https://nypost.com/2018/03/14/...es-of-massive-fraud/

Securities and Exchange Commission on Wednesday accused Theranos CEO Holmes and a top lieutenant of defrauding investors of more than $700 million through false claims about its blood-testing technology.

Theranos and 34-year-old Holmes ran “an elaborate, years-long fraud in which they exaggerated or made false statements about the company’s technology, business, and financial performance,” according to the SEC.

Holmes — a Steve Jobs wannabe who dressed exclusively in black turtlenecks — settled with the regulators for $500,000 while neither admitting nor denying the accusations.

She additionally agreed to not be a director or officer of a public company for 10 years, and to forgo profiting from Theranos ownership until $750 million is returned to investors, according to the consent order with the SEC.

The charges amount to one of the biggest scandals to rock the tech world since the bursting of the tech bubble in 1999.

The SEC claims that Holmes misled investors about her technology, which Theranos said was able to test for diseases with only a pinprick, and more cheaply than what was commercially available, according to the SEC settlement.

In reality, the company didn’t have any reliable technology to test blood samples, and sent blood to third-party companies for testing, according to the complaint.

The settlement marks a further humiliation for Holmes, a Silicon Valley star who at one point was the youngest self-made woman billionaire with $4.5 billion in net worth.

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Forbes estimate now of Holmes' worth: zero

https://www.forbes.com/sites/m...holmes/#51fe81a33633

So we should have more female CEO's because they would never do anything dishonest like...oh wait.

A durn shame, that's for sure.

But, given as how she conned so many people out of so much money, something tells me that she'll be back with another "can't miss" product.

good

there was a medical product that I looked at years ago as a possible investment opportunity

they had a hand-held device and you put a small amount of blood on a module that was inserted into the device and it was essentially a portable bedside lab that could run about a dozen different tests in about 5 minutes

I am racking my brain trying to remember what it was called - but it wasn't the one in the story

I hope her house is paid off - it would be a real shame to get evicted

I bet George Schultz is unhappy.

This illustrates just ONE of the risks of venture capital. Unless you know what the business is, how things work, best leave it to others. “Risk is not knowing what you are doing.” Warren Buffett

At one point early in the microprocessor revolution, there were something like 3,000 organizations offering microprocesor based digital computers to consumers. All but a handful went out of business. Apple, Dell, a few others survived. Is IBM offering personal computers anymore? For every Jobs and Gates, there were hundreds of Kays, Altairs and IMSAIs.

Several years ago, right before Theranos was taking off, I had a breakfast meeting with her. She is obviously super smart, highly ambitious and when I met her, motivated by a good idea.
Sometimes, though people drink too much of their own kool-aid.

Not enough. Securities fraud is a serious offense. They are fining her $500k. On a $750MM fraud. She should be in prison.

Hell, Martha Steward did time for less.

Oh yeah, she's "broke" alright. I'd love to be "broke" like that.

If she doesn't have 5 or 10 million dollars cash put away, I'll eat my hat.

agreed para.She got cash from kissinger,and a lot of smart folks.

that 500 k fine was a tiny pimple to her

She's a fraud and bilked investors out of hundreds of millions if not billions. Why isn't she in prison?

quote:

Originally posted by ArtieS:
Not enough. Securities fraud is a serious offense. They are fining her $500k. On a $750MM fraud. She should be in prison.

Hell, Martha Steward did time for less.

Good point re: Martha Stewart. Perspective makes a big difference.

The article notes (rather obliquely) that the settlement relates to civil charges only. It is possible (and I would say likely) that the US Attorney is looking at criminal charges. With the settlement of the civil case out of the way, I would expect an indictment within months. If not, I'd be very surprised.

quote:

Originally posted by Hobbs:
She's a fraud and bilked investors out of hundreds of millions if not billions. Why isn't she in prison?

this is the same question i have

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Her, Jordan Belfort and all these other white collar criminals who steal/scam ridiculous sums of money from honest people should rot in jail for the rest of their lives. They're a detriment to society and the punishment doesn't come close to fitting the crime, especially when compared with those serving real time for doing much less. The system needs an overhaul.

https://abcnews.go.com/Technol...ranos-fraud-53746987

The settlement comes two years after the SEC, prompted by a Wall Street Journal investigation, began looking into claims Theranos had made about its potentially revolutionary blood-testing technology.

