Firm in blood-test deceit set to close

Blood-testing startup Theranos is now set to formally dissolve just weeks after its CEO Elizabeth Holmes was charged with criminal fraud for allegedly defrauding investors doctors and the public in a multi-million dollar scheme

Blood-testing startup Theranos is now set to formally dissolve just weeks after its CEO Elizabeth Holmes was charged with criminal fraud for allegedly defrauding investors doctors and the public in a multi-million dollar scheme

She and Balwani pitched a tale in investor presentations, product demonstrations and media articles about the startup's key product - a portable blood analyzer - which they claimed could revolutionize the industry by inexpensively conducting comprehensive tests from drops of blood from fingers.

The move comes after Theranos failed to secure a buyer or further investments and ended up breaking the terms of its $65 million loan from Fortress Investment Group.

Late Tuesday, Theranos CEO David Taylor emailed investors to announce that the company is shutting down.

She carefully crafted her image as well, often wearing black turtleneck sweaters that led some in Silicon Valley to describe her as "the next Steve Jobs", a reference to the Apple founder.

But an investigation by The Wall Street Journal two years ago found that Theranos' technology was inaccurate at best, and that the Palo Alto, California-based company was using routine blood-testing equipment for the vast majority of its tests.

We've covered Theranos numerous times.

In June, founder Elizabeth Holmes and former Theranos president Ramesh "Sunny" Balwani were indicted on two counts of conspiracy to commit wire fraud and nine counts of wire fraud for misleading investors and the public. The Journal reports that most of the company's employees - reported to be down to fewer than two dozen as of April, a drastic fall from a peak of 800 - worked their last day on August 31.

Ms Holmes raised over $700m in funding for Theranos, but when she tried to pitch the technology to the US Department of Defense in 2012, her pitch was rejected due to the devices' unpredictable results. Ultimately, the once highly sought after Silicon Valley biotech company owes Fortress Investment Group and others $60 million, and it hopes to settle for less so that the company's remaining $5 million could be distributed among other creditors.

The pair has denied the charges and faces potential decades in prison and massive fines.

Theranos is now negotiating with Fortress to keep part of its remaining cash to pay off other investors.

The company did not immediately respond to Ars' request for comment. The pharmacy chain has said it was misled by Theranos about its technology and prospects. Its failure was dramatic and painful for many. Tyler Shultz, a grandson of former Secretary of State George Shultz and the first employee to blow the whistle to a state regulator about what he saw as troubling practices, became estranged from his grandfather, a Theranos director. Theranos also had a partnership with Walgreens, which had blood-testing centers in its stores.