A little over two years after Theranos was exposed as a fraud by the WSJ, and not that much longer after its CEO Elizabeth Holmes was prancing around with Bill Clinton on the stage of the Clinton Global Initiative...
... the SEC finally woke up, and moments ago it announced that it has charged Elizabeth Holmes as well as Theranos' former president Ramesh Balwani with "massive fraud" for raising $700M+ "through an elaborate, years-long fraud in which they exaggerated or made false statements about the company’s technology, business, and financial performance."
The SEC announced that as part of a settlement, Theranos and Holmes have agreed to resolve the charges against them, and "in addition to a penalty, Holmes has agreed to give up majority voting control over the company, as well as to a reduction of her equity which, combined with shares she previously returned, materially reduces her equity stake."
“As a result of Holmes’ alleged fraudulent conduct, she is being stripped of control of the company she founded, is returning millions of shares to Theranos, and is barred from serving as an officer or director of a public company for 10 years,” said Stephanie Avakian, Co-Director of the SEC’s Enforcement Division. “This package of remedies exemplifies our efforts to impose tailored and meaningful sanctions that directly address the unlawful behavior charged and best remedies the harm done to shareholders.”
But before you think that justice is finally being done, here is the actual "fine": $500.000.
Theranos and Holmes have agreed to settle the fraud charges levied against them. Holmes agreed to pay a $500,000 penalty, be barred from serving as an officer or director of a public company for 10 years, return the remaining 18.9 million shares that she obtained during the fraud, and relinquish her voting control of Theranos by converting her super-majority Theranos Class B Common shares to Class A Common shares. Due to the company’s liquidation preference, if Theranos is acquired or is otherwise liquidated, Holmes would not profit from her ownership until – assuming redemption of certain warrants – over $750 million is returned to defrauded investors and other preferred shareholders. The settlements with Theranos and Holmes are subject to court approval. Theranos and Holmes neither admitted nor denied the allegations in the SEC’s complaint. The SEC will litigate its claims against Balwani in federal district court in the Northern District of California.
Or to summarize:
Martin Shkreli = 7 years, $7.5M fine
— Quoth the Raven (@QTRResearch) March 14, 2018
Investor capital lost = ~$0
Elizabeth Holmes = $500k fine, D&O bar
Company value lost = ~$8 billion
So yes, no prison time, and no actual financial hardship. But at least story of the "brilliant entrepreneur", who was supposed to be the next turtleneck-clad Steve Jobs according to the idiot press...
... and who ended up being a complete fraud, is officially finished.
There is just one loose end: it is unclear if the "investing" idiots over at Softbank will recoup any of their $100 million investment which they made just this past December as we profiled in "Busted Billion-Dollar-Baby Fraud Finds Another Greater Fool - Softbank Lends Theranos $100 Million!"
Full SEC press release below:
Holmes Stripped of Control of Company for Defrauding Investors
The Securities and Exchange Commission today charged Silicon Valley-based private company Theranos Inc., its founder and CEO Elizabeth Holmes, and its former President Ramesh “Sunny” Balwani with raising more than $700 million from investors through an elaborate, years-long fraud in which they exaggerated or made false statements about the company’s technology, business, and financial performance. Theranos and Holmes have agreed to resolve the charges against them. Importantly, in addition to a penalty, Holmes has agreed to give up majority voting control over the company, as well as to a reduction of her equity which, combined with shares she previously returned, materially reduces her equity stake.
The complaints allege that Theranos, Holmes, and Balwani made numerous false and misleading statements in investor presentations, product demonstrations, and media articles by which they deceived investors into believing that its key product – a portable blood analyzer – could conduct comprehensive blood tests from finger drops of blood, revolutionizing the blood testing industry. In truth, according to the SEC’s complaint, Theranos’ proprietary analyzer could complete only a small number of tests, and the company conducted the vast majority of patient tests on modified and industry-standard commercial analyzers manufactured by others.
The complaints further charge that Theranos, Holmes, and Balwani claimed that Theranos’ products were deployed by the U.S. Department of Defense on the battlefield in Afghanistan and on medevac helicopters and that the company would generate more than $100 million in revenue in 2014. In truth, Theranos’ technology was never deployed by the U.S. Department of Defense and generated a little more than $100,000 in revenue from operations in 2014.
“Investors are entitled to nothing less than complete truth and candor from companies and their executives,” said Steven Peikin, Co-Director of the SEC’s Enforcement Division. “The charges against Theranos, Holmes, and Balwani make clear that there is no exemption from the anti-fraud provisions of the federal securities laws simply because a company is non-public, development-stage, or the subject of exuberant media attention.”
