Indian-American ex-president, Theranos CEO charged with 'massive fraud'
PTI New Delhi Last Updated: March 15, 2018 | 17:01 IST 
A former Indian-American president of the blood-testing company Theranos and the firm's founder and CEO were on Thursday charged with "massive fraud" amounting to over USD 700 million by the US federal regulators.
According to the Securities and Exchange Commission (SEC), Ramesh "Sunny" Balwani and the founder Elizabeth Holmes raised money by deceiving investors about the company's technology, business and financial performance.
Holmes, 34 and Balwani, 52, raised more than USD 700 million in years-long "massive fraud", it said.
The SEC alleged that Theranos, Holmes and Balwani falsely claimed that its key product a portable blood analyser could conduct comprehensive blood tests from finger drops of blood, revolutionising the blood testing industry.
In truth, Theranos' proprietary analyser could complete only a small number of tests, and the company used analysers manufactured by others to conduct majority of patient tests.
Holmes and Balwani also claimed that the company's products were deployed by the US Department of Defence on the battlefield in Afghanistan and that the company generated more than USD 100 million in revenue in 2014.
In reality, the company's technology was never deployed by the US Department of Defence and generated a little more than USD 100,000 in revenue from operations in 2014.
Theranos and Holmes neither admitted nor denied the allegations in the SEC's complaint and have agreed to settle the fraud charges levied against them.
Holmes agreed to pay a USD 500,000 penalty, be barred from serving as an officer or director of a public company for 10 years, return the remaining 18.9 million shares that she obtained during the fraud, and relinquish her voting control of Theranos, the statement said.
Due to the company's liquidation preference, if Theranos is acquired or is otherwise liquidated, Holmes would not profit from her ownership until over USD 750 million is returned to defrauded investors and other preferred shareholders, it said.