In an email to shareholders, CEO David Taylor said the company will try to pay unsecured creditors with about $5 million in remaining cash.
The Silicon Valley firm said big name investors had lost about $1 billion.
In June of this year, a federal grand jury indicted Theranos founder Elizabeth A. Holmes and former president Ramesh “Sunny” Balwani with two counts of conspiracy to commit wire fraud and nine counts of wire fraud. According to the indictment, the charges stem from allegations Holmes and Balwani engaged in a multi-million dollar scheme to defraud investors, and a separate scheme to defraud doctors and patients.
According to the indictment, Holmes and Balwani used advertisements and solicitations to encourage and induce doctors and patients to use Theranos’s blood testing laboratory services, even though the defendants knew Theranos was not capable of consistently producing accurate and reliable results for certain blood tests. The tests performed on Theranos technology, in addition, were likely to contain inaccurate and unreliable results.
The indictment alleges that the defendants used a combination of direct communications, marketing materials, statements to the media, financial statements, models, and other information to defraud potential investors.
Two years ago, The Wall Street Journal investigated claims by Theranos and reported the Palo Alto, California-based company used routine blood-testing equipment for the vast majority of its tests.
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