Federal prosecutors have indicted disgraced Theranos founder Elizabeth Holmes and former president and chief operating officer, Ramesh “Sunny” Balwani, for defrauding customers and investors, calling their actions a “corporate conspiracy” that “endangered health and lives.”
Holmes has also stepped down as CEO from the blood-testing company, once a Silicon Valley darling valued at $9 billion. Starting in 2015, a series of articles in The Wall Street Journal by investigative journalist John Carreyrou revealed that the company was peddling a technology — blood tests with a simple finger prick — that did not actually work. The company has been forced to void or correct nearly a million blood-test results. The company has since become an example of the dangers of Silicon Valley hype and Holmes, once a billionaire, now has a net worth close to zero.
Prosecutors charged both Holmes and Balwani, who each face two counts of conspiracy to commit wire fraud and nine counts of wire fraud. This carries a maximum 20 years in prison, plus a fine of $250,000 for each count of conspiracy and wire fraud.
Today’s ruling comes three months after Holmes settled civil fraud charges with the Securities and Exchange Commission. Holmes, 34, will remain chairman of Theranos. The company’s general counsel, David Taylor, will become its new CEO.