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Report: Feds To Ban Theranos Founder Elizabeth Holmes For 2 Years (cbsnews.com) 104

Posted by BeauHD from the three-strikes-you're-out dept.
An anonymous reader writes: According to the Wall Street Journal, health regulators have proposed pulling the federal license for the company's California laboratory and banning its founder and CEO, Elizabeth Holmes, and company president Sunny Balwani from the blood-testing business for two years. The letter which the WSJ cited in its report found that Theranos had not corrected problems at its lab in Newark, California, and faced possible sanctions as a result. In October 2015, the WSJ reported all but one of Theranos' analyzers in use were off the shelf, and that their tiny samples may not always have been accurate. The company was facing allegations of data manipulation in late December 2015. Earlier this year, U.S. regulators found serious deficiencies at Theranos' laboratory in Newark, California, putting the company's relationship with the Medicare program in danger. Theranos has said that The Centers for Medicare and Medicaid Services (CMS) has not imposed sanctions on its Newark Lab. "Due to the comprehensive nature of the corrective measures we've taken over the past several months, which has been affirmed by several experts, we are hopeful that CMS won't impose sanctions," the company said in an emailed statement. "But if they do, we will work with CMS to address all of their concerns."
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Report: Feds To Ban Theranos Founder Elizabeth Holmes For 2 Years More

Report: Feds To Ban Theranos Founder Elizabeth Holmes For 2 Years

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  • Wow, how unsurprising (Score:5, Insightful)

    by smooth wombat ( 796938 ) on Thursday April 14, 2016 @06:57PM (#51912137) Journal

    Anyone who has the least bit of common sense could have told you she's a fraud. She has yet to submit her process to anyone else for confirmation it does what it says it does, her own company has been relying more and more on standard tests rather than their supposed "miracle" process, and companies which have been using her service have been dropping her and going back to what is known to work.

    I remember seeing her listed as one of those youngest self-made billionaires and all I could think was how much she's pulled the wool over on everyone. I can't wait for the lawsuits to come flying in.

    • all I could think was how much she's pulled the wool over on everyone

      Oops, I saw the same but all I could think was "she's hot!"

    • Re: (Score:2, Insightful)

      by Anonymous Coward

      She was touted as hot stuff, because of her identity and political connections. This is what happens when you allow politics to interfere with business decisions.

      Still, thank goodness for the free market - She made promises she couldn't deliver on, and when she couldn't deliver, she lost customers, her investors are suing her, and the government is investigating (and punishing) her fraud.

      • Re: (Score:2, Insightful)

        by Anonymous Coward

        Thank goodness for the free market? WTF are you talking about? She's being investigated by FEDERAL FREAKING HEALTH REGULATORS.

        Literally the first three words of the article are "Federal health regulators".

        • Re: (Score:2)

          by Mashiki ( 184564 )

          Correction: She's being investigated by federal authorities now. Prior to that she was touted as the next great thing because of her gender, because it's trendy as fuck to do that right now(and for the last few years). Not because she had a good product, not because it was great. But because of the location of her sex organs, and the media was complicit in that.

    • Re: (Score:2)

      by AK Marc ( 707885 )
      There are hundreds of theories that work. A well-tuned mass spectrometer could identify virus proteins or things like that. Wouldn't be hard to make something that fakes or comes close to usable.

  • Just Like Cold Fusion... (Score:2, Insightful)

    by Anonymous Coward

    ...I had hoped that the technology was really valid.

    • Would have been nice, yeah.

      And hell, who knows, sooner or later, it might happen for real. I mean, 30 years ago, things like smart phones, virtual reality gaming (okay, good virtual reality gaming), and self-driving cars were the province of science fiction.

      We could still get to this type of blood testing. It's just not through Theranos.

