A US federal grand jury has indicted Theranos' Elizabeth Holmes and Ramesh Balwani for alleged wire fraud, as 360Dx reports. It adds that Holmes also stepped down as the company's CEO Friday.
Holmes, who started the company in 2003, and Balwani, its former president, are charged with two counts of conspiracy to commit wire fraud and nine counts of wire fraud. "This indictment alleges a corporate conspiracy to defraud financial investors," John Bennett from the Federal Bureau of Investigation in San Francisco tells the Wall Street Journal. "More egregiously, this conspiracy misled doctors and patients about the reliability of medical tests that endangered health and lives."
Both Holmes and Balwani have pleaded not guilty, the New York Times adds.
Theranos, which was once valued at $9 billion as it claimed to be able to conduct a suite of blood tests from a small amount of blood, began to unravel following a series of articles in the Wall Street Journal that reported that its technology and lab practices might not be up to snuff. The Centers for Medicare & Medicaid Services in January 2016 sent the firm a letter about a number of deficiencies in its lab testing procedures and later barred Holmes from owning or operating a lab for two years.
The Securities and Exchange Commission also charged Theranos, Holmes, and Balwani with fraud in March. While Holmes and Theranos settled the case, Balwani indicated he would fight it, 360Dx adds.