PUBLISHER'S NOTE: The indictments laid against Theranos founder Elizabeth Holmes and her start-up company's former present make the extraordinarily serious allegation that that encouraged patients and doctors to use the company’s blood tests in spite of knowing they “were likely to contain inaccurate and unreliable results" - and that they promoted devices and tests that not only did not work but also endangered lives. This development brings to my mind the horrific Canadian 'Motherisk' scandal which centered on a laboratory at the iconic Hospital for Sick Children in Toronto which purported to have developed a revolutionary "gold-standard" DNA hair testing technology which could flawlessly detect the presence of previous drug use. Sadly, the lab's technology was utterly flawed - in spite of the gold-standard claims - as flawed as Elizabeth Theranos's greatly touted blood testing devices. A public inquiry was called in Ontario because of the disturbing number of parents whose children were taken away - some permanently - by the Children's Aid authorities, as a result of Motherisk's terribly flawed technology. Although civil suits have been commenced, it is noteworthy, that unlike the USA, which has chosen to indict Holmes and the former president of the company for endangering the lives of patients, not a single criminal charge has been laid against Motherisk officials - or the Hospital for Sick Children which was responsible for the rogue lab. Welcome to Ontario - the same province which did not lay a single criminal charge against former doctor Charles Smith - responsible for so many wrongful convictions and for children being seized from their parents and put up for adoption - and no charges against the hospital which employed Smith, which, by the way, just happens to be the iconic Hospital for Sick Children. Something is terribly wrong in this picture.
Harold Levy: Publisher; The Charles Smith Blog.
-----------------------------------------------------------
PASSAGE OF THE DAY: "Ms. Holmes appeared on the cover of Inc. magazine, next to the headline “The Next Steve Jobs.” But a series of articles in The Wall Street Journal exposed the company’s testing as deeply flawed, and her story is now the subject of a book by the articles’ author, John Carreyrou, called “Bad Blood: Secrets and Lies in a Silicon Valley Startup,” and a forthcoming movie. Wealthy investors collectively lost hundreds of millions of dollars, including Walmart’s Walton family, the media mogul Rupert Murdoch, as well as Betsy DeVos, the secretary of education, and her relatives. In addition to misleading investors about the promise of the company, federal officials charged the two with encouraging patients and doctors to use the company’s blood tests in spite of knowing they “were likely to contain inaccurate and unreliable results.”
---------------------------------------------------------------------
STORY: "Theranos Founder Elizabeth Holmes Indicted on Fraud Charges," by reporter Reed Abelson, published by The New York Times on June 15, 2018. (Reed Abelson has been a reporter for The New York Times since 1995. She currently covers the business of health care, focusing on health insurance and how financial incentives affect the delivery of medical care.)
PHOTO CAPTION: "Elizabeth Holmes had become a darling of Silicon Valley, as she promoted what she claimed as a simple blood test that would revolutionize and personalize health care."
GIST: "Elizabeth
Holmes, the disgraced founder of Theranos, the lab testing company that
promised to revolutionize health care, and its former president, Ramesh
Balwani, were indicted on Friday on charges of defrauding investors out of hundreds of millions of dollars as well as deceiving hundreds of patients and doctors. The
criminal charges were the culmination of a rarity in Silicon Valley —
federal prosecution of a technology start-up. This one boasted a board
stacked with prominent political figures and investors, and a startling
valuation of $9 billion just a few years ago. In the fabled universe of
overnight billionaires and unicorns, companies with billion-dollar
valuations, Ms. Holmes had catapulted herself and her company into the
buzz-filled world of “disrupters” by pledging to upend the health
industry and give consumers control over their own care. Both
Ms. Holmes and Mr. Balwani pleaded not guilty to charges of wire fraud.
Lawyers for Ms. Holmes could not be reached for comment, but a lawyer
for Mr. Balwani said in a statement that his client was “innocent and
looks forward to clearing his name at trial.” The indictment
was filed by the United States attorney’s office in San Francisco and
came about three months after the Securities and Exchange Commission
settled civil fraud charges against Ms. Holmes. On
Friday, Theranos also announced that Ms. Holmes, who founded Theranos
in 2003 as a 19-year-old Stanford University dropout, stepped down as
chief executive. She will be replaced by David Taylor, the company’s
general counsel, according to a statement from the company, which did
not respond to requests for additional comment. In announcing the indictment, federal prosecutors highlighted the culture of Silicon Valley and the lure of exciting new ventures “Investors
large and small from around the world are attracted to Silicon Valley
by its track record, its talent, and its promise,” prosecutors said.
