Author: KEVIN ROOSE / Source: New York Times
Each week, Kevin Roose, technology columnist at The New York Times, discusses developments in the tech industry, offering analysis and maybe a joke or two.
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The biggest story in tech this week was the Security and Exchange Commission’s announcement of fraud charges against Theranos, the smoke-and-mirrors biotech company; its founder, Elizabeth Holmes; and its former president, Ramesh Balwani. As part of a settlement, Holmes has agreed to pay a $500,000 fine; surrender much of her stake in Theranos, which was once valued at $4.5 billion; and accept a decade-long ban on being an officer or a director of a public company. The settlement doesn’t involve any jail time or admission of guilt, although the company is also facing a separate criminal investigation.
The complaint, which you should really read if you’re interested in the anatomy of a corporate downfall, contains stunning accusations. They include:
■ Theranos exaggerated its revenue by 1,000 times, telling at least one potential investor that it had made $108 million in 2014, when its actual revenue was around $100,000.
■ Theranos employees wrote flattering reports about the company’s own products, put the logos of pharmaceutical companies on them and used them to imply that those companies had endorsed Theranos’s technology.
■ Theranos was paid millions of dollars by Walgreens (in the complaint, it’s listed as “Pharmacy A”) to roll out testing services at its stores. When its own diagnostic tools weren’t ready in time, Theranos passed third-party testers off as its own.
■ Theranos repeatedly lied to reporters from publications like Wired, Fortune and The Wall Street Journal about how many tests its proprietary machines were capable of running, and gave those misleading articles to investors as proof of the company’s accomplishments.
This is juicy, Hollywood-ready…
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