CBSN

Theranos founder Elizabeth Holmes charged with wire fraud

Federal prosecutors indicted Theranos founder Elizabeth Holmes and former chief operating officer Ramesh "Sunny" Balwani for allegedly defrauding investors, doctors and patients, federal prosecutors announced Friday. They were charged with two counts of conspiracy to commit wire fraud and nine counts of wire fraud.

The indictment alleges that Holmes and Balwani used ads and solicitations to encourage doctors and patients to use Theranos' blood testing technology, even though they knew it was not capable of producing accurate and reliable results. The indictment also alleges that Holmes and Balwani made numerous misrepresentations to potential investors about Theranos' financial condition. 

"This indictment alleges a corporate conspiracy to defraud financial investors," said FBI Special Agent John F. Bennett in a press release from the U.S. Attorney's Office in the northern district of California  "This conspiracy misled doctors and patients about the reliability of medical tests that endangered health and lives."

Theranos marketed technology that could perform laboratory tests from a pinprick of blood from the finger. Holmes had called it "the most important technology in the world."

At its height, Theranos was worth nearly $10 billion and Holmes was the youngest, self-made female billionaire in the world. Theranos' board of directors once included Henry Kissinger, Defense Secretary James Mattis and former Secretary of State George P. Shultz.

A former Theranos employee told Norah O'Donnell on "60 Minutes" that the "revolutionary technology," named Edison, never really worked. Other former employees alleged that some blood samples returned contradictory and inconclusive results when retested, and that Holmes lied to Walgreens when she told them Edison was ready to use on patients, leading to a partnership that planned to put the device in every store.

"She deceived everyone. Everyone," O'Donnell told "60 Minutes Overtime." "She had hundreds of employees from MIT, from Harvard, from Apple. The smartest people in Silicon Valley went to work for her. They believed in her. It was not just the media. It was the people who gave her $900 million dollars. I mean, there were a lot of prominent, very smart people who bought into the myth of Elizabeth Holmes."

As O'Donnell reported on "60 Minutes," nearly every media outlet, including CBS News, bought into the Theranos myth.

Bloomberg reported earlier Friday that Holmes had stepped down as Theranos' CEO but would retain a seat on the board. Balwani, who is Holmes' former boyfriend and once ran day-to-day operations, left the company in 2016.