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The harder they fall: How a heralded, medical industry billionaire was revealed a fraud




Elizabeth Holmes, Founder & CEO of Theranos speaks at Forbes Under 30 Summit at Pennsylvania Convention Center on October 5, 2015 in Philadelphia, Pennsylvania.
Elizabeth Holmes, Founder & CEO of Theranos speaks at Forbes Under 30 Summit at Pennsylvania Convention Center on October 5, 2015 in Philadelphia, Pennsylvania.
Lisa Lake/Getty Images

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Federal prosecutors indicted Elizabeth Holmes on criminal fraud charges for allegedly defrauding investors, doctors and the public as the head of the once-heralded blood-testing startup Theranos.

Federal prosecutors also brought charges against the company's former second-in-command.

Holmes, who was once considered a wunderkind of Silicon Valley, and her former Chief Operating Officer Ramesh Balwani, are charged with two counts conspiracy to commit wire fraud and nine counts of wire fraud each, the U.S. Attorney's Office for the Northern District of California said late Friday. If convicted, they could face prison sentences that would keep them behind bars for the rest of their lives, and total fines of $2.75 million each.

Prosecutors allege that Holmes and Balwani deliberately misled investors, policymakers and the public about the accuracy of Theranos' blood-testing technologies going back to at least 2013. Holmes, 34, founded Theranos in Palo Alto, California, in 2003, pitching its technology as a cheaper way to run dozens of blood tests.

Holmes said Theranos had discovered a new way of doing blood testing, one able to do dozens of tests with just a prick of a finger and few droplets of blood. A notoriously secretive company, Theranos shared very little about its blood-testing machine, nicknamed Edison, with the public or medical community. Holmes said she was inspired to start the company in response to her fear of needles.

Guest host Libby Denkmann speaks with John Carreyrou, an investigative reporter for the Wall Street Journal who first reported on Theranos’ deceptions. His book, “Bad Blood” (Knopf, 2018) focuses specifically on the scandal.

With files from the Associated Press.

With guest host Libby Denkmann.

Guest:

John Carreyrou, author of the new book, “Bad Blood: Secrets and Lies in a Silicon Valley Startup” (Knopf, 2018); investigative reporter for the Wall Street Journal