Theranos, the blood testing startup founded by Elizabeth Holmes that pulled off the biggest scam ever happened in the Silicon Valley. From 2003 to 2008 this company grew spectacularly, but as we all know whenever someone tries to have everything in the world someone else is waiting for them to grab them down to nothing just like what happened to Stratton Oakmont and it's very CEO Jordan Belfort. Stratton Oakmont was the biggest Wall Street firm till 1999 when Belfort accused of money laundering, stock market manipulation and fined for 190 million dollars. The same goes for Theranos, so lets begin from the beginning and see what was Theranos hiding in their vault.
Elizabeth Holmes dropped out of Stanford at the age of 19 to start Theranos, which was then called Real-Time Cures. She was inspired both by her grandfather's medical career, and her summer 2003 internship at the Genome Institute of Singapore. Briefly after the internship she wrote up a patent application for an arm patch that had the ability to diagnose and treat medical conditions. In order to raise initial funding, Holmes leveraged several family connections. The first two investors in Theranos were Tim Draper, the father of her childhood friend and former neighbor, and Victor Palmieri, one of her father's long-time friends. By the end of 2004, Holmes had raised nearly $6 million.
In November 2006, Henry Mosley was fired from the position of chief financial officer after questioning the reliability of its technology and the honesty of the company. Holmes told the employees at her Silicon Valley startup that if they didn’t believe in her and the company's mission, they should quit immediately. Whenever anyone raised questions about her technology — which she claimed could run hundreds of tests and detect diseases early based on a small drop of blood — she fired them, tried to muzzle them with legal threats, or accused them of sexism.
Wall Street Journal investigative reporter John Carreyrou got a tip about Theranos in early February 2015. On February 26, he contacted a former lab director at Theranos who told him about unethical and harmful practices there. At that time the company was operating at a limited capacity and had been generating false and unreliable results for patients. Theranos had also been thinking of conducting HIV tests before the former lab director talked Holmes and Sunny Balwani (her ex boyfriend) out of it.
A turning point came in 2015, when medical research professors John Ioannidis and Eleftherios Diamandis, and investigative reporter John Carreyrou of The Wall Street Journal, questioned the validity of Theranos' technology. The company faced a string of legal and commercial challenges from medical authorities, investors, the U.S. Securities and Exchange Commission (SEC), Centers for Medicare and Medicaid Services (CMS), state attorneys general, former business partners, patients, and others. By June 2016, it was estimated that Holmes's personal net worth had dropped from $4.5 billion to virtually nothing.The company was near bankruptcy until it received a $100 million loan from Fortress Investment Group in 2017 secured by its patents. In September 2018, the company ceased operations. Company shut down its clinical labs, laid off about 340 employees, and went to work solely on its miniLab technology.
On March 14, 2018, Theranos, Holmes, and former company president Ramesh "Sunny" Balwani were charged with "massive fraud" by the SEC. One section of the complaint says Holmes falsely claimed in 2014 that the company had annual revenues of $100 million, a thousand times more than the actual figure of $100,000. Theranos and Holmes agreed to resolve the charges against them, with Holmes paying a fine of $500,000, returning the remaining 18.9 million shares that she held, relinquishing her control of the company, and being barred from being an officer or director of any public company for ten years. According to the agreement, if Theranos were acquired or otherwise liquidated, Holmes would not profit from her ownership until more than $750 million was returned to investors and other preferred shareholders. Theranos and Holmes neither admitted nor denied the allegations in the SEC's complaint. Balwani did not settle. On June 15, 2018, the U.S. Attorney for the Northern District of California announced the indictment of Holmes on wire fraud and conspiracy charges. Balwani was also indicted on the same charges. The jury selection for the trial is scheduled to begin on July 28, 2020, with the trial scheduled to commence in August 2020.
In brief theranos dumped almost 9 Billion dollars by the technology that never existed or tends to exist. In the case of Jordan Belfort it was Gregory Coleman who brought the whole company down to nothing. Similarly, it was John Carreyrou who did the same thing to theranos but not as a FBI agent instead he wrote a book, Bad Blood, exposing all of the lethal practices at the theranos.
So, that's it for now you guys until the next time this is Science Feed saying goodbye to you all.
Read More:
NASA announces to launch mission on Titan through Dragonfly.
It's too late to give a farewell, but it's never too late to say goodbye - The Story of Opportunity - Science Feed
How NASA makes 3D visualization of an exploded star