“As a result of Holmes’ alleged fraudulent conduct, she is being stripped of control of the company she founded, is returning millions of shares to Theranos, and is barred from serving as an officer or director of a public company for 10 years,” said Stephanie Avakian, Co-Director of the SEC’s Enforcement Division. “This package of remedies exemplifies our efforts to impose tailored and meaningful sanctions that directly address the unlawful behavior charged and best remedies the harm done to shareholders.”
“The Theranos story is an important lesson for Silicon Valley,” said Jina Choi, Director of the SEC’s San Francisco Regional Office. “Innovators who seek to revolutionize and disrupt an industry must tell investors the truth about what their technology can do today, not just what they hope it might do someday.”
Theranos and Holmes have agreed to settle the fraud charges levied against them. Holmes agreed to pay a $500,000 penalty, be barred from serving as an officer or director of a public company for 10 years, return the remaining 18.9 million shares that she obtained during the fraud, and relinquish her voting control of Theranos by converting her super-majority Theranos Class B Common shares to Class A Common shares. Due to the company’s liquidation preference, if Theranos is acquired or is otherwise liquidated, Holmes would not profit from her ownership until – assuming redemption of certain warrants – over $750 million is returned to defrauded investors and other preferred shareholders. The settlements with Theranos and Holmes are subject to court approval. Theranos and Holmes neither admitted nor denied the allegations in the SEC’s complaint. The SEC will litigate its claims against Balwani in federal district court in the Northern District of California.
The SEC’s investigation was conducted by Jessica Chan, Rahul Kolhatkar, and Michael Foley and supervised by Monique Winkler and Erin Schneider in the San Francisco Regional Office. The SEC’s litigation will be led by Jason Habermeyer and Marc Katz of the San Francisco office.
Finally, here is a "brief" recap of all the fawning coverage the objective media had given to Theranos and Holmes in the years ahead of her spectacular collapse:
August 30, 2013
"Theranos: The Biggest Biotech You've Never Heard of."
San Francisco Business Times. By Ron Leuty. Here.
September 8, 2013
"Elizabeth Holmes: The Breakthrough of Instant Diagnosis."
October 9, 2013
"Just a Drop Will Do."
Pediatric News. By William Wilkoff. Here.
November 13, 2013.
"One Small Ow-eee."
PediaBlog. By Ned Ketyer MD. Here.
November 18, 2013
"Creative disruption? She's 29 and Set to Reboot Lab Medicine."
US Patent: "Systems and Methods of Sample Processing and Fluid Control in a Fluidic System."
PDF, Patent 8,742,230 B2, 80 pp.. Here.
"This invention is in the field of medical devices...portable medical devices that allow real-tie detection of analytes from a biological fluid...for providing point-of-care testing for a variety of medical applications."
"Theranos: Small Sample, Big Opportunity."
Decibio [Consultancy blog]. By Eric Lakin. Here.
"Meet Elizabeth Holmes, Silicon Valley's Latest Phenomenon"
San Jose Mercury News, by Michelle Quinn. Here.
"Theranos bringing 500 new jobs to Scottsdale's SkySong."
Phoenix Business Journal. By Angela Gonzales. Here. [SkySong is an ASU-affiliated tech park].
"Meet Elizabeth Holmes, the Youngest Female Self-made Billionaire Changing the World with Medical Technology."
Women's ILAB, by Katherine Melescuic. Here.
"This Woman's Revolutionary Idea Made Her A Billionaire — And Could Change Medicine."
Business Insider. By Kevin Loria. Here. See also June 4, 2015.
"Health Plans Deploy New Systems to Control Use of Lab Tests."
Managed Care. By Joseph Burns. Here.
Does not directly cite Theranos. Cites contrasting viewpoints on the value of direct easy inexpensive test access:
October 1, 2014
October 16, 2014
"She's America's Youngest Female Billionaire - And a Dropout."
by Rachel Crane. CNN/Money. Here. [Text & Video.]
October 27, 2014
"Theranos Due Diligence: Company Profile, SWOT Analysis, Market Opportunity."
Decibio. Consulting group profile of Theranos and its valuation and market position (73 pages; $850). Here. Table of Contents, here. Additional description here.
Here.,For further details, see here.
November 7, 2014
"Major Upside for Walgreens Stock"
InvestorPlace. By John Divine. Here.
"The single biggest catalyst for WAG stock in the future may be the company’s decision to partner with the privately held health-tech firm Theranos."
Video interview with Pattie Sellers. Here.
For further details, see here.
December 8, 2014
"Here's How the World's Youngest Self-Made Female Billionaire Shows People She's In Charge."
Business Insider. By Richard Feloni. Here.
December 8, 2014
"The New Yorker on the Promise, the Secrecy, and the Challenges of Super-Startup Theranos."
MedCityNews. by Meghana Keshavan. Here.
December 12, 2014
"Behind the Curtain at Theranos."
NBC News. (Video). Interview with Ken Auletta. Here.
For more detail, see here.
