Elizabeth Holmes, founder and CEO of the Silicon Valley health tech company as well as a Clinton donor, has been charged with “massive fraud” and settled with the Securities and Exchange Commission.
The SEC alleged that her company deceived investors when they raised $700,000,000 between 2013 and 2015. The settlement requires her to pay a $500,000 fine and she’s also bared as serving as director or officer of any public company for 10 years, according to CNBC.
The SEC alleged that Theranos raised more than $700 million from late 2013 to 2015 while “deceiving investors by making it appear as if Theranos had successfully developed a commercially-ready portable blood analyzer that could perform a full range of laboratory tests from a small sample of blood.”
The SEC also said Theranos deceived investors by “hosting misleading technology demonstrations, and overstating the extent of Theranos’ relationships with commercial partners,” noting that at times Theranos’ technology performed could only do about 12 tests of the over 200 tests advertised. The SEC also said former Theranos President Ramesh “Sunny” Balwani and Holmes lied about the extent of Thernos’ involvement with the military.
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Theranos previously settled a lawsuit with one of its biggest investors, Partner Fund Management, which invested more than $96 million in Theranos in 2014. Holmes has already said she plans to give away shares to the “most significant shareholders.”
Further, she settled with the state of Arizona for nearing $5,000,000 last year after fraud claims came about in regards to her companies “flawed” Edison device blood tests.
“The Theranos story is an important lesson for Silicon Valley,” Jina Choi, director of the SEC’s San Francisco regional office, said in a statement. ‘”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.”
In 2016, Homles has set to host a $2,700-a-head fundraiser for the Clinton campaign at the Theranos Palo Alto, California headquarters. The location was changed when the campaign was criticized for holding the event at the headquarters of a company under federal investigation.
Holmes remained a host for the fundraiser, and Chelsea Clinton still attended the event.
“[The event] is not connected to a specific company or policy, but a chance to talk directly to women in tech,” the Clinton campaign told CNBC at the time. “We frequently send initial invitations while host committees are still being formed and locations finalized. This was never a health care event and the location wasn’t set. It will not be at Theranos.”
They’ll all fall eventually, right?