The Journal quoted former employees that suspected the technology was a fraud, and it found that the company was using routine blood-testing equipment for the vast majority of its tests. The story raised concerns about the accuracy of Theranos' blood testing technology, which put patients at risk of having conditions either misdiagnosed or ignored.

Holmes, 34, founded Theranos in Palo Alto, California, in 2003, pitching the company's technology as a cheaper way to run dozens of blood tests

Theranos raised millions in startup funding by promoting its tests as costing a "fraction" of what other labs charge.

At the center of Theranos' mystique was its "Edison" machine, which the company claimed could test for a variety of diseases through only a few drops of blood from a person's finger. Despite the hype and company claims, Theranos shared few details on how its Edison machine — named after the inventor — worked.

Theranos attracted extraordinary interest and loaded its board with huge names, mainly elder Washington statesmen, including two former U.S. secretaries of state: Henry Kissinger and George Schultz. The group was criticized for lacking expertise in science or medicine.

In 2015, Holmes was able to convince the Arizona State Legislature and Gov. Doug Ducey to pass a law allowing patients to get blood tests without a doctor's order, for the direct benefit of Theranos. The company got Walgreens to open store-within-a-store concepts where customers could get their blood tested by Theranos.

After the Journal's investigation, Theranos and Holmes pushed back hard, and for months refused to acknowledge that its machines were effectively a sham. State and federal authorities started investigations into the accuracy of the company's blood testing work. In 2016 the Centers for Medicare and Medicaid Services, which oversees blood testing labs in the U.S., banned Holmes from operating a lab and revoked Theranos' blood testing license.

In late 2016, Theranos began shutting down its clinical labs and wellness centers and laid off more than 40 percent of its full-time employees. The company has been on life support ever since, and is rumored to be close to bankruptcy.

Along with the fine announced Wednesday, Holmes agreed to return 18.9 million shares of Theranos that she obtained during the fraud. If the company is sold or liquidated in bankruptcy, Holmes will not profit from any remaining ownership in the company until at least $750 million in proceeds are returned to investors, the SEC said.

Theranos said Wednesday that neither the company nor Holmes admitted or denied wrongdoing.

"The company is pleased to be bringing this matter to a close and looks forward to advancing its technology," Theranos said in a prepared statement.

quote:

Originally posted by JALLEN:...For every Jobs and Gates, there were hundreds of Kays, Altairs and IMSAIs.

Living in Silicon Valley, I have seen the VC world first hand. The numbers I have seen are that for every ~100 deals presented to VC's, they invest in ~10. Of those 10, 2-3 are "DOA". 3-4 are "walking dead", will move forward but will never get off the ground. 2-3 are base hits, VC's get a fair return, but not worth the risk. Maybe only 1-2 are home runs. But the home runs make up for all the rest.

quote:

Originally posted by ArtieS:
Not enough. Securities fraud is a serious offense. They are fining her $500k. On a $750MM fraud. She should be in prison.

Hell, Martha Steward did time for less.

Wait. Lying to the investigators is the most heinous offense imaginble not involving actual death or grievous physical injury.

quote:

The article notes (rather obliquely) that the settlement relates to civil charges only

Yes. I agree. Another poor piece of journalism. When you have to read an article more than once, it is the writer who has not made things clear. I have come to expect that in print journalism.

The OP article states:

"Theranos disclosed in a 2016 letter to investors it was under a criminal probe. No criminal charges have been filed, and it’s not known if the investigation is ongoing."

I haven't seen any other reports of a criminal investigation of Theranos. If anyone has a link, pls post.

From what I have read of this story, it is pretty bad. The capability "claimed" never existed. Even Gen Mattis was part of the board.

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https://www.usatoday.com/story...ive-fraud/424670002/

Holmes founded the company in 2003 at age 19 after dropping out of Stanford University in order to pursue her start-up.

This really was "the emperor has no clothes"