December 14, 2014
"Blood Test Innovation: Less Cost, No Big Needle"
Information Week/Healthcare. By Larry Stofko. Here.
"Can Theranos Disrupt the Clinical Lab Testing Market? An Objective Look at Advantages, Liabilities, and Challenges That Must Be Addressed."
[Pathology] Executive War College. By Dr. Robert Boorstein. [Deck] Here.
Comments
So, the Adam's apple is real, after all?
"So yes, no prison time, and no actual financial hardship. But at least story of the brilliant entrepreneur, and was supposed to be the next turtleneck-clad Steve Jobs..."
...will get to keep the billions and never go to jail. A nice chalet in the alps then? the turtleneck will go well in cold weather...
On the other hand, New Zealand is pretty popular with the runaway billionaire set these days.... whatever you do, get out of the spotlight!
In reply to So, the Adam's Apple is real… by SloMoe
Musn't have been any FBI agents in the investors.
In reply to "So yes, no prison time, and… by toady
I don't see how people who do these things manage to evade retribution from the people they swindle 9 figure plus sums out of.
In reply to Musn't have been any FBI… by Joe Davola
Martin Shkreli = 7 years, $7.5M fine
Investor capital lost = ~$0
Elizabeth Holmes = $500k fine, D&O bar
Company value lost = ~$8 billion
Theres those > equal rights they like to see.
In reply to I don't see how people who… by Sanity Bear
Shkreli didn't have Kissenger backing him.
In reply to Martin Shkreli = 7 years, $7… by overbet
Theranos was probably a front for building a nefarious database.
In other news
http://www.bbc.com/news/technology-43394758
Brain back-up start-up ‘will be the death of users’
Calling all anti/post humanists, step right up, here’s your best chance of uploading your brain so that you can ‘live forever’ in a robot on Mars, a real opportunity of a lifetime, don’t pass this up!
In reply to Shkreli didn't have… by Shitonya Serfs
And then there are the Clintons! How long before DOJ brings them up on massive charity fraud???
In reply to Theranos was probably a… by tion
Look at their board members:
George Schultz - fmr Sec State
William Perry - fmr Sec Def
Henry Kissinger - fmr Sec State
Sam Nunn - fmr Senator
Bill Frist - fmr Senator
Gary Roughead - fmr Admiral
James Mattis - Gen. USMC
William Foege - fmr Director CDC
Richard Kovacevich - fmr CEO Wells Fargo
Etc.
No real mystery why she gets away practically Scott free.
In reply to And then there are the… by waterwitch
"Look at their board members:" 100% goyim, except for Kissinger, who was tasked to keep an eye on them.
Theranos was a kike scam to fleece the goyim, using a shiksa goddess as the front woman.
Shkreli was a rich little smartassed goy from Queens who thought he could cut in on Jew pharma turf and actually make the fags pay a fair price for their anal-sex enabling drugs.
So why should anybody be surprised that the consequences turned out a little differently for each of them?
In reply to Look at their board members:… by Mr. Bones
goddess?
http://pixel.nymag.com/imgs/daily/intelligencer/2016/04/18/theranos-cri…
In reply to Theranos was a kike scam to… by Buckaroo Banzai
Yeah, I've wondered about that - DNA database?
In reply to Theranos was probably a… by tion
alternative DNA database?
FIFY
in the late 90s, every state legislature passed a law requiring all law enforcement agencies to take a skin sample of everyone they arrest. the premise being of possible transmission of tuberculosis. horseshit. they were building a DNA database for those who had been arrested.
the boys with the badges were not satisfied with that and wanted to after the good people. enter theranos.
In reply to Yeah, I've wondered about… by Bastiat
May the power of the miracle yalmuke protect her
RIPS
In reply to Martin Shkreli = 7 years, $7… by overbet
Look and yee shall find...
The Connection Between The Clintons And Theranos Runs Deep
<gasp>
Well knock me down with a feather, I am so utterly shocked!
In reply to May the power of the miracle… by Deathrips
She's a pariah now and rightly so.
In reply to Look and yee shall find… by CuttingEdge
A pariah?
Yes, but a pariah who still has the media protecting her glutenous arse.
I'm starting to wish the insidious cunt's minders would look the other way next time she takes a tumble down stairs...
..or maybe give her a polite nudge to start the ball rolling?
In reply to She's a pariah now and… by glenlloyd
Shkreli could have had it easy if he would have just shut the fuck up. That dude dug his own grave.
In reply to Martin Shkreli = 7 years, $7… by overbet
Proper impartiality dispenses with those things in favor of objectivity and facts, but since everything today is politicized, up to & including the legal process, you get the Show Trial effect.
In reply to Shkreli could have had it… by Tijuana Donkey Show
If Obama had a daughter....
