Last week, the Securities and Exchange Commission announced a $700 million securities fraud settlement against Theranos CEO Elizabeth Holmes.
As part of the settlement, Holmes agreed to pay $500,000 in fines and give up control of the company. The SEC also banned her from serving as an officer of a public company for a decade.
The SEC accused Holmes of fabricating claims regarding a blood testing product the Palo Alto company claimed to develop. Holmes made fantastic claims about the ability to diagnose dozens of conditions using a single blood drop. She also said that the US Department of Defense used her company’s product in Afghanistan. In addition, she claimed that the company would generate more than $100 million in profits in 2014. Such a product would be very valuable. It would lower the cost of blood tests and would reduce patient reluctance to have their blood drawn. Her company raised billions of dollars in investor funds as a result of the claims.
In reality, the company’s 2014 balance sheet showed actual profits of little more than $100,000. The Department of Defense did not use the company’s technology in Afghanistan or anywhere else. Further, the product could conduct only a limited number of tests. Most of the product’s test results came from analyzers made by other companies. The company’s true position came to light following publication of a Wall Street Journal investigative report. The company later acknowledged that multiple federal agencies were investigating the company.
The SEC is still pursuing its case against Theranos president Ramesh Balwani in a San Jose federal court. Balwani stepped down from the company in 2016. According to his attorney, Balwani used his own money in an effort to save the company.
Securities fraud lawyer
Although this particular case is a civil action, securities fraud can be prosecuted as a criminal offense. When you face fraud charges, hire an experienced securities fraud lawyer like Robert Helfend.
Mr. Helfend has more than three decades of experience as a federal criminal defense lawyer, and he will fight aggressively for his clients in federal court. Don’t settle for an inexperienced lawyer when your freedom is on the line. Contact Robert Helfend or call toll-free at (800) 834-6434, (310) 456-3317, (818) 591-2809 or (805) 273-5611 for an immediate consultation on your Los Angeles County securities fraud case.
Photo Credit: Mattia Belletti, via Flickr.com