NEW YORK — Elizabeth Holmes, a Stanford dropout once called the “next Steve Jobs” is being charged with “massive fraud” by U.S. regulators for her actions while leading the blood testing startup Theranos.
Theranos and Holmes agreed Wednesday to settle the case and pay a $500,000 fine. She is barred from serving as an officer or director of a public company for 10 years. The Securities and Exchange Commission said it will take its case against the president of the company, Ramesh “Sunny” Balwani, to federal court.
The SEC says Holmes, 34, Theranos, and Balwani misled investors for years about the performance of its blood testing technology. Theranos, based in Palo Alto, California, misled investors for years, once telling them its machines were being used by the Defense Department when they were not.
Theranos said it could perform blood tests on as little as drop of blood.
Theranos acknowledged in April 2016 that it was under investigation by several regulators and agencies after a series of reports by The Wall Street Journal in which former employees said the company’s tests were unreliable.
Deerfield-based Walgreens ended its partnership with Theranos in April 2016, closing the 40 Theranos Wellness Centers set up in the Phoenix area and in Palo Alto, California.
In November 2016, the drugstore giant sued Theranos, alleging breach of contract and seeking $140 million.