Theranos faces criminal investigation: 5 things to know

Did Palo Alto, Calif.-based blood testing startup Theranos mislead investors and government officials?

The U.S. Attorney's Office and the Securities and Exchange Commission are currently investigating, particularly to find out if the company misrepresented the readiness of its technologies and operations, according to The Wall Street Journal.

Here are five things to know about the investigations.

1. The SEC is looking into how Theranos presented itself to investors when it sought funding, according to the report.

2. The U.S. Attorney's Office has also subpoenaed Walgreens Boots Alliance and the New York State Department of Health for information on how Theranos represented its technologies. Prosecutors are also investigating if Theranos misled government officials, according to the report. The Wall Street Journal notes subpoenas do not necessarily indicate Theranos will be formally charged.

3. Walgreens was subpoenaed because it has a partnership with Theranos to host 40 clinics at its stores in Arizona, which it intends to ax if Theranos cannot fix issues found by a federal inspection in November. The Walgreens partnership is Theranos' main link to customers, according to the report.

4. The New York Department of Health was subpoenaed because Theranos applied for a lab license there, according to the report. This application said Theranos planned to test customer's blood on traditional lab devices, according to the report. Later, there were issues with a Theranos employee who claimed in 2014 that the company was manipulating the state department's proficiency-testing program by sending in results from traditional machines, but the company said its proficiency-testing process had been discussed with regulators, according to the report. Ultimately, Theranos never got a lab license in New York after its lab director resigned and asked to remove his name from the application, according to the report.

5. In a memo to its partners, Theranos said, "The investigations by the SEC and the U.S. Attorney's Office, which began following the publication of certain news articles, are focused on requesting documents and are ongoing," according to USA Today coverage of the probes. "The company continues to work closely with regulators and is cooperating fully with all investigations."

 

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