Theranos founder Elizabeth Holmes steps down as CEO, faces criminal charges

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Elizabeth Holmes, the founder of embattled blood-testing company Theranos, has resigned as CEO of the company — nearly three months after the Securities and Exchange Commission sued her and the company for alleged "massive fraud," CNBC reports.

Immediately after the company made the announcement, federal prosecutors filed criminal charges against Ms. Holmes and the company's former President and COO Ramesh Balwani, alleging they defrauded investors as well as physicians and patients, according to The Wall Street Journal. Both appeared in court June 15 and were arraigned on two counts of conspiracy to commit wire fraud and nine counts of wire fraud. They were subsequently released on $500,000 bond each, and ordered to surrender their passports.

Theranos General Counsel David Taylor will take over the role, while still maintaining his current position. Ms. Holmes will keep her spot as chair of Theranos' board.

The company fell into a downward spiral after The Wall Street Journal published a series of scathing reports on its blood-draw device, which promised to be able to diagnose nearly 200 diseases from a small amount of blood. The WSJ report found Theranos' technology could only perform about 12 of the tests and the SEC claimed the company tricked investors by "hosting misleading technology demonstrations, and overstating the extent of Theranos' relationships with commercial partners," the complaint said, according to CNBC. Documents show investors lost more than $600 million.

Ms. Holmes, who founded Theranos when she was 19 after dropping out of Stanford (Calif.) University, agreed to pay the SEC a $500,000 fine, return 19 million shares in the company she obtained "during the fraud," and never serve as an officer or director of a public company for the next 10 years.

Theranos now faces liquidation, according to the WSJ. With about 25 employees left, Ms. Holmes reportedly told investors that Fortress Investment Group, a private equity firm that loaned Theranos $65 million in 2017, was likely to seize its assets by late July.

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