Theranos tries to sidestep founder’s fraud charges
In what may be the one-time biotech darling’s final chapter, the SEC charged founder Elizabeth Holmes and her partner with defrauding investors. Can the firm move on without her?
The moral of the Theranos story is a simple one: Tell the truth, or face the consequences.
What was once a startup valued at billions of dollars is now struggling to distance itself from the legal woes of its founder, Elizabeth Holmes, after she settled a lawsuit charging she defrauded investors and misled patients.
Elizabeth Holmes raised hundreds of millions of dollars from investors on the promise that her medical-testing startup Theranos Inc. would change medicine with a single drop of blood. On Wednesday, securities regulators called her a fraud and forced her to give up the company she built.
The lawsuit and settlement announced Wednesday by the U.S. Securities and Exchange Commission detailed how Holmes and her chief deputy lied for years about their technology, snookered the media, and used the publicity to get investors to hand more than $700 million to keep the closely held company afloat.
As part of the accord, Holmes will pay a $500,000 fine, surrender 19 million shares and is barred from being an officer or director of a public company for 10 years.
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