Theranos CEO charged with criminal fraud

Federal prosecutors have indicted Elizabeth Holmes on criminal fraud charges for allegedly defrauding investors, doctors and the public as the head of the once-heralded blood-testing startup Theranos. Federal prosecutors also brought charges against the company’s former second-incommand.

Holmes, who was once considered a wunderkind of Silicon Valley, and her former Chief Operating Officer Ramesh Balwani, are charged with two counts conspiracy to commit wire fraud and nine counts of wire fraud, the U.S. Attorney’s Office for the Northern District of California said late Friday. If convicted, they could face prison sentences that would keep them behind bars for the rest of their lives, and total fines of $2.75 million each.

Prosecutors allege that Holmes and Balwani deliberately misled investors, policymakers and the public about the accuracy of Theranos’ blood-testing technologies. Holmes, 34, founded Theranos in Palo Alto, Calif., in 2003, pitching its technology as a cheaper way to run dozens of blood tests. Once considered the nation’s youngest female billionaire, Holmes said she was inspired to start the company in response to her fear of needles.

But an investigation by The Wall Street Journal two years ago found that Theranos’ technology was a fraud, and that the company was using routine bloodtesting 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.

“CEO Elizabeth Holmes and COO Sunny Balwani not only defrauded investors, but also consumers who trusted and relied upon their allegedly-revolutionary blood-testing technology,” Acting U.S. Attorney Alex Tse said in a statement.