Theranos: Another Venture Capital-Funded Startup Fraud Fairy Tale
UPDATED: October 12, 2016 Partner Fund Management Inconsistently Sues Theranos While Trying To Hedge Their Hedge Fund Bets to Recover From Fraud They Created. Below Original Story #TheSociopathicBusinessModel
Oh and look who stopped by to say hello:
UPDATED: October 5, 2016 Theranos Lays Off 340 Employees. Below Original Story
Updated: September 6, 2016
Venture capital-funded startup Theranos’ chief scientist commits suicide: Ian Gibbons was one of CEO Elizabeth Holmes’ first hires; which also means he was likely one of the first employees manipulated into thinking that innovation was above the law. False projections based on VC ROI (and not what the market can bear) to give the appearance of hypergrowth for an overvaluation is fraud better known as The Sociopathic Business Model™ and all too common in startups that put profit before employees, patients and even taxpayers. The truth does not need a narrative, only criminals do.
Update: May 26, 2016
— KillingMyCareer (@MelaynaLokosky) May 26, 2016
Theranos faces a class action lawsuit for deceptively marketing blood testing.
Update: May 12, 2016
Theranos’ COO retires as the troubled bio-tech startup overhauls its organizational structure https://t.co/H428VhdekW
— Technolopy (@technolopypro) May 12, 2016
Theranos President & COO, Sunny Balwani “decides” to “retire.” That’s precious, pending a federal investigation, he “decided” to “retire.” Nope, CMS is gunning for Balwani and founder Elizabeth Holmes to prevent them from participating in CMS (Medicare/Medicaid) contracts for two years, similar to what happened to Synthes executives in 2011. Meaning no healthcare company would hire them interested in insurance reimbursement. That’s that equivalent to getting burned in the industry. It’s about time. Don’t let the door hit you on the way out Sunny!
Update: April 19, 2016
— KillingMyCareer (@MelaynaLokosky) April 19, 2016
April 14, 2016
This site often writes about venture capital (VC)-funded startup fraud that costs employees their jobs, consumers and patients their safety or lives, and post-IPO or acquisition long-term shareholders & taxpayers billions while VCs make 8-10 times their initial investment back; and, this fraud cycle is encouraged, replicated and rewarded in the industry, better known as The Sociopathic Business Model™.
This week, Centers for Medicare & Medicaid Services (CMS), in an unprecedented move, proposed banning VC funded startup Theranos’s CEO Elizabeth Holmes and Theranos’s president Sunny Balwani for two years after learning that the company did not fix what regulators referred to as major problems within the laboratories. This is a great start! CMS prevented costly fraud and sent a very scary message to VCs.
Theranos was approved for one test yet was fraudulently offering 250 tests which means the sales projections (in part, how the company valuations are determined) were based on the company selling all 250 tests; and in turn eventually getting reimbursed by Medicare/Medicaid and then private health insurance. Reimbursement is what would make the startup attractive for an IPO or acquisition. Regardless if Holmes is removed from the company, the company won’t be able to support their $9 billion valuation because they can’t sell all 250 tests but only one test. CMS caught on to fraud before they & taxpayers paid for it, which is unique, thanks in part to what they learned from another venture capital-funded startup Acclarent which was sold to Johnson & Johnson’s Ethicon and not surprisingly underperforming post-acquisition due to healthcare fraud, and exposing that fraud is known as The MMpiHer Method™.
CMS trying to impose a $10,000 a day fine until the Theranos is compliant is like the rest of us paying a penny a day for some nuisance. Taking Holmes out of the game is a good start (and this isn’t the usual Silicon Valley sexism this is just straight up fraud) and, she should be banned for life, not just two years. CMS, unlike SEC who clearly have no interest in preventing fraud, also need to go after the venture capital #BoardWhores because that leads to #GodsOfFrauds.
Noticeably absent and a RED FLAG is that Theranos CEO Elizabeth Holmes is missing from the Board and Balwani remains while the company is not short on former government officials:
Sunny Balwani: President and COO – Director
Riley P. Bechtel – Director
William H. Foege
William H. Frist
Henry A. Kissinger
James N. Mattis – Director
William J. Perry
George P. Shultz
Theranos Venture Capital:
Partner Fund Management
Not until venture capital firms are held accountable for funding startup fraud, from the healthcare industry to the tech industry, can we expect to see positive change. In the meantime, Theranos VCs potentially losing hundreds of millions might be what’s needed to get Silicon Valley to stop funding fraud and it’s certainly helping the rest of us take the billion dollar blinders off of companies like Theranos and (perhaps Uber) and see them for what they really are: fraud.
UPDATED: October 5, 2016 Theranos Lays Off 350 Employees
UPDATED October 12, 2106: Partner Fund Management sues Theranos for SEC fraud
Nope, venture capital knowingly & willingly funds startup fraud and doesn’t get to hedge their hedge fund bets now that Theranos has been exposed as a fraud, thanks in part to another VC-funded startup case, Acclarent. Partner Fund Management isn’t a victim of Theranos they, along with all the other VCs, are responsible for funding the fraud in the first place. The ROI sales model was based on 250 tests even though Theranos was only FDA approved for one test. It’s false projections based on investor ROI (not what the market can bear) to give the appearance of hypergrowth for an overvaluation; and, that’s fraud! It’s nice to see the VCs stuck holding a worthless sack for once.