elizabeth Holmes, the founder and CEO of the beleaguered blood-testing startup Theranos, has been charged with “massive [years-long] fraud” by the Securities and Exchange Commission.
According to the SEC, Holmes and former company president Ramesh Balwani allegedly “deceived investors into believing that its key product — a portable blood analyzer — could conduct comprehensive tests from finger drops of blood.”
Everyone loves a good story
It’s the stuff that makes Hollywood swoon (literally): The company once valued at $9B was founded by a bold college dropout with a fear of needles and a desire to change the world.
Holmes’ comeuppance, along with the company’s, was widely publicized; some even compared her innovative spirit (and her ability to wear a black turtleneck) to that of Steve Jobs.
But from the get-go, medical experts questioned the mystique of Theranos’ technology, and that smoke eventually turned to fire when The Wall Street Journal reported the technology was only being used in a fraction of the 240 tests they advertised.
Still falling from grace
The SEC alleges that Holmes, Balwani and Theranos raised more than $700m from investors by fudging the capabilities of the technology, their financial status, and exaggerating their relationship with the Department of Defense.
As for Holmes: She agreed to a $500k penalty, the relinquishment of 19m shares and voting control of Theranos, and was banned from serving as an officer or director of a public company for the next decade.
Sounds rough, but hey, we hear the gig economy’s really heating up these days…