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Elizabeth Holmes steps down as Theranos CEO as DOJ levels charges
CNBC is reporting that Elizabeth Holmes has stepped down from her position as CEO of Theranos and the Department of Justice has indicted her on alleged wire fraud. Both the company and Holmes have been embroiled in scandal following reports that the blood tests it claimed to be working on weren't actually effective. Earlier this year, the Securities and Exchange Commission charged Holmes and Theranos with fraud.
[...] Along with Holmes, Ramesh "Sunny" Balwani, former president of Theranos, is being charged by the DOJ as well. Both Holmes and Balwani appeared before US Magistrate Judge Susan van Keulen today where they were arraigned on nine counts of wire fraud and two counts of conspiracy to commit wire fraud. [...] CNBC reports that Holmes will still chair Theranos' board and the company's general counsel, David Taylor, has been appointed CEO. If convicted, Holmes and Balwani face a maximum prison sentence of 20 years, a $250,000 fine and restitution for each count of wire fraud.
Related Stories
Theranos, Blood-Testing Company Plagued By Scandal, Says It Will Dissolve
Theranos — the Silicon Valley blood-testing startup whose former top executives are accused of carrying out a massive, years-long fraud — is shutting down.
David Taylor, who became CEO in June, said Theranos will dissolve after it attempts to pay creditors with its remaining cash. The news was first reported by The Wall Street Journal, which published the letter.
The letter explains that the company "intends to enter into an assignment for the benefit of creditors." This arrangement would allow for all of Theranos' assets, other than its intellectual property, to be assigned to a third party in trust for the company's creditors. The company says it has about $5 million remaining in cash.
Previously: Theranos Introduces New Product to Distract from Scandal
Theranos Lays Off 340, Closes Labs and "Wellness Centers"
Theranos Given Indirect Lifeline From Softbank
Blood Unicorn Fairy Tale: Theranos Founder Charged With Fraud
Elizabeth Holmes Steps Down as Theranos CEO as DoJ Levels Charges
Submitted via IRC for Bytram
Theranos founder Elizabeth Holmes will go on trial next summer
Elizabeth Holmes, the disgraced founder of blood-testing startup Theranos, will officially go to trial in San Jose next year, according to the US District Judge Edward J. Davila of the Northern District of California.
[...] According to TechCrunch, the trial will begin in August 2020, with jury selection beginning on July 28th, 2020. The Wall Street Journal also reports that prosecutors have collected millions of pages of documents, and that the defense has complained about the amount that is being presented, and that the WSJ's initial reporting might have unduly influenced the way the government regulators approached the company.
Previously: Blood Unicorn Fairy Tale: Theranos Founder Charged With Fraud
Elizabeth Holmes Steps Down as Theranos CEO as DoJ Levels Charges
Theranos to Dissolve in a Pool of Blood
Judge in Theranos fraud case orders 14-hour psychological test for Holmes:
Holmes and Theranos' former president Ramesh "Sunny" Balwani were charged in June 2018 with nine counts of wire fraud and two counts of conspiracy to commit wire fraud.
[...] According to the court document filed this week[*], Holmes—who is now being tried separately from Balwani—notified the court last December that she plans to submit "expert evidence relating to a mental disease or defect or any other mental condition" that has bearing on the issue of guilt. The expert providing such evidence was named in the document as psychologist Mindy Mechanic, of California State University, Fullerton.
According to Mechanic's faculty website, she focuses on "psychosocial consequences of violence, trauma, and victimization with an emphasis on violence against women and other forms of interpersonal violence." The site also notes that Mechanic "frequently provides expert testimony in complex legal cases involving interpersonal violence."
[...] In response to Holmes' plans to provide mental health evidence, federal prosecutors requested that they should also be able to examine Holmes' mental state and provide their own psychiatric evidence in court as a fair rebuttal.