  • Litmus test that you're in a tech bubble (Score:5, Insightful)

    by JoeyRox ( 2711699 ) on Thursday April 14, 2016 @07:00PM (#51912149)
    When investors are willing to place a $9B valuation on a tech unicorn that is so secretive nobody even knows what their actual product is or whether it even works.
    • Shut up and take my money most VC's don't use their own money but raise it from wealthy individuals

    • Re:Litmus test that you're in a tech bubble (Score:5, Informative)

      by tomhath ( 637240 ) on Thursday April 14, 2016 @07:41PM (#51912349)

      Has it been revealed how much capital they actually raised? A $9b "valuation" probably means they raised a couple hundred million. No doubt a big chunk of that went straight into her own bank account.

      so secretive nobody even knows what their actual product is or whether it even works

      Their product was well known (quick blood tests that used a tiny amount of blood). But everyone knew from the start that it simply didn't work. A college freshman designing a new way of testing blood that the big labs couldn't figure out how to do? Really?

      • $752M as of April of last year. As you indicated, valuation is usually described as the amount of money raised for a startup's most recent investment, relative to the percentage of equity sold for that offering. It's just like the most recent bid/ask of a publicly traded company, except private.

      • Re:Litmus test that you're in a tech bubble (Score:5, Insightful)

        by sunking2 ( 521698 ) on Thursday April 14, 2016 @07:54PM (#51912419)
        To be fair it was actually a college freshmen with rich parents who could give her seed money to gather people around her who could make believe they were onto something.

      • Everyone? Please there are a lot of people that believed her and your hindsight is 20/20 bullshit is just that. The idea itself is plausible.

        If you can design an IC microchip that could measure chemical composition in blood you'd make billions on a device that could measure things with a finger prick and provide instantaneous results that right now require a plunger in the arm and days to measure. They've got a few similar tests that do work already out there (mainly in the insulin area) and it's not implau

        • Some of Theronos's stuff does work, it's just highly inaccurate and that's what she's covered up, probably in the hope she could fix the inaccuracy problem. But as time went on they moved more and more to conventional tests because they couldn't fix the inaccuracy.

          To me, "highly inaccurate" translates directly to "it doesn't work". This is hardly 20/20 hindsight, though - there were plenty of people back during Theranos's boom days that were saying they were suspicious of the whole thing.

          • To me, "highly inaccurate" translates directly to "it doesn't work".

            What if it's the right result 9 times out of 10? Because that level of incorrectness is unacceptable in the medical field. Medical tests need to have accuracy in the four to five nines to be considered accurate. Most of the non-medical world would consider a 9 out of 10 result pretty good, hell a 300 batting average is a 30% success rate and is considered good.

            I believe the hope at Theranos was that they could get to medical level of accura

      • A college freshman designing a new way of testing blood that the big labs couldn't figure out how to do? Really?

        But she's an empowered female disrupter! You're just jealous!

    • When investors are willing to place a $9B valuation on a tech unicorn that is so secretive nobody even knows what their actual product is or whether it even works.

      It's a health care bubble, actually. There's over-investment in the health care sector right now, at least in startup costs.

      Of course, there are also massive startup hurdles there for regulatory and bill-payment reasons

    • They filled a zillion patents. Why did they think the secret sauce would be.. well, secret.

  • Ban? (Score:3)

    by 110010001000 ( 697113 ) on Thursday April 14, 2016 @07:00PM (#51912151) Homepage Journal
    How about putting her in jail for fraud? Jesus.

    • Re: (Score:1)

      by Anonymous Coward

      Putting her in prison would just put us even more on the hook, and she could probably still get elected governor of Florida.

    • How about putting her in jail for fraud?

      Because jails should be used to protect the public from violent criminals, not as a substitute for VC due diligence.

    • That's a different group of authorities (and a different standard of proof). They're stopping her from supplying services to the government.

      I suppose the state authorities (or FBI or similar) could investigate her for fraud.

