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
Related Stories
The embattled biotech firm Theranos has introduced a new blood testing product, as its CEO deflected criticism of the company's previous blood tests:
Theranos CEO Elizabeth Holmes made an appearance at a scientific convention today, but it wasn't to allay the many concerns about the company's previous blood tests, the results of which were thrown out earlier this year. Holmes also chose not to address the federal criminal and civil investigations against her company, instead announcing a new Theranos product: a blood-testing kit that could serve as the successor to its controversial Edison machines.
Speaking at the the annual meeting for the American Association for Clinical Chemistry, Holmes said the new machine — called the Theranos Sample Processing Unit, or "miniLab" — was the size of a computer printer, and will be able to run a battery of tests on just 160 microliters of blood taken from a pricked finger. She showed clinical data that detailed 11 tests miniLab can run on blood samples, including one for the Zika virus, but the company says that it can run up to 40 tests. A source told The Wall Street Journal that so many tests could not be run on the same blood, and that patients would need to provide three or four samples.
Theranos's troubles continue with the layoffs of about half its workforce:
Theranos is closing its labs and wellness centers, CEO Elizabeth Holmes announced today in a post on the company blog. And this isn't a temporary closure: the "approximately" 340 employees running them are out of a job. [...] The company pivoted away from working on its closely held "nanotainer" technology to a "miniLab" in August. The boxy device — unveiled at the American Association for Clinical Chemistry conference — collects small samples of blood and urine and then uploads them to a centralized system for further analysis. And it's a far cry from what the company, once valued at $9 billion, set out to do. According to several experts whom TechCrunch spoke to at the unveiling, it might not be very innovative, either. Although Theranos didn't want its new device referred to as a "lab on a chip," that's essentially what these experts said the miniLab was. And that has been done.
The new device hinges largely on FDA approval — something Holmes said she'd hoped to fast-track under the emergency use authorization (EUA) for Zika detectors. That plan didn't go so well, however. The FDA denied Theranos approval after finding the company failed to use proper patient safety protocols. [...] The news Theranos is shuttering its labs and wellness centers and laying off nearly half its workforce comes after a series of shocking revelations over the past year involving faulty test results and improperly trained workers. The company is now facing numerous lawsuits, was forced to shut down it's California lab facility, lost its main partner Walgreens and was subject to a Congressional inquiry. Finally in July regulators banned Holmes from stepping foot in her own labs.
Previously: Theranos Introduces New Product to Distract from Scandal
Theranos gets $100 million in debt financing to carry it through 2018, with some caveats
Theranos has secured $100 million in debt financing. Yes, someone gave the blood testing company known for handing out questionable test results money.
First reported by Business Insider, the company reportedly told investors it had secured the money from Fortress Investment Group, a New York-based private equity firm that was acquired by Softbank earlier this year.
Of course, this is debt financing, not equity and Theranos will surely need it as it has been bleeding money, laying off more than half its workforce this year and trying to come up with ways to keep it afloat.
Previously: Theranos Introduces New Product to Distract from Scandal
Theranos Lays Off 340, Closes Labs and "Wellness Centers"
The black turtleneck-wearing founder of Theranos has been accused of swindling investors out of $700 million for blood-testing technology that amounted to smoke and mirrors. However, Elizabeth Holmes will only have to pay a $500,000 fine and surrender millions of worthless shares:
The Blood Unicorn Theranos Was Just a Fairy Tale
[...] Securities and Exchange Commission today brought fraud charges against Holmes, Theranos and its former president, Sunny Balwani, and its complaint alleges pretty strongly that the investors were just as bamboozled as everybody else. In fact, Theranos made direct use of its positive press to raise money: It "sent investors a binder of background materials," which included "articles and profiles about Theranos, including the 2013 and 2014 articles from The Wall Street Journal, Wired, and Fortune that were written after Holmes provided them with interviews" and that included her misleading claims about the state of Theranos's technology. She also repeated those claims to investors directly: "For instance, Holmes and Balwani told one investor that Theranos' proprietary analyzer could process over 1,000 Current Procedural Terminology ('CPT') codes and that Theranos had developed a technological solution for an additional 300 CPT codes," even though "Theranos' analyzers never performed comprehensive testing or processed 1,000 CPT codes in its clinical lab," and in fact never processed more than 12 tests on its TSPU. And Theranos would even do a little pantomime blood-draw demonstration directly on the investors:
This initial meeting was often followed by a purported demonstration of Theranos' proprietary analyzers, the TSPU, and the miniLab. In several instances, potential investors would be taken by Holmes and Balwani to a different room to view Theranos' desktop computer-like analyzers. A phlebotomist would arrive to draw their blood through fingerstick, using a nanotainer, a Theranos-developed collection device. Then the sample was either inserted into the TSPU or taken away for processing. Based on what they saw, potential investors believed that Theranos had tested their blood on either an earlier-generation TSPU or the miniLab. As Holmes knew, or was reckless in not knowing, however, Theranos often actually tested their blood on third-party analyzers, because Theranos could not conduct all of the tests it offered prospective investors on its proprietary analyzers.
Also at The New York Times, TechCrunch, and Time.