[...] The judge in the case, US District Judge Edward Davila of the Northern District of California, agreed with the prosecutors. As such, he ordered Holmes to undergo up to 14 hours of psychological testing and psychiatric evaluation by two government-appointed doctors over the course of two consecutive days. Davila also ordered that the government's evaluation of Holmes be recorded on video—over Holmes' objections.
[*] Here is a link to the court document.
Holmes to face maximum of 80 years in prison when she’s sentenced in September:
While she is likely to receive prison time for defrauding investors, she will be able to spend the next eight and a half months out on bail. She faces a maximum sentence of 20 years in prison for each of the four counts she was convicted of, though it’s unlikely that she’ll be sentenced to all 80 years.
Holmes has been out on bail since June 2018, when she and alleged co-conspirator Ramesh “Sunny” Balwani were charged. Both were released after posting $500,000 bonds and surrendering their passports. Now that Holmes has been convicted and is awaiting sentencing, her bond will have to be secured by property. Their trials have been repeatedly pushed back, first because of the COVID pandemic and then later because Holmes gave birth.
Part of the reason Holmes’ sentencing has been postponed is because the government still has to prosecute its case against Balwani.
Previously:
2022/01/04 - Elizabeth Holmes Found Guilty on 4 of 11 Charges
2020/09/13 - Judge in Theranos Fraud Case Orders 14-Hour Psychological Test for Holmes
2019/07/01 - Theranos Founder Elizabeth Holmes to Face Trial Next Year on Fraud Charges
2018/09/06 - Theranos to Dissolve in a Pool of Blood
2018/06/17 - Elizabeth Holmes Steps Down as Theranos CEO as DoJ Levels Charges
2018/03/15 - Blood Unicorn Fairy Tale: Theranos Founder Charged With Fraud
2017/12/24 - Theranos Given Indirect Lifeline From Softbank
2016/10/06 - Theranos Lays Off 340, Closes Labs and "Wellness Centers"
2016/08/03 - Theranos Introduces New Product to Distract from Scandal
(Score: 4, Informative) by Gaaark on Sunday June 17 2018, @10:22PM (11 children)
"face a maximum prison sentence of 20 years, a $250,000 fine and restitution for each count of wire fraud."
So, they'll get what... 4 days and pay up in sticks of chewing gum?
"Fine?"
"Yeah. That's fine."
--- Please remind me if I haven't been civil to you: I'm channeling MDC. ---Gaaark 2.0 ---
(Score: 5, Insightful) by PartTimeZombie on Sunday June 17 2018, @11:13PM (6 children)
I was assuming they will go away for a long time, as the "victims" are all wealthy, powerful white people who have senior politicians as friends, and probably want to send the message that nobody should try to steal from wealthy "investors"*.
* In quotes because if you couldn't see this was a con long, long ago then you are just a rube.
(Score: 5, Insightful) by frojack on Sunday June 17 2018, @11:35PM
Chump change to the wealthy "victims" (Who probably were in on the scam anyway).
Few months in Camp Fed, probation and maybe some minimal fine. The poor woman CEO was duped by the male technical experts. (sob).
No, you are mistaken. I've always had this sig.
(Score: 0) by Anonymous Coward on Sunday June 17 2018, @11:36PM (2 children)
"* In quotes because if you couldn't see this was a con long, long ago then you are just a rube."
*
*
*
Of course the con was painfully obvious to many of us, but it's worth noting that there are many people who either don't actually use the intelligence they do have, or perhaps they aren't that intelligent, period. Add to that the very real phenomenon that greed can and does blind people to what would be "red flags", and it's easy to see how con artists are often able to succeed when they prey on certain subsets of the population.
It's best to go with your gut instinct on such matters and never forget the "if it seems too good to be true it is probably a scam" principle.
(Score: 3, Informative) by PartTimeZombie on Sunday June 17 2018, @11:58PM (1 child)
Frojack pointed out above that the "victims" may well have been in on the con which might be true, as there are tax breaks for loses aren't there?