In reply to Martin Shkreli = 7 years, $7… by overbet
What is wrong with you people. Shkreil absolutely fucked over people whose life sustaining needs are linked to a drug he jacked the price up to where most were paying over $300k/year. Holmes, no saint, just bilked idiot investors out of their money. They weren't forced to pay it or die. They just did a very shitty job a due diligence.
In reply to Martin Shkreli = 7 years, $7… by overbet
Shkreli was never charged with increasing drug prices.
In reply to What is wrong with you… by GoingBig
Clintonesques or Muskesque?
That is the question.
Same old piss in a different colored bottle, if you ask me.
Holmes' mistake?
Trying to fuck over the FDA with obfuscation, and a healthy dose of your common or garden variety bullshit?
Not advisable. Wrong people to have on your case (unless you are Sackler descendants, ofc).
In reply to What is wrong with you… by GoingBig
It's well documented Skhreli willingly gave the drug away to individuals and simply pounded the insurance companies.
If ever there was a case against him it was discrimination against big pharma clients. This wasn't a class action lawsuit for the little guy, it was big business using the media machine to slam their tiny mirror image.
It was also his intent to use the funds he got by jacking the price on a largely unused drug (~2000 patients/yr) in actual life saving circumstances (daraprim) to fund his research concerning other life debilitating diseases.
But you like to believe stories without evidence.
In reply to What is wrong with you… by GoingBig
No kidding!
In reply to I don't see how people who… by Sanity Bear
With Shkreli it became personal. He didn't know when to keep his mouth shut.
In reply to I don't see how people who… by Sanity Bear
You think the funds that invested ought to raise some retribution capital and hire some BG's to make her sleep with the fishes?
In reply to I don't see how people who… by Sanity Bear
If someone stole $100 million from me they would be vivisected without anasthesia.
In reply to You think the funds that… by Dorado
So George Schultz is getting off scot free? https://en.wikipedia.org/wiki/George_P._Shultz
In reply to Musn't have been any FBI… by Joe Davola
How about Mad Dog Mattis?
In reply to So George Schultz is getting… by TeethVillage88s
I can't wait until Trump pardons Skhreli. That is going to be a glorious day.
In reply to Musn't have been any FBI… by Joe Davola
Slick Willie confirmed that Elizabeth is a classical pump and dump.
In reply to Musn't have been any FBI… by Joe Davola
I think the bottom line is, if your going to defraud investors, be sure you have the CLINTONS by your side, because then YOUR GAURANTEED IMPUNITY from meaningful prosecutions!
In reply to "So yes, no prison time, and… by toady
"...be sure you have the CLINTONS by your side..."
And a CLIT under your belt.
Noted.
In reply to I think the bottom line is,… by Katos
Yes, Give her the same punishment as they gave Jon Corzine for loosing $5 billion.....
In reply to "So yes, no prison time, and… by toady
Failing that she could always go full on spotlight and try camming. Lots of weirdo bimbos there; she'd blend in perfectly.
In reply to "So yes, no prison time, and… by toady
#TrustWomen
In reply to So, the Adam's Apple is real… by SloMoe
#METOO
In reply to #TrustWomen by chrsn
She's an actual crook but won't even see a day in jail, unlike Shkreli.
She is protected by the fucking Clinton Cartel and many DC Swampsters.
A good gang rape by MS13 is in order.
Stupid fucking bitch whore.
And those are the nicer attributes.
In reply to She's an actual crook but… by Bad Goy
this won't make the news
Is Hillary involved? Maybe they can get her that way.....
Did CGI tell her how much she had to pony up to get all the original flowery headlines about this technology was better than nickel beer?
In reply to Is Hillary involved? Maybe… by ZENDOG
Much of that was the board members.
In reply to Did CGI tell her how much… by SoDamnMad
All roads lead through Huma's snatch, first.
In reply to Is Hillary involved? Maybe… by ZENDOG
Kissinger was
In reply to Is Hillary involved? Maybe… by ZENDOG
Massive Fraud?
I mean are you sure??
It just can't be because they told me Everything is Awesome!!!
la lalala la lala...
I claim this was a money laundering business. Her array did not work and could not have been approved for clinical work and she was offering testing way below costs. I have managed a private independent lab before and what she was doing was blatantly illegal. Looking at her board members is a clue into why she wasn't shut down and jailed immediately.
Miffed
In reply to Massive Fraud?… by 1777
Hillary Clinton Foundation Blatantly Illegal.
But Grandson of George P Schultz turned evidence as Whistleblower and his Grand Father helped cover it up, right? Another Failure of Journalism, 4th Estate, Pillars of Civilization, SEC, FBI, DOJ, FTC...
In reply to I claim this was a money… by Miffed Microbi…
Everything was Awesome, for just us, until that fucking bastard got elected! Now we'll all hang from nooses! I'll get you, my pretty! And your little dog too!
In reply to Massive Fraud?… by 1777
Pagination