Federal prosecutors are investigating the possibility that Theranos, Inc., a blood testing startup once valued at $9 billion, misled its investors with regard to its proprietary pin-prick blood sample technology.
"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 ongoing, in addition to the CMS inspection," Theranos wrote. "The company continues to work closely with regulators and is cooperating fully with all investigations. "
Theranos has an active partnership with Walgreens in Arizona, a state where the Palo Alto-based Theranos has another lab. Now, Walgreens Boots Alliance and the New York State Department of Health have received subpoenas: Prosecutors want documents and testimony as to how the company was marketing itself and its technology. The investigation may or may not lead to an indictment and is in its early stages according to anonymous sources to the Journal.
"I feel devastated that we did not catch and fix these issues faster," Elizabeth Holmes said in an interview with Today that coincidentally aired yesterday before the news of the criminal investigation broke. "I'm the founder and CEO of this company, anything that happens in this company is my responsibility at the end of the day."
According to a letter from the Centers for Medicare and Medicaid Services. Holmes faces a two-year ban from the blood testing industry if problems aren't resolved at its Newark, California lab, which could also be shut down.