  • Seems like they drank their own koolaid (Score:1)

    by Anonymous Coward

    It's possible this is an Enron type scam, but I think it's more likely that Holmes kept thinking they were on the verge of the big breakthrough, and was able to sell that to lots of investors who should've done more homework. It's like Curt Schilling with 38 Studios, the video game maker that convinced the state of Rhode Island to cosign $75 million in loans in exchange for relocating there and hiring hundreds of engineers.

    • It's possible this is an Enron type scam, but I think it's more likely that Holmes kept thinking they were on the verge of the big breakthrough, and was able to sell that to lots of investors who should've done more homework. It's like Curt Schilling with 38 Studios, the video game maker that convinced the state of Rhode Island to cosign $75 million in loans in exchange for relocating there and hiring hundreds of engineers.

      Nope, she gave people fake healthcare information leading to misinformed self-care while promoting self-care based on that bad data. She's probably responsible for more deaths than anyone could even accurately account for along with everyone else at that sham of a company.

  • ugh, a few years too late (Score:3)

    by supernova87a ( 532540 ) <kepler1@NoSpaM.hotmail.com> on Thursday April 14, 2016 @07:18PM (#51912237)
    What an embarrassment, not just that a company gets banned from providing health services, but that the misrepresentations and malpractices rise to a level so severe that a CEO gets personally banned from the industry. And for the COO (Sunny Balwani) who was threatening low level employees for telling the truth, may he never be employed again by anyone who knows better.

    Perhaps it was a case of having too much fame too soon, and feeling the pressure to lie to cover the failures/shortcoming? If only the truth and exposure had come sooner. There are plenty of entrepreneurs and good ideas out there that deserve the publicity + funding that she got, but didn't because they weren't so well connected.
  • Why not life in jail? How does the whore get to keep millions of dollars for doing nothing and giving people fake health data?

    • Why not life in jail? How does the whore get to keep millions of dollars for doing nothing and giving people fake health data?

      Or she could run for president. Worked for Carly Fiorina, didn't it?

      • Worked for Carly Fiorina, didn't it?

        Hehe, not really. At least Carly was upfront about her incompetence and didn't/couldn't hide it. Yet some people still hold her out to be some kind of gifted business person.

    • Unnecessary and derogatory name-calling on Slashdot.

      Take a shot.

  • It would have been vastly more useful for the headline to say what their founder was being banned from then to tell me her name. I gained pretty well nothing from seeing her name and was left wondering what on earth the feds were banning her from.

    • She's being banned from Federal contracting and participating in anything federally funded. It's called a federal contracting death sentence and it will pretty much end her career in anything involving federal research dollars (which is almost all research). Basically the only research she can participate in during this time frame is something entirely funded by private dollars and there is very little research that is funded like that.

    • Banning her from black turtlenecks and caked on makeup.
  • It may be possible that Theranos has been experiencing problems because one or more of the entrenched interests in the pharm industry wants to slow the company down so they can catch up and come up with competing products with a known brand name. Such move would cause the talent to jump ship and thus sink the startup. Or, they are simply trying to sink the company to extend their present business plan(s). This is more probable than Theranos and Holmes et. al. being frauds. If such were the case, you would

    • Re: (Score:2)

      by fred911 ( 83970 )

      " Or, they are simply trying to sink the company to extend their present business plan(s)."

      The only conspiracy here was the sale of smoke and mirrors. Nothing more than selling the dream with a compelling staff and story, ala Madoff. Time and financial forensics will eventually show the real product, which I imagine is just that, a story without the IP to support any of it.

    • Re: (Score:3)

      by AK Marc ( 707885 )
      If they were being hounded and had something that worked, they could have shared raw data and invited auditors in for documentation. Instead it was all lies and secrets. Nobody fled because they were always two weeks from the breakthrough. Sometimes no amount of money can buy a breakthrough, no matter how much money you have, and how much you want it.

