The consequences of medical fraud—no barriers or boundaries here!
CEO of “Revolutionary” Blood Testing Company Charged with Federal Wire Fraud
Today, mass fraud goes almost unnoticed. This one is a medical fraud with no boundaries.
Every person who had their blood tested with the Theranos company over the past 15 years has had their health at risk. We may never know the amount of damage nor the number of victims caused by this fraud. Yet society will feel the echo of its cost for years to come. And yes, there were flags: SEC investigations and millions of dollars in penalties, too. How it took so long to discover a fraud of this scale is a matter in question. It’s like a payoff for the system to allow such frauds to pervade society until something doesn’t add up.
On June 14, 2018, Elizabeth Holmes, founder and CEO of Theranos, was charged with federal wire fraud. She, along with Ramesh Balwani, was indicted on nine counts of federal wire fraud. The two were also charged with two counts of conspiracy to commit wire fraud. Balwani is the company’s former president and Holmes’ former romantic partner. The med-tech Bonnie and Clyde.
Theranos is a private healthcare company now infamous for its phony invention of a unique blood test. The technology was pitched as a low cost and more efficient alternative to normal blood tests. It boasted its ability to test for major diseases using only a small blood sample. These bogus claims catapulted Elizabeth Holmes to fame at the age of 19 as she started her company. Now, she stands accused of defrauding investors, doctors, and patients. According to the indictment, the blood tests were “inaccurate, unreliable, and improperly validated, and in some cases which had had critical results removed.”
This comes after a $700 million “massive fraud” charge by the Securities and Exchange Commission (SEC) from earlier this year. Theranos, Holmes, and Balwani were charged for defrauding investors and making false claims about the Department of Defense’s use of their company’s technology.
The case was then resolved in a settlement deal with the SEC.
It might be difficult for most of us to understand this as a point of law. When the average person commits a crime against humanity, like these corporations do, they are punished on the first offense. They are jailed, imprisoned, and separated from their families as a matter of government policy. But corporations are let off of the hook with only “fines” or “penalties” that bolster government revenue. This is a norm in the world of mass financial fraud.
Three years ago, in 2015, Medicare inspected the company’s lab. The inspection found critical discrepancies in testing results. The testing inaccuracies were potentially life-threatening for patients. All this was said to be known by Holmes and Balwani.
Despite the failure of their technology, the company marketed these faulty blood tests – prior to clients even giving blood. Of course, Holmes and Balwani made hundreds of millions of dollars. These profits came at the expense of risking the lives of thousands of patients. At its height, the stock value of Theranos reached $9 billion. That amount of cash is likely to have enablers within its reach. Wall Street or Silicon Valley, it’s the same notoriety when it comes to fraud activities.
Holmes, a former sound byte darling, “the youngest self-made female billionaire,” is looking at 20 years in prison if convicted. She’ll also pay a $250,000 fine and restitution costs. Balwani, facing the same kind of time, is claiming innocence. His attorney stated, “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.” Proving his innocence will be a tough sell given his past intimacy with the company and its CEO.
While Holmes has yet to make an official statement, she has stepped down as CEO of Theranos. This occurred moments before her indictment. However, she still remains as chairwoman of the company’s board of directors. This is not the end of this fraud event. Far from it. It’s just the beginning…watch this space.