Connecting Oracle to Commerce One, Balwani, Fremont Group and Bechtel
There is a long tail story lurking in the background in the matter of
Bennett v. Southern Pacific linked a murder of a witness. The
truth kept in check by Contra Costa District Attorneys prior to Dianna
Becton former Superior Court Judge of Contra Costa County.
Take a moment to read on why Bennett v. Southern Pacific came to life
and how it died on the Court House steps.
The Fall of Theranos intertwined Fremont Group and Oracle
Often in life the same actors reappear sometimes like flies, lady bugs and horse but it's your choice which analogy is applicable.
Admittedly the Theranos case wasn't high priority until several names emerged. It's quite funny as the accusers who gained the investigative prowess of the Securities and Exchange Commission are themselves a target of the Department of Justice.
Mr. Balwani is a connection from the 1990s where he took control of Commerce One. The founders were Tom Gonzales Sr. and Tom Gonzales Jr., the last time I saw them they were at Mt. Diablo National Bank preparing accounts. We had short conversation as they were busy. Tom jr. died a few weeks later from bladder cancer but that was from the grapevine. There are other details about what happened that I cannot verify as it's more akin to back room chatter.
Vertical Technologies Lafayette CA
During my early computer days while building a cabinet shop I was always seeking cheap or special deals on equipment. I would stop by their offices on the second floor down by the old Rockin Horse Bar and Restaurant.
Bennett v. Southern Pacific, The witness murder and SoS George Schultz which theoretically include former President Bush, Riley Bechtel former CEO of Bechtel but also includes former SoS Henry Kissinger.
Theranos (/ˈθɛrənoʊs/) was a privately held health technology corporation,[2] initially touted as a breakthrough technology company, but
subsequently infamous for its false claims to have devised blood tests that only needed very small amounts of blood.[3][4][5] Founded in 2003 by then-19-year-old Elizabeth Holmes,[6] Theranos raised more than US$700 million from venture capitalists and private investors,[7] resulting in a $10 billion valuation at its peak in 2013 and
2014.[8][9] Investors and the media hyped Theranos as a breakthrough in the
large blood-testing market, where the U.S. diagnostic-lab industry posts
annual sales of over $70 billion. Theranos claimed its technology was
revolutionary and that its tests required only about 1/100 to 1/1,000 of
the amount of blood that would ordinarily be needed and cost far less
than existing tests.
A turning point came in October 2015, when investigative
reporter John Carreyrou of The Wall Street Journal questioned the validity of Theranos' technology. The company
faced a string of legal and commercial challenges from medical
authorities, investors, the U.S. Securities and Exchange Commission (SEC), Centers for Medicare and Medicaid Services (CMS), state attorneys general, former business partners,
patients, and others.[10] By June 2016, it was estimated that Holmes's personal net worth
had dropped from $4.5 billion to virtually nothing.[11] The company was near bankruptcy until it received a $100 million investment from Fortress Investment Group in 2017.[12] In September 2018, the company ceased operations.
In July 2016, Theranos received sanctions from the CMS, including the
revocation of its CLIA certificate and prohibition of Holmes and other company officials
from owning or operating a laboratory for two years.[13] Theranos announced it would close its laboratory operations and
wellness centers to work on miniature medical testing machines.[14] In April 2017, Theranos said it had reached a settlement
agreement with CMS.[15] Following the CMS sanctions, the Walgreens pharmacy chain terminated its contract with Theranos and filed a
lawsuit claiming continuous breaches of contract. The suit was settled out of court, with Theranos compensating Walgreens for a much smaller amount than
the claimed $140 million, reported at about $30 million.
On March 14, 2018, Theranos, Holmes, and former company
president Ramesh "Sunny" Balwani were charged with "massive fraud" by the SEC.[16] One section of the complaint says Holmes falsely claimed in 2014
that the company had annual revenues of $100 million, a thousand times
more than the actual figure of $100,000.[17] Theranos and Holmes agreed to resolve the charges against them,
with Holmes paying a fine of $500,000, returning the remaining 18.9
million shares that she held, relinquishing her control of the company,
and being barred from being an officer or director of any public company for ten years.[18] According to the agreement, if Theranos were acquired or
otherwise liquidated, Holmes would not profit from her ownership until more than $750
million was returned to investors and other preferred shareholders.
