Theranos founder accused

SEC alleges ‘elaborate, years-long’ deception

The SEC says the founder of Theranos, an Arizonabased blood-testing company, operated an “elaborate, years-long fraud” that deceived investors.

The founder of Theranos, a private blood-testing company that made metro Phoenix the main testing ground for its unproven technology, has been charged with an “elaborate, years-long fraud,” the Securities and Exchange Commission said Wednesday.

Theranos founder and CEO Elizabeth Holmes and the company’s former President Ramesh “Sunny” Balwani raised more than $700 million from investors through an “elaborate, yearslong fraud” that deceived investors by claiming the company had developed a portable blood analyzer that could perform a range of tests from a small sample of blood, the SEC said.

Holmes did not admit or deny the allegations, but she agreed to settle the civil charges levied against her. Under the agreement, Holmes will pay a $500,000 fine and be barred from serving as an officer or director of a public company for a decade. She will also surrender the 18.9 million shares obtained during the fraud and relinquish her voting control of Theranos, the SEC said.

The SEC said it will pursue its case against Balwani. The SEC said Holmes and Balwani claimed Theranos’ technology could perform tests that were “faster, cheaper and more accurate” than conventional lab-testing.

Despite their claims that the bloodtesting technology could perform comprehensive tests, the company conducted “the vast majority of patient tests on modified and industry-standard commercial analyzers manufactured by others,” the SEC said in a statement.

Last April, Theranos agreed to pay Arizona consumers $4.65 million under a consumer-fraud settlement negotiated by Arizona Attorney General Mark Brnovich’s office. The settlement included 176,000 consumers who purchased Theranos tests at Arizona retail locations since 2013.