Thursday November 21, 2019

Theranos CEO Indicted On Criminal Fraud Charges

Technology a fraud

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Elizabeth Holmes, founder and CEO of Theranos, speaks at the Fortune Global Forum in San Francisco, Nov. 2, 2015. Federal prosecutors said Friday they have indicted Holmes on criminal fraud charges for allegedly defrauding investors, doctors and patients.
Elizabeth Holmes, founder and CEO of Theranos, speaks at the Fortune Global Forum in San Francisco, Nov. 2, 2015. Federal prosecutors said Friday they have indicted Holmes on criminal fraud charges for allegedly defrauding investors, doctors and patients. VOA

Federal prosecutors have 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, 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.

Technology a fraud

Prosecutors allege that Holmes and Balwani deliberately misled investors, policymakers and the public about the accuracy of Theranos’ blood-testing technologies. Holmes, 34, founded Theranos in Palo Alto, California, in 2003, pitching its technology as a cheaper way to run dozens of blood tests. Once considered the nation’s youngest female billionaire, Holmes said she was inspired to start the company in response to her fear of needles.

But an investigation by The Wall Street Journal two years ago found that Theranos’ technology was a fraud, and that the company was using routine blood-testing equipment for the vast majority of its tests. The story raised concerns about the accuracy of Theranos’ blood testing technology, which put patients at risk of having conditions either misdiagnosed or ignored.

“CEO Elizabeth Holmes and COO Sunny Balwani not only defrauded investors, but also consumers who trusted and relied upon their allegedly-revolutionary blood-testing technology,” Acting U.S. Attorney Alex Tse said in a statement.

Elizabeth Holmes
Elizabeth Holmes, flickr

SEC charges

The Securities and Exchange Commission brought civil fraud charges against Holmes and Balwani three months ago. Holmes settled with the SEC, agreeing to pay $500,000 in fines and penalties. Balwani, 53, is fighting the charges.

As the charges were announced Friday, Theranos said Holmes would step down as CEO of the company and its general counsel, David Taylor, would become the company’s next CEO. Theranos laid off most of its staff earlier this year and is widely expected to file for bankruptcy. Holmes remains the company’s chairman.

Also read:Two Indian-Americans among Forbes America 50 successful women

The company did not immediately respond to a message seeking comment on Friday’s indictments. (VOA)

Next Story

India is Leading Mobile Ad Fraud in Asia: Report

Marketers must understand the potential of technologies such as Blockchain that can help solve issues related to fraud and create security and transparency in mobile marketing ecosystem

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Asia
Major types of ad Fraud are cookie stuffing (74 per cent), adware traffic (65 per cent), data fraud (61 per cent) and ad injection (54 per cent), and the cases Have Been Increasing in Asia. Pixabay

India is leading mobile ad Fraud in Asia with a rate of 62 per cent as marketers are spending nearly 20 per cent of their advertising budget on ad fraud, a new report said on Monday.

Nine out of 10 marketers said there is scope for improvement in ad fraud prevention methods while 95 per cent respondents felt that lack of penalties and transparency in industry regulations give rise to ad fraud,” said the report titled ‘Ad Fraud Benchmark Report’ from global non-profit organization Mobile Marketing Association.

Major types of ad fraud are cookie stuffing (74 per cent), adware traffic (65 per cent), data fraud (61 per cent) and ad injection (54 per cent).

Only 37 per cent respondents are aware of Blockchain and its application to fraud prevention, said the report published in collaboration with a leading research firm Decision Lab.

Asia
India is leading mobile ad Fraud in Asia with a rate of 62 per cent as marketers are spending nearly 20 per cent of their advertising budget on ad fraud, a new report said on Monday. Pixabay

“In India, the awareness on ad fraud risks is very low with almost a fifth of the marketers being unclear of their ad fraud budget and majority of them believing that fraudulent activities will only increase,” said Moneka Khurana, Country Head, MMA India.

ALSO READ: AI Can Give More Accurate Results for Cardiac MRI

“Marketers must understand the potential of technologies such as Blockchain that can help solve issues related to fraud and create security and transparency in mobile marketing ecosystem,” Khurana added. (IANS)