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Theranos: Another Venture Capital-Funded Startup Fraud Fairy Tale

Theranos: Another Venture Capital-Funded Startup Fraud Fairy Tale

theranos-bag-of-shit

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:

partner-fund-management-llp-ip-blocked

 

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

Theranos faces a class action lawsuit for deceptively marketing blood testing.

Update: 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

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™.

Theranos

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

Richard Kovacevich

James N. Mattis – Director

Sam Nunn

William J. Perry

Gary Roughead

George P. Shultz

Theranos Venture Capital:

Partner Fund Management

Walgreens

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.

venture-capital-celebrates-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.

Click here for more on understanding the VC-funded startup healthcare sales model

Click here for more information on Medicare/Medicaid & private health insurance as it relates to fraud

 

5 Comments
  • Shakamo Bradley Jalibani
    Reply

    THANK YOU! For this article and keeping Theranos and Holmes in the spotlight, despite their powerful PR and legal team trying to spin, baby, spin their lying, fraudulent, bullsXXt fantasy into a myth of success. I spent 18 months investigating Holmes, Balwani, and Theranos on behalf of potential investors/partners wanting to piss away good money into something too good to be true. The result of this investigation? The Emporer was not just naked, but was conning others and possibly costing lives. This investigation wasn’t just paper-checking and online tracking, it was record-check, dumpster diving, and travel all over the globe to verify Homes’ claims, background, and those of Balwani and others involved. What you have here is a spoiled child, Holmes, who was told that she was so special and destined to change the world that she believed it. She thought herself so special that she didn’t have to pay dues and do the real work that legit success requires. After all, she claimed Mandarin fluency and Jane Austen expertise in her teens (see you guys? I’m so smart and special! AND nobody likes me either just like Mark Zuckerberg and Jobs!). Anyone opposing her had an ax to grind and was bitter and jealous and stupid (according to her and her family). Her family are complicit in encouraging her unicornism and never questioning her fantasy, lies, or resume-puffing on a global scale. Likewise, the government “BoardWhores” (great term) never read the fine print, asked hard questions, or did any checks on her or her claims. All taken at face value due to her parents connections in govt (and her Mom being a clerk for a Congess Cmte). Theranos did a few things right: the proved style and flash and hype are more important than facts, truth, data, and reality. Holmes brought in the big gun PR, Media Relations team that wrote entire stories which the media swallowed whole. Holmes got a legal dream team headed by David Boies (of Clinton-Gore fame) and Boies Hollywood-NYC pals to go along. Sadly, Holmes MAY have grown up to be a mature, real, honest, and true contributor to some science/health fields or research. Instead, her immature, socially-stunted, egotistical arrested development and lust for fame/wealth will list her alongside Jayson Blair, Bernie Madoff, Pitbull, True Detective Season 2, and Subprime Mortgage Vultures on the list of modern frauds and self-righteous cons. There’s a reason people like Rockefeller, Curie, Ford, Lister, Nikola Tesla, Pasteur, Carver, Jobs, Goddard, Gates, Carnegie, and Turing all worked so long and hard for success: it doesn’t come easy, fast, or cheap. But instead of idolizing real heroes who worked for it? Holmes idolizes Mark Zuckerberg (who only created a modern model of the old gossip-fueled party-line phone system). Even Steve Jobs knew enough to know he was a macro-visionary and marketeer, not Ghandi, Buddha or Issac Newton. Holmes is like so many from the dot-com bubble cult (Webvan and eToys and the Segway were gonna change mankind right?), when irrational exuberance (aka BULLSHIT) was mistaken for fact, truth, and hard work. Egged on by a clueless huckster like Balwani and a complicit media we can see the Empress clearly has no clothes. Just because they use every hipster trendy buzzword does not make them sage geniuses (see how many interviews she used “disrupter” and “lean in”). It just makes them the American Idols of biotech “startups”. With a little luck the government will shut them down, lock them out, and even David Boies will run scared in the face of billion-dollar lawsuits.

    May 7, 2016 at 7:58 pm
  • Ramesh K
    Reply

    God-Father of above BS is tech-sector.

    May 12, 2016 at 7:35 am
  • Ramesh K
    Reply

    Info given to this site , is getting leaked , either from datacenter
    where the servers are hosted
    or from inside the org. Emails are no secrets.

    May 12, 2016 at 9:25 pm

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