Theranos and Holmes neither admitted nor denied the allegations in the
SEC's complaint.[7] Balwani did not settle.[19] On June 15, 2018, the U.S. Attorney for the Northern District of California announced the indictment of Holmes on wire fraud and conspiracy charges. Balwani was also indicted on the same
charges.[20] After all efforts to find a buyer went nowhere, what remained of
the company dissolved on September 4, 2018.[21]
History[edit]
While at Stanford University, Elizabeth Holmes had an idea to develop a wearable patch that could
adjust the dosage of drug delivery and notify doctors of variables in
patients' blood.[22] She started developing lab-on-a-chip technology for blood tests, and had the idea for a company that
would make testing cheaper, more convenient and accessible to
consumers.[23] Holmes dropped out of Stanford in 2003 and used the education
trust from her parents to found the company that would later be called
Theranos, derived from a combination of the words "therapy" and
"diagnosis".[24][25] The company's original name was "Real-Time Cures",[8][26][27] which Holmes changed after deciding that too many people were
dubious about the word "cure".[8]
Partnerships[edit]
In 2012, Safeway invested $350 million into retrofitting 800 locations with
clinics that would offer in-store blood tests. However, after many
missed deadlines and questionable results from a trial clinic at
Safeway's Corporate offices, the deal was called off in 2015.[28] In September 2013, Theranos partnered with Walgreens to offer
in-store blood tests at more than 40 locations. Walgreens announced
plans to expand its "wellness centers" across the United States.[29] Theranos blood tests were used on drug trial patients of GlaxoSmithKline and Pfizer. Each company stated that there were no ongoing active projects with
Theranos in October 2015.[30][31] In November 2016, Walgreen Co. filed suit against Theranos in a
federal court in Delaware, for breach of contract. Theranos reported to
investors on June 21, 2017 that the suit, which originally sought $140
million in damages, was settled for less than $30 million.[32][33]
In March 2015 the Cleveland Clinic announced a partnership with Theranos to test its technology in
order to decrease the cost of lab tests.[34] Theranos became the lab-work provider for Pennsylvania insurers
AmeriHealth Caritas and Capital BlueCross in July 2015.[35][36]
In July 2015, the Food and Drug Administration approved the use of the company's fingerstick blood testing
device for the herpes simplex virus (HSV-1) outside a clinical laboratory setting.[37][38] Theranos was awarded the 2015 Bioscience Company of the Year by
AzBio.[39]
Exposure and downfall[edit]
In October 2015, John Carreyrou of The Wall Street Journal reported that
Theranos was using traditional blood testing machines to run its tests
instead of the company's Edison devices (for a definition, see
the Technology and Products section below), and that
the company's Edison machines might provide inaccurate results.[40][41] Theranos claimed that the allegations were "factually and
scientifically erroneous and grounded in baseless assertions by
inexperienced and disgruntled former employees and industry
incumbents".[42][43]Walgreens suspended plans to expand blood-testing centers in their
stores following the report.[44][45] At that time, the Cleveland Clinic announced that it would work
to verify Theranos technology.[46] Theranos fought back against
the Journal's investigation, sending lawyers after
sources in the story in an effort to stop them from providing
information to the press.[4] Tyler Shultz was a key source for the WSJ story.
Shultz was a Theranos employee from 2013 to 2014 and the grandson of
then Theranos director, former U.S. Secretary of State George P. Shultz. Tyler Shultz had attempted to bring concerns about the company's
activities to his management, and when that had failed, he had spoken to
Carreyrou and also, under an alias, reported the company to the New York
State Department of Health.[47]
Following the WSJ story, the history of FDA
interactions with Theranos was scrutinized. The FDA had received a
formal inquiry to look at Theranos blood test devices by the U.S.
