The vaporware and hyped promises of Theranos surprisingly did not get much attention on this group thruout the company's history.  There has been a lot of vaporware and fraudulent claims in synbio, which obviously goes against fundamental principles of science.

""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""

U.S. Securities and Exchange Commission Press Release

https://www.sec.gov/news/press-release/2018-41

Theranos, CEO Holmes, and Former President Balwani Charged With Massive Fraud

Holmes Stripped of Control of Company for Defrauding Investors

FOR IMMEDIATE RELEASE
2018-41

Washington D.C., March 14, 2018 —

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.

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BBC News' Interpretation of the story

http://www.bbc.com/news/business-43406050

Theranos founder Elizabeth Holmes charged with $700m fraud

14 March 2018

The founder of a US start-up that promised to revolutionise blood testing has agreed to settle charges that she raised over $700m (£500m) fraudulently.

The Securities and Exchange Commission, a top US financial regulator, said Elizabeth Holmes and Theranos deceived investors about the firm's technology.

The agency also said the firm had falsely claimed its products had been used by the US army in Afghanistan.

Ms Holmes will lose control of the firm and be fined $500,000.

An SEC official called the fallout an "important lesson for Silicon Valley".

"Innovators who seek to revolutionise 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," said Jina Choi, director of the SEC's San Francisco regional office.

Theranos was founded in 2003 when Ms Holmes was only 19, and sought to develop an innovative blood testing device.

The firm said its Edison device could test for conditions such as cancer and cholesterol with only a few drops of blood from a finger-prick, rather than taking vials from a vein.

In 2015 Forbes magazine estimated Ms Holmes' wealth at $4.5bn

However, in the same year reports in the Wall Street Journal suggested the devices were flawed and inaccurate.

By 2016 Forbes had revised its estimates of Ms Holmes' fortune to "nothing".

Charges

The charges were brought against Theranos and its former president Ramesh "Sunny" Balwani as well as Ms Holmes.

The SEC plans to bring a case against Mr Balwani.

The regulator alleged that Theranos, Ms Holmes and Mr Balwani made a series of false and misleading statements in investor presentations, product demonstrations and interviews.

It said: "Theranos, Holmes, and Balwani claimed that Theranos' products were deployed by the US Department of Defence on the battlefield in Afghanistan and on medevac helicopters and that the company would generate more than $100m in revenue in 2014.

"In truth, Theranos' technology was never deployed by the US Department of Defence and generated a little more than $100,000 in revenue from operations in 2014...

"In truth, according to the SEC's complaint, Theranos' proprietary analyser could complete only a small number of tests, and the company conducted the vast majority of patient tests on modified and industry-standard commercial analysers manufactured by others."

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## Jonathan Cline
## jcl...@ieee.org
## Mobile: +1-805-617-0223
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