    • WSJ and Slashdot late to this party (Score:2, Insightful)

      by Anonymous Coward

      The story of Theranos and Elizabeth Holmes have been covered at length at, how shall I put it, "other places" on the Web.

      Many of us here on Slashdot toil away at technical jobs in the vain hope of getting paid health coverage or maybe a retirement plan, forget about becoming wealthy let alone famous. Then there are these techies who get hyped as the "Next Steve Jobs" or "the most influential tech entrepreneurs under age 30" and we read their stories in a mixture of wonderment, envy, and resentment of why-a

      • Sorry "Mr AC", but although you may have had some "valid points" in your "fine post", I'm now going to "sue you blind" because your writing style "gave me cancer."
    • Hi.

      1. Theranos makes(?) diagnostics. Pharm industry makes drugs.

      2. The diagnostic industry already knew that blood from skinpricks not only doesn't contain the same quantities of many biomarkers as blood from venous draws, the levels can also vary wildly from drop to drop, making the results pretty useless. Why compete with that?

    • Re: (Score:2)

      by PCM2 ( 4486 )

      It may be possible that Theranos has been experiencing problems because one or more of the entrenched interests in the pharm industry wants to slow the company down so they can catch up and come up with competing products with a known brand name.

      That doesn't really make any sense. If there really was some kind of Big Pharma conspiracy like that, the smart move would be to wish Theranos godspeed, let them come up with their big breakthrough, and then right when they're ready to go to market, use Big Pharma influence to trip them onto their faces. File lawsuits, file objections with regulators, what-have-you, the whole time Theranos is bleeding money, and then finally Big Pharma says, "Look, all of this can end tomorrow if you just let us buy a contr

  • Schadenfreude (Score:1, Insightful)

    by Anonymous Coward

    The investors around this tried to _construct_ a female Anglo-saxon technology success story... and failed.

    There is another story like this: Danielle Fong - "green energy storage" by a woman, so famous people threw a lot of money at it and it waffles around indefinitely. She should legitimately be a researcher working on this at maybe at university or government or corporate lab, not as co-founder of a startup.

    Marissa Mayer is this too... installed by delusional religious/political thinking.

    And here's what'

  • rofl (Score:2)

    by Tom ( 822 )

    And she was just named as an example of a self-made rich person in another topic here.

    Thanks for reminding me, I should have added "criminal" to "inherited".

  • She will still glide through life (Score:4, Insightful)

    by EmperorOfCanada ( 1332175 ) on Friday April 15, 2016 @03:39AM (#51913681)
    This woman will spend the rest of her life on boards of directors, working for some private equity firm, and generally gliding through life in positions where she may ore may not actually contribute anything that can be measured. Yet the more "accomplishments" she pads onto her resume the more she will use that resume to clime some other ladder.

    But her real contribution will be to sour the milk for any company that wants to actually do what she pretended to be doing. They will go to raise money for a valid, real, not fraudulent product, and their requests will be filed beside cold fusion and madoff investments.
    • In other words she's the next Carly Fiorina.
      • Yes, what is it about these "high achievers" that they can just keep going from screwup to screwup and somehow people look back at their long history of screwups and say, "Wow, they have done so much in their life.".

        To me it all boils down to a strange little incident in my old highschool. A guy I knew was running for school president and encouraged everyone to make posters that made fun of him. The school was suddenly filled with posters, except that most were complementary. His win was assured. Then the
  • So I was a bit confused.

  • I knew they didn't stand a chance as soon as they retained David Boies as their legal counsel (despite the conflict of interest, since he sits on their Board). Why on Earth do people think he's some kinda super-lawyer? I mean look at his track record:

    Defended Napster (they were shut down).
    Convicted Microsoft (overturned on appeal)*
    Worked for Al Gore in the 2000 election (he didn't become president)
    Represented Andy Fastow from Enron (he went to jail).
    Worked for Oracle in their case against Google for Java (

  • I don't really care what she does, but my God she is HOT!!!

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