On October 2, 2018, Elizabeth Holmes was found guilty of two counts of conspiracy to commit wire fraud by a federal jury in San Jose. The verdict came after three years of accusations that Theranos misled investors and the public about its technology.
Elizabeth Holmes is the founder and CEO of Theranos, a company that has raised over $900 million in funding. She was charged with fraud and conspiracy for allegedly defrauding investors of her company. Read more in detail here: elizabeth holmes today.
SAN JOSE (California) — Theranos Inc. was wooing two big retailers in 2010, wanting to install their laboratory equipment in busy pharmacies throughout the nation.
According to court testimony in the criminal trial of Theranos founder Elizabeth Holmes, the blood-testing startup won over Safeway Inc. and Walgreens Boots Alliance Inc. WBA -0.34 percent with the promise of real-time and cheaper lab testing, which would expand affordable healthcare for consumers and bring in more revenue to the retail giants.
After years of due research, pilot projects, consultation with lawyers and medical experts, and talks with Theranos for a collaboration that eventually failed, both companies’ executives were convinced to trust in the startup’s promises, according to testimony.
According to court evidence over the last two days, neither business spent considerable time researching the Theranos equipment and testing it for dependability and accuracy, which was absent from the diligence.
In court evidence on Wednesday, former Walgreens Chief Financial Officer Wade Miquelon stated, “Our common belief was the technology functioned as we were promised.”
At a 2013 event to commemorate the company’s collaboration with Walgreens, Theranos CEO Elizabeth Holmes is shown brandishing scissors. Greg Wasson, the former CEO of Walgreens, and Wade Miquelon, the former CFO, are seen at right.
Theranos claims that their patented technology can screen for over 200 diseases with only a few drops of blood from a finger prick. The Wall Street Journal reported in 2015 and 2016 that Theranos’ blood-testing equipment were unreliable and incorrect, and that the firm could only conduct a percentage of tests on its own machines, relying on off-the-shelf commercial analyzers for the remainder.
Ms. Holmes is charged with a dozen counts of wire fraud and wire fraud conspiracy. Ms. Holmes’ lawyers have argued that operating a failing business isn’t a crime and that any misrepresentations regarding Theranos’ technology and operations should be blamed on her senior deputy and ex-boyfriend, Ramesh “Sunny” Balwani.
Mr. Balwani is charged with the same dozen charges, and his trial is set for early next year. He has entered a not guilty plea.
Mr. Miquelon, who oversaw the early years of Walgreens’ turbulent relationship with Theranos, said Wednesday that the firm conducted its own due diligence on Theranos, relying on staff healthcare specialists in part. Mr. Miquelon said that Walgreens also engaged a lab company to conduct an assessment, and the lab firm informed Walgreens that Theranos was “the furthest advanced” of the roughly 200 diagnostic firms Walgreens had contemplated partnering with.
Walgreens sought advice from Johns Hopkins University specialists and scheduled meetings with Ms. Holmes and Mr. Balwani. According to a document shown in court, the physicians did so and concluded that the technology was sound and would be helpful in a retail clinic environment. But, according to Mr. Miquelon, they never received a Theranos gadget to “play with.”
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Former Safeway CEO Steven Burd testified on Tuesday that he discussed Theranos’ allegations with the laboratory heads at Johns Hopkins and the University of California, San Francisco. He asked one of the physicians to dinner with him and Ms. Holmes to discuss Theranos’s operations. Mr. Burd went on to say that one of his Johns Hopkins connections had gotten a Theranos testing equipment, but that the firm had taken it back before the researchers could test it.
Safeway had done hundreds of hours of due diligence on Theranos and corresponded nearly daily with Ms. Holmes for more than a year, according to an email shown in court from Mr. Burd.
Mr. Burd said that a Safeway board member had his blood tested via a finger prick, but that the equipment malfunctioned and didn’t give the findings. Mr. Miquelon claimed he had his blood tested twice through finger pricks and received findings from his doctor some time later.
In 2010, Safeway and Walgreens both struck agreements with Theranos. On its corporate site, Safeway conducted a trial program to test workers’ blood. Theranos gadgets, on the other hand, were never sold in Safeway shops, despite the fact that the supermarket had invested more than $350 million to construct retail clinics for that reason.
As the businesses worked out the specifics, the Walgreens initiative moved through stages, from “Project Beta” in 2011 to “Project Normandy” in 2012. Mr. Miquelon said that both Walgreens and Theranos sought outside expert opinion on regulatory issues such as whether Walgreens shops or Theranos’ headquarters could be deemed the lab that has to be regulated.
Mr. Miquelon said in court that “due to the new-to-the-world nature of the technology, it needed some effort to comprehend.”
Theranos’ agreements with Safeway and Walgreens also offered the merchants the option to end the partnership.
Walgreens agreed to pay Theranos a $100 million “innovation fee” and $40 million in convertible notes, essentially a loan with the potential to convert to an equity ownership interest in Theranos, according to Mr. Miquelon, to assist the company fulfill the partnership’s criteria.
In 2013, Walgreens and Theranos began offering in-store blood testing to friends and relatives before extending to the general public. According to court documents, Theranos’ relationship with Walgreens deteriorated in 2014 when the company missed crucial milestones.
Under pressure from federal authorities, Theranos would later invalidate tens of thousands of results from patients tested at Walgreens and cease collecting blood via its trademark finger-prick technique. Walgreens sued Theranos for $140 million in 2016, and the two companies struck a secret deal a year later, according to The Wall Street Journal. Theranos was ordered to pay Walgreens more than $25 million.
Theranos and the Trial of Elizabeth Holmes
Heather Somerville can be reached at [email protected]
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