Previously: Theranos Introduces New Product to Distract from Scandal
Theranos Lays Off 340, Closes Labs and "Wellness Centers"
Theranos Given Indirect Lifeline From Softbank
Submitted via IRC for BoyceMagooglyMonkey
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.
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: 5, Insightful) by MichaelDavidCrawford on Thursday September 06 2018, @09:58AM (8 children)
You say that like it's a bad thing.
Yes I Have No Bananas. [gofundme.com]
(Score: 2) by takyon on Thursday September 06 2018, @10:01AM (7 children)
Did they get their blood-soaked parachute in time?
[SIG] 10/28/2017: Soylent Upgrade v14 [soylentnews.org]
(Score: 1, Troll) by VLM on Thursday September 06 2018, @11:51AM (5 children)
They got a lot of fawning PR for having a woman in charge. Well, this is what that leads to...
(Score: 3, Funny) by takyon on Thursday September 06 2018, @12:18PM
It wasn't merely a woman. It was a woman who had raided Steve Jobs's wardrobe [businessinsider.com].
[SIG] 10/28/2017: Soylent Upgrade v14 [soylentnews.org]
(Score: 3, Insightful) by DannyB on Thursday September 06 2018, @01:39PM
Did she say . . .
I'm melting! melting! Oh, what a world! What a world! Who would have thought a good little girl like you could destroy my beautiful wickedness?
To transfer files: right-click on file, pick Copy. Unplug mouse, plug mouse into other computer. Right-click, paste.
(Score: 2) by bob_super on Thursday September 06 2018, @09:56PM (2 children)
Are we dissolving England next ?
(Score: 2) by VLM on Friday September 07 2018, @11:29AM (1 child)
Hasn't it already been taken over and turned into the Islamic Republic of Airstrip One?
(Score: 2) by bob_super on Friday September 07 2018, @04:56PM
Not quite : still officially a kingdom, for another 20 years until the lady thinks her son is ready to pass it up and let the popular grandson take her place.
(Score: 2) by RS3 on Friday September 07 2018, @02:46AM
They're not sure yet- still trying to get the test to work.
(Score: 3, Interesting) by Alfred on Thursday September 06 2018, @01:05PM (11 children)
It might come down to she didn't give a bilderburger (or whatever superclass money infused villian you chose) the BJ he demanded.
Whatever it is she got way more attention than she deserves and way more bad press than any bad CEO normally gets which stands out as an outlier so i trust the narrative even less.
(Score: 0) by Anonymous Coward on Thursday September 06 2018, @01:26PM (5 children)
"way more bad press than any bad CEO normally gets"
Yes, but this doesn't seem like your usual story of CEO incompetence in doing good stuff.
More like impressive competence in doing evil stuff.
If that is proven true, then the bad press will be much deserved along with the free room, board, and orange clothes.
(Score: 2) by Alfred on Thursday September 06 2018, @01:47PM (4 children)
But the people out to get her will fabricate whatever truth they need to get their way.
She has not actually hurt anyone, just their pocketbooks. This isn't "love canal" bad where there are actual physical damages. But in the comparison of toxic waste for kids compared to hurting a rich mans ledger, the later will be punished harder.
(Score: 3, Interesting) by All Your Lawn Are Belong To Us on Thursday September 06 2018, @02:53PM
Actually, CMS found that Theranos' testing for Warfarin levels, along with many others, were incorrect. Just because there just aren't any confirmed reports of patient damage occurring yet because of it doesn't mean that there wasn't harm done.
The Wikipedia article stated, " In February 2016, Theranos announced that it would permit the Cleveland Clinic to complete a validation study of its technology.[63] In March, 2016, the Journal of Clinical Investigation found that the company's blood test results were flagged "outside their normal range 1.6x more often than other testing services", that 68% of lab measurements evaluated "showed significant interservice (sic) variability", and that "lipid panel test results between Theranos and other clinical services" were "nonequivalent""
Holmes and Balwani have been indicted for fraud because it is alleged they knew full well that the tests they were hyping didn't live up to their hype. When patient care decisions are based on that data there is certainly damage potential, let alone investors who bought into what they were saying because they were saying it and now have lost their investment because they allegedly lied.
This sig for rent.
(Score: 0) by Anonymous Coward on Thursday September 06 2018, @03:41PM
Just like Bernie Madoff
(Score: 2) by NotSanguine on Thursday September 06 2018, @09:05PM
Which people? Names please. I've read several articles (some fawning, some not) about Elizabeth Holmes. Apparently, she modeled herself as a startup entrepreneur and took the time (as a 20 year old) to find some rich older guy to fuck and fund her startups.
From a technical standpoint, she was in way too deep and really had no vision other than to sell her company. The problem was that the developed products didn't actually work [businessinsider.com].
What's more, apparently Holmes hid this from investors and customers. It's not clear if anyone died because of her deception, but there is ample evidence that she lied about the efficacy of her products and . Repeatedly. [sciencemag.org] To actual and potential investors, regulators and actual and potential customers.
The cock she was (not) sucking had nothing to do with bringing her down. If you have *evidence* showing something different, I'd love to see it. I won't hold my breath.
