Theranos founder Elizabeth Holmes and Ramesh Sunny Balwani, the companys former president, was charged by the feds with wire fraud for allegedly engaging in a multi-million dollar scheme to defraud investors, according to the Department of Justice. The indictment was unsealed Friday, soon after it was announced that Holmes had resigned from her embattled blood-testing company, CNBC reported. Holmes and Balwani allegedly cheated investors out of over $700 million between 2013 and 2015 and used ads to persuade doctors to use Theranos technology in their labs, despite knowing their methods were inaccurate and unreliable, the Securities and Exchange Commission said in a civil lawsuit filed in March. The company claimed that it had developed a revolutionary and proprietary analyzer that could perform many testsusing only a few drops of blood, according to the indictment. Holmes and Balwani knew that the analyzer, in truth, had accuracy and reliability problems, performed a limited number of tests, was slower than some competing devices, and, in some respects, could not compete with existing, more conventional machines, prosecutors said.
Once a Silicon Valley darling, Holmes created Theranos in 2003 and convinced major government officials to invest in her company, including Defense Secretary James Mattis. Holmes will remain the chairman of the board. In April, she announced 125 employees would be laid-off in June and the company would face liquidation in August.