Theranos

History

2022

Elizabeth Holmes sentenced to 11 years in prison

Theranos founder Elizabeth Holmes was sentenced to 11 years in federal prison on November 18, 2022 for defrauding investors in a blood testing startup.

Prosecutors also asked the court to order Holmes to pay $804 million in damages to Theranos partners, including Safeway and Walgreens, as well as other wealthy investors, including Rupert Murdoch.

US Department of Justice requested 15 years in prison for Elizabeth Holmes and payment of $800 million to defrauded investors

In November 2022, the US Department of Justice requested a punishment of 15 years in prison and payment of $800 million to defrauded investors for the founder of Theranos startup Elizabeth Holmes, Reuters reports.

"Given the scale of Holmes' fraud <...>, 180 months in prison would reflect the seriousness of the crimes, provide for fair punishment for them, and deter Holmes and others," prosecutors said in a statement.

She claimed to have developed technology that produced an accurate blood test of just a few drops, making the procedure quick, cheap and painless. Holmes became the youngest female billionaire, in 2015 Forbes estimated her fortune at $4.5 billion (she was 31 years old at that time). The businesswoman owned half of Theranos shares, the market capitalization of the company itself at that time was estimated at $9 billion.

A few months after the start-up, customers began to complain en masse about Theranos devices, their results had too many errors, which is why Theranos was forced to carry out parallel analyzes in the traditional way to eliminate errors. Later it became known that the technology for conducting a blood test, which Holmes originally spoke about, was fake. On March 15, 2018, Holmes was charged with fraud. Forbes now estimates the value of the businesswoman's assets at $0.

The founder of the company, Elizabeth Holmes, was found guilty of four charges

In January 2022, a jury found the founder of Theranos medical startup Elizabeth Holmes guilty of four charges. First of all, in conspiracy to deceive investors and fraud. Holmes, 37, faces a fine and up to 20 years in prison.

Holmes founded Theranos in 2003, the company promised to produce devices for instant blood testing. By the time the first revealing materials about fake technologies and startup finances were released in 2015, it was estimated at almost $9 billion.

2018: Liquidation of the company and loss of $1 billion by investors

In early September 2018, it became known about the liquidation of Theranos after a series of scandals, in the center of which the company was. Investors who invested in a startup lost $1 billion.

The Wall Street Journal wrote that Theranos is stopping work, citing a letter that CEO David Taylor sent to shareholders. The last working day for Theranos employees was August 31.

The controversial manufacturer of equipment for rapid blood tests Theranos is being liquidated. Investors lose $1 billion

The company closes to return the funds taken from them to creditors within 6-12 months. At the same time, large investors will not be able to return their investments.

The decision to wind down the business came after unsuccessful attempts to sell Theranos, Taylor said. Jefferies Group was involved in the deal, but the contract was never signed with any of the 80 applicants.

Unfortunately, negotiations with no potential buyer have turned into a deal. We don't have time now, "Tayler wrote in a letter to shareholders.

He also noted that Theranos was unable to pay off a loan taken from Fortress Investment Group, but negotiations are underway to grant the lender rights to Theranos patents and write off $5 million to transfer this money to other creditors who did not receive collateral in the form of collateral.

According to Taylor, in addition to Fortress's debts, Theranos owes at least another $60 million. Since the company does not have enough own cash to pay the debt in full, there will be no distributions of funds between shareholders, the head of Theranos said.

He added that the company will seek consent to conclude an agreement between Theranos's board and shareholders with Fortress. The process of termination of the company began in the first week of September 2018 and will continue on the 10th.

Theranos was a large and promising manufacturer of equipment for clinical blood tests. In 2014, the company was valued at $9 billion, but a year later the value collapsed more than 10 times after it became known about the substitution of test results and the use of the development of other companies.

In June 2018, the US authorities charged Theranos founder and ex-CEO Elizabeth Holmes and former chief operating officer and head of the company's board of directors Ramesh Balwani with deception.

Executives, through advertising and service promotion, pushed doctors and patients to use Theranos lab services, though they knew the company was not in a position to provide an accurate and reliable blood test, the U.S. attorney's office said in a release.

Holmes and Balwani cited deliberately false facts in presentations to investors and press releases, as well as when demonstrating the company's products. Theranos has tried in this way to convince investors of the revolutionary nature of its key product - a portable blood analyzer - by its ability to perform the full range of tests on a drop of blood from a finger.

According to the US Securities and Exchange Commission, Theranos top managers, using a fraudulent scheme, raised more than $700 million from investors.

Holmes agreed to pay a fine of $500 thousand, returned 19 million shares of the company and agreed not to hold posts in public companies for ten years. However, by early September 2018, the trial is ongoing. She and Ramesh Balwani face up to 20 years in prison and a fine of up to $250,000.

In March 2018, Theranos cut most jobs but continued on a temporary basis.^[1]

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