(Score: 2) by darkfeline on Monday June 18 2018, @07:41AM
I'm pretty sure there are better ways to get tax breaks without throwing the money away. Since we don't have a 100% tax bracket, you're going to be strictly losing more money than what you save from the tax break, unless that money somehow got funneled into secret assets somewhere.
Join the SDF Public Access UNIX System today!
(Score: 1, Insightful) by Anonymous Coward on Monday June 18 2018, @02:28AM
What about the Important Connected Wealthy People they had assembled on the board of directors? Any chance they will have to face justice?
However, Tyler Shultz, grandson of Reagan's secretary of state, wasn't content to be a pretty face, he loudly warned that Theranos was a scam.
(Score: 2) by Fluffeh on Monday June 18 2018, @03:27AM
That's totally the way I saw it too. Steal $100 from a thousand suckers and you're gutter scum not really worth anyone's time. Steal $100k from a politician and you are in the crosshairs of all the three-letter agencies.
(Score: 2) by darkfeline on Monday June 18 2018, @07:37AM (1 child)
That's "for each count". So taking the reporting at face value, that means a maximum of 180 years and $2.25 million fine plus restitution, and that's not counting the conspiracy charges.
Of course, I wouldn't be surprised either if it got negotiated down to something more mundane, or if there are some other maximum limits on fraud sentences.
Join the SDF Public Access UNIX System today!
(Score: 0) by Anonymous Coward on Monday June 18 2018, @02:33PM
There is exactly zero probability that, if convicted on all counts, the absolute statutory maximum sentence will be received. That is because sentencing in the US does not work like that [popehat.com].
(Score: 0) by Anonymous Coward on Monday June 18 2018, @11:34PM (1 child)
There's an elaborate points-and-charts system that makes recommended sentences longer for large amounts stolen, for failure to admit responsibility or show remorse, and for being in a leadership role in a conspiracy. About all she's got going for her is no prior convictions. So, not 20 years, but not short if the judge stays close to guidelines.
She'll have a good chance at a minimum security camp, not the worst thing but featuring expired and moldy food, verbal abuse, and terrifyingly bad medical "services". I hiss when people say "Club Fed" -- it is something I would wish on my worst enemy.
(Score: 2) by Gaaark on Tuesday June 19 2018, @12:33AM
https://www.washingtonpost.com/news/reliable-source/wp/2015/01/05/what-its-really-like-inside-club-fed-prisons/?noredirect=on&utm_term=.f128e32c5ef3 [washingtonpost.com]
--- Please remind me if I haven't been civil to you: I'm channeling MDC. ---Gaaark 2.0 ---
(Score: 4, Insightful) by Snotnose on Monday June 18 2018, @12:02AM
When your company implodes beneath you. Now we see where the congressweasels decide to sink their teeth. Considering her business model was the wave of the future, and our ass fucking clown monkeys, um, congresscritters, are really good at seeing where the money flows, I'm gonna guess she gets a slap on the wrist with the admonition "hide it better next time".
My ducks are not in a row. I don't know where some of them are, and I'm pretty sure one of them is a turkey.
(Score: 1, Insightful) by Anonymous Coward on Monday June 18 2018, @03:18AM (1 child)
My dog pointed out to me the other day that there's a resemblance between Holmes & Mark Zuckerberg.
(Score: 2) by Thexalon on Monday June 18 2018, @04:11PM
How did the pooch do that? By pissing on both of them? If so, give him a treat for me!
The only thing that stops a bad guy with a compiler is a good guy with a compiler.
(Score: 3, Insightful) by Anonymous Coward on Monday June 18 2018, @03:25PM
First rule of successful fraud is do not steal from rich people. The Walton heirs and former Secretary of Sate George Schultz were investors in Theranos along with Secretary of Education DeVos and Ruper Murdoch. She is going to jail.