“They are also attracted by the fact that behind the innovation and
entrepreneurship are rules of law that require honesty, fair play, and
transparency.” Ms. Holmes and Mr.
Balwani were accused of misleading the public and their investors by
promoting devices and tests that not only did not work but also
endangered lives. Ms. Holmes had drafted a spellbinding sales pitch and
relentlessly pursued anyone — including her own employees — who doubted
her new blood-testing machines. “There
is one cardinal rule in Silicon Valley that most people never realize,”
said Paul Saffo, a longtime technology consultant, “and this is never
ever breathe your own exhaust.” “This is someone who is so deeply self-deluded by her optimism and faith in herself,” he said. “And delusion is contagious.” The
concept was irresistible: Theranos said it could take a few drops of
blood from a simple finger prick to detect everything from H.I.V. to a
diabetic’s A1C level. Relying on a proprietary technology to analyze the
small quantities of blood, the private company offered a wide array of
tests much more cheaply than existing blood tests. It
even partnered with Walgreens, the giant drugstore chain, to open up
centers in Arizona and California. Theranos reached a settlement with
Walgreens last August.
At its peak,
Theranos attracted prominent venture capitalists like Timothy Draper,
Ms. Holmes’s former neighbor, and Don Lucas, an early investor in
Oracle. Ms. Holmes, a charismatic
executive who wore black turtlenecks and spoke passionately about her
aim to remake health care, also assembled a star-studded board,
including two former secretaries of state, George P. Shultz and Henry
A. Kissinger, as well as two former United States senators. Gen. Jim
Mattis, the current secretary of defense, also served on the board. He
told Fortune magazine in 2014 that he joined the board because he was impressed by the strength of Theranos’s leadership. In October 2015, Ms. Holmes appeared on the cover of Inc. magazine, next to the headline “The Next Steve Jobs.” But a series of articles in The Wall Street Journal
exposed the company’s testing as deeply flawed, and her story is now
the subject of a book by the articles’ author, John Carreyrou, called
“Bad Blood: Secrets and Lies in a Silicon Valley Startup,” and a
forthcoming movie. Wealthy investors collectively lost hundreds of millions
of dollars, including Walmart’s Walton family, the media mogul Rupert
Murdoch, as well as Betsy DeVos, the secretary of education, and her
relatives. In addition to misleading
investors about the promise of the company, federal officials charged
the two with encouraging patients and doctors to use the company’s blood
tests in spite of knowing they “were likely to contain inaccurate and
unreliable results.” In 2016, federal regulators barred Ms. Holmes from owning and operating a laboratory for two years. Later that year, Theranos announced it was closing its lab and laying off about 340 employees, or more than 40 percent of its work force. Last
March, the S.E.C. charged Ms. Holmes with widespread fraud, accusing
her of exaggerating — even lying — about her technology while raising
$700 million from investors. In announcing the charges,
the S.E.C. said that Theranos and Ms. Holmes had agreed to a
settlement, with Ms. Holmes agreeing to pay a $500,000 penalty. She and
the company did not admit nor deny the allegations. Mr. Balwani did not
settle, and planned to fight the allegations. Theranos’s
collapse has given pause to venture capitalists, but Lakshman
Ramamurthy, a former official with the Food and Drug Administration and
now the global regulatory lead at Foundation Medicine, is not certain
investors have learned their lesson. Companies like Theranos, which
offered little hard evidence that its tests worked to its investors,
“have their own rules,” he said. “That hasn’t changed.” “The Silicon Valley hubris remains,” Mr. Ramamurthy said."
The entire story can be found at:
PUBLISHER'S NOTE: I am monitoring this case/issue. Keep your eye on the Charles Smith Blog for reports on developments. The Toronto Star, my previous employer for more than twenty incredible years, has put considerable effort into exposing the harm caused by Dr. Charles Smith and his protectors - and into pushing for reform of Ontario's forensic pediatric pathology system. The Star has a "topic" section which focuses on recent stories related to Dr. Charles Smith. It can be found at: http://www.thestar.com/topic/c
