Theranos chief executive Elizabeth Holmes is stepping down, the company announced today. As word of Holmes’s resignation made the rounds, so did news that federal prosecutors are filing criminal charges against Holmes and her number two executive, Ramesh “Sunny” Balwani.
The indictment alleges that Holmes and Balwani defrauded doctors and patients, as well as investors, according to The Wall Street Journal.
Prosecutors charge that Holmes and Balwani “not only defrauded investors, but also consumers who trusted and relied upon their allegedly-revolutionary blood testing technology.” Holmes raised more than $700 million from investors for her blood-testing company.
In Holmes’s place, Theranos general council David Taylor has been appointed CEO. At the time of this writing, Holmes was thought to be staying on as founder and chairman of the board.
Holmes dropped out of Stanford University to start the company in 2003. By 2013, she was attracting attention even beyond Silicon Valley for promising a revolutionary method for running medical tests with a simple prick of the finger. But the startup relied on third-party technology, which Holmes hid from investors that toured Theranos labs. The medical testing startup eventually retracted and corrected tens of thousands of tests and agreed to stay out of the blood-testing business for two years in exchange for reduced penalties by federal health regulators.
The embattled founder has been fighting to keep the company afloat since she was charged with securities fraud in March.
The company has been trying to stave off bankruptcy. As part of that effort, the company laid off most of its remaining workforce in April.