Elizabeth Holmes, once touted as the next Steve Jobs, has given up control of the blood testing company she founded, Theranos, and has agreed to a $500,000 fine to settle a “massive fraud” case.
The 34-year-old once had an estimated net worth of $4.5 billion based on a Theranos valuation. Forbes now estimates Holmes net worth to be “nothing.”
According to Forbes, the U.S. Securities and Exchange Commission (SEC) said that the alleged fraud orchestrated by Holmes was worse than anyone thought.
Elizabeth Holmes will serve no jail time for what the SEC describes as an “elaborate, years-long fraud.”
Investors reportedly lost millions, with The Guardian reporting that Rupert Murdoch is set to lose $100 million.
Holmes and her partner, former company president Ramesh Balwani, is accused of misleading investors to believe that their product could conduct a portable comprehensive blood test with a small amount of blood.
Holmes agreed to a $500,000 penalty and to serve a 10-year ban on acting as a director of a public company to settle the charges. However, in the agreement she did not admit or deny the allegations of fraud, reports the Washington Post.
Holmes shared very little detail on how the Theranos key product worked. The allegedly fraudulent claims were uncovered by the Wall Street Journal‘s John Carreyrou. The report found that former employees suspected that the technology is fraudulent and Theranos was using regular blood testing equipment.
Elizabeth Holmes, founder of blood-analysis startup Theranos, charged with 'massive fraud' https://t.co/Gkn4RFlPiZ
— USA TODAY (@USATODAY) March 14, 2018
Holmes has agreed to return 18.9 million shares of Theranos that she was granted as a founder. Holmes will not profit from the company if it is to be sold until at least $750 million is returned to the investors.
Theranos and Elizabeth Holmes have agreed to settle an SEC lawsuit that alleges they raised more than $700 million through an elaborate fraud https://t.co/sbLmWhR1kP #tictocnews pic.twitter.com/zXeaV504L1
— TicToc by Bloomberg (@tictoc) March 14, 2018
It is unclear if the investors will be able to get their money back. The investments were based on a valuation of false claims. Holmes’ highly touted $4.5 billion net worth was based on Theranos once being valued at $9 billion.
Holmes grossly exaggerated the company’s financial performance, according to the SEC. The 35-year-old Stanford dropout reportedly claimed that Theranos sold $100 million worth of equipment when it was around 100,000 in sales.
Holmes is accused of staging demonstrations using routine blood analyzers and setting up deals with vendors, such as a grocery chain.
It is unclear whether Theranos will continue to advance its product or cut its losses. A statement from its board of directors suggests the company will be moving forward from the issue.
“The company is pleased to be bringing this matter to a close and looks forward to advancing its technology.”