10 Famous financial frauds you should know

10) Theranos scandal

Theranos was an American privately held corporation which was touted as a breakthrough health technology company, with claims of having devised blood tests that required only very small amounts of blood and could be performed very rapidly using small automated devices the company had developed. However, these claims were later proven to be false.

Founded in 2003 by 19-year-old Elizabeth Holmes, Theranos raised more than US$700 million from venture capitalists and private investors, resulting in a $10 billion valuation at its peak in 2013 and 2014.

A turning point came in 2015 when medical research professors John Ioannidis and Eleftherios Diamandis, along with investigative journalist John Carreyrou of The Wall Street Journal, questioned the validity of Theranos’s technology. The company faced a string of legal and commercial challenges from medical authorities, investors, the U.S. Securities and Exchange Commission (SEC), patients, and others.

By June 2016, it was estimated that Holmes’s personal net worth had dropped from $4.5 billion to virtually nothing. After several years of struggle, lawsuits, and sanctions from CMS, what remained of the company dissolved on September 4, 2018.

On March 14, 2018, Theranos, Holmes was charged with fraud by the SEC. On June 15, 2018, the United States Attorney for the Northern District of California announced the indictment of Holmes on wire fraud and conspiracy charges. The trial was scheduled to commence in August 2020 but was delayed due to the COVID-19 pandemic and Holmes’ pregnancy. Holmes’ trial began on August 31, 2021.

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