No, no, you're not thinking; you're just being logical. --Niels Bohr
(Score: 2) by bob_super on Thursday September 06 2018, @09:58PM
> She has not actually hurt anyone
Yes, because people get blood tests just for kicks, so getting inaccurate results is inconsequential !
Moron !
(Score: 5, Informative) by takyon on Thursday September 06 2018, @01:28PM (1 child)
https://en.wikipedia.org/wiki/Theranos [wikipedia.org]
The Theranos story combines a hyped up founder who became a billionaire (on paper), an absurd "unicorn" $10 billion valuation, a whistleblower, and outright fraud. It's not your normal tech startup story.
That may be responsible for the founder and company being hyped up in the first place, although parts of the company were actively engaged in fraud against journalists AND individual investors. But we're long past that point and there have been federal indictments.
What your confusion comes down to is ignorance.
[SIG] 10/28/2017: Soylent Upgrade v14 [soylentnews.org]
(Score: 0) by Anonymous Coward on Friday September 07 2018, @12:03AM
Alas, nowadays it is.
(Score: 0) by Anonymous Coward on Thursday September 06 2018, @01:34PM (1 child)
It could also be that they attempted to scam the wrong people. Same mistake that Bernie Madoff made.
The problem with this theory is that she should then be jumping on the #metoo bandwagon. If she truly was victimized for no other reason than she was assigned the female gender at birth, there is no time like the present to name and shame.
The major problem with this kind of feminist interpretation in general is that the accusation never happens in a timely manner after the act. I think we can give a pass when the #metoo bandwagon comes through town. But this is a larger problem that even #metoo suffers from. If it comes out 20 years from now when she's on her deathbed that it was the case that she was not willing to give a sexual favor to some all-men guy....
(Score: 2) by Alfred on Thursday September 06 2018, @01:56PM
If #metoo had integrity all of Hollywood would be shut down (well all of the male part, which is most of it).
(Score: 2) by All Your Lawn Are Belong To Us on Thursday September 06 2018, @02:57PM
Yes but it was Holmes who was making extraordinary claims. Then she couldn't supply extraordinary proof. Then she couldn't supply plain old proof.
It may be she was a young girl who thought she had The Next Big Thing but then when the Thing didn't materialize she didn't dial back her rhetoric but instead doubled down on it. They likely could have taken a hit and became a regular labs provider with a heavy R&D department - maybe even get a seat at the big boys table.
I suppose we'll have some inkling when the their fraud trials are over.
This sig for rent.
(Score: 5, Informative) by takyon on Thursday September 06 2018, @01:29PM (7 children)
https://en.wikipedia.org/wiki/Theranos#Bad_Blood [wikipedia.org]
Jennifer Lawrence in a turtleneck.
[SIG] 10/28/2017: Soylent Upgrade v14 [soylentnews.org]
(Score: 4, Insightful) by zocalo on Thursday September 06 2018, @01:37PM (5 children)
A nice mental image to be sure, but you're going to have to do much better to beat Natalie Portman in hot grits.
UNIX? They're not even circumcised! Savages!
(Score: 2) by takyon on Thursday September 06 2018, @02:33PM (2 children)
If they add dream sequences, they could have Jennifer Lawrence in a black turtleneck sinking into a pool of blood.
[SIG] 10/28/2017: Soylent Upgrade v14 [soylentnews.org]
(Score: 0) by Anonymous Coward on Thursday September 06 2018, @04:32PM
if there are dream sequences, I think we can just skip the theranos chick and just get straight to the hot grits.
(Score: 3, Insightful) by krishnoid on Thursday September 06 2018, @09:10PM
Ladies and gentlemen, start up your deepfakes engines! Finally, a proper use for them.
(Score: 0) by Anonymous Coward on Thursday September 06 2018, @02:42PM (1 child)
Hi people. Jennifer Lawrence just poured a turtleneck down my naked and petrified pants.
(Score: 0) by Anonymous Coward on Thursday September 06 2018, @03:19PM
If you keep repeating the old memes, you are in SERIOUS danger of summoning the ghost of goat.se
DECIST IMMEDIATELY!
(Score: 2) by bob_super on Thursday September 06 2018, @10:01PM
Jennifer Lawrence without ... turtleneck, was worth watching.
(Score: -1, Offtopic) by Anonymous Coward on Thursday September 06 2018, @03:21PM (1 child)
Nomsg
(Score: -1, Offtopic) by Anonymous Coward on Thursday September 06 2018, @06:53PM
-takyon
PGP key: 808080808urmomgay
(Score: 3, Informative) by Beryllium Sphere (r) on Friday September 07 2018, @04:20AM
For a scary look at how many frauds happen in the Valley and how much the establishment tolerates them, see Erin Griffith's article in Fortune.
http://fortune.com/silicon-valley-startups-fraud-venture-capital/ [fortune.com]
(Score: 2) by ilsa on Friday September 07 2018, @05:19PM
Unless the executives are slapped with criminal charges and prevented from going into business again, this means nothing. All dissolving the business does is hurt the investors and the employees. The executives are free to go and spin up another business and keep being frauds.