Theranos founder Elizabeth Holmes and Ramesh “Sunny” Balwani, the company’s former COO, could face a lengthy prison sentence if convicted of multiple federal crimes. The U.S. Attorney for the Northern District of California is accusing the duo of participating in a multi-million dollar fraud scheme.
Per a KTLA report, the charges laid out by the attorney’s office include two counts of conspiracy to commit wire fraud and nine counts of wire fraud. A guilty conviction means Holmes and Balwani could spend 20 years in prison and a fine of $250,000 for each wire fraud and conspiracy count. Restitution of $100 million may also be awarded.
According to the indictment, the pair allegedly made false claims about the effectiveness of Theranos’ blood testing technology. Essentially, they told doctors, patients, the media, and investors that the company’s “proprietary methods” could produce highly accurate and extremely fast test results, easily outperforming conventional labs. However, the attorney general’s office accuses Holmes and Balwani of knowing about numerous “accuracy and reliability problems” and choosing not to disclose them.
Just as the indictment was announced on Friday, Holmes quit as the company’s CEO, but will remain on the Theranos’ board. Theranos’ general counselor, Davis Taylor, has since taken over the CEO position.
Balwani, through his attorney Jeffrey B. Coopersmith, claims he is innocent of any wrongdoing.
“Mr. Balwani committed no crimes. He did not defraud Theranos investors, who were among the most sophisticated in the world. He did not defraud consumers but instead worked tirelessly to empower them with access to their own health information. Mr. Balwani is innocent and looks forward to clearing his name at trial.”
As previously reported by the Inquisitr, the U.S. Securities and Exchange Commission filed fraud charges against the Theranos executives in March. The watchdog agency accused Holmes and Balwani of knowingly exaggerating revenue predictions and telling investors regulatory approval was unnecessary for its blood testing technology.
Holmes reached a settlement with the SEC, but Balwani’s case is still pending.
“Sunny Balwani accurately represented Theranos to investors to the best of his ability,” Coopersmith said in a statement regarding the SEC’s case.
Holding the title of youngest female self-made billionaire, Elizabeth Holmes created Theranos 15 years ago. Her idea was to create more affordable and efficient medical tests. Developing a simple blood test for different health conditions like cancer and diabetes was the company’s primary goal.
At one time, Theranos was valued at $9 billion. Oracle founder Larry Ellison and media tycoon Rupert Murdoch have invested substantial money into the company.