Department of Defense in 2012 before the devices were commercially
available and did not require FDA approval.[48] FDA inspection reports from 2014 and 2015 stated that its
containers for blood collection were "not validated under actual or
simulated use conditions" and "were not reviewed and not approved by
designated individual(s) prior to issuance".[49] The FDA inspection in 2015 resulted in multiple 483s from the FDA where inspectors observed violations of FDA Title 21 Regulations.[50][51] After the inspection, Theranos announced that it would
voluntarily suspend its tests apart from the FDA-approved herpes simplex
virus (HSV-1) test.[52]
The Arizona Department of Health Services reported issues with the company's Scottsdale lab meeting
regulations in September 2015. The reports in which these issues were
documented were revealed in the Arizona Republic in November 2015.[53]
In January 2016, the Centers for Medicare and Medicaid Services (CMS) sent a letter to Theranos based on an inspection of its
Newark, California, lab in fall 2015, reporting that the facility did
not "comply with certificate requirements and performance standards" and
caused an "immediate jeopardy to patient health and safety" due to a
test to determine the correct dose of the blood-thinning drug warfarin.[54] Walgreens and Capital BlueCross announced a suspension of
Theranos blood tests from the Newark lab.[55]
In March 2016, CMS regulators announced plans to enact sanctions that
included suspending Holmes and Balwani from owning or operating a lab
for two years and that they would revoke the lab's license.[56] The company did not receive the sanctions until July.[57]
By April 2016, Theranos came under criminal investigation by federal
prosecutors and the SEC for allegedly misleading investors and
government officials about its technology.[58]The case is considered "extremely unusual" by a former assistant U.S.
attorney for the Justice Department.[59] The U.S. House of Representatives Committee on Energy and
Commerce requested information on what Theranos was doing to correct its
testing inaccuracies and adherence to federal guidelines in June
2016.[60][61]
In May 2016, Theranos announced that it had voided two years of results
from its Edison device.[62] The company announced that about 1 percent of test results
had been voided or corrected from its proprietary machines in June
2016.[63]
In July 2016, Theranos announced that the CMS had revoked its CLIA
certificate and issued sanctions prohibiting its owners and operators
from owning or operating a lab for two years, suspension of approval to
receive Medicare and Medicaid payments, and a civil monetary penalty.
The company discontinued testing at its Newark location while attempting
to resolve the issues.[13] Theranos announced plans to appeal the decision by regulators to
revoke its license to operate a lab in California and other
sanctions.[64]
In August 2016 the company withdrew its request for emergency clearance
of a Zika virus blood test after a lack of essential safeguards during the
testing process was found by federal inspectors.[65][66]
Theranos announced that it would close its laboratory operations and
wellness centers and lay off about 40 percent of its work force to work
on miniature medical testing machines in October 2016.[14][67][68][69][67]
In January 2017, Theranos announced that it had laid off 41 percent of
its workforce, or approximately 155 people, and closed the last
remaining blood-testing facility after the lab failed a second major
U.S. regulatory inspection.[70][71]
Also that month, the company faced lawsuits from several different
entities including Walgreens[72][73] and Arizona Attorney General Mark Brnovich.[74]
In April 2017, lawyers for Partner Investments LP and two other funds,
with combined stakes totaling more than $96 million in Theranos
preferred shares, charged that Theranos had threatened to seek bankruptcy protection if the investors did not agree to accept additional stock equity
in lieu of litigation. Theranos officials said the funds had
mischaracterized the exchange offer, which was discussed before the suit
was filed.[75] The suit also alleged that Theranos Inc. had misled company
directors about its practices concerning laboratory testing and that it
had secretly bought lab equipment to run fake demonstrations.[76] On May 1, 2017, Theranos announced that it had reached an
undisclosed settlement with Partner Fund Management LP (PFM). Theranos'
General Counsel David Taylor stated: "Theranos is pleased to have
resolved both lawsuits with PFM. Although we are confident that we would
have prevailed at trial, resolution of these two cases allows our tender
offer to go forward and enables us to return our focus where it belongs,
which is on executing our business plans and delivering value for our
shareholders."[77] In April 2017, Theranos reached a settlement with CMS agreeing to
stay out of the blood-testing business for at least two years in
exchange for reduced penalties,[78] and signed a consent decree with Arizona Attorney General Mark Brnovich over violations of the Arizona Consumer Fraud Act. Alleged violations included false advertisement and inaccurate blood testing. Theranos agreed to refund $4.65
million to the state's residents for Theranos blood testing services,
providing a refund to every resident who had received a test, regardless
of whether the test results were voided or corrected.[79][80][81][82]
In August 2017, Theranos announced it had reached a settlement with
Walgreens.[83]
In December 2017, Fortress Investment Group loaned $100 million to
Theranos. Theranos had reportedly been on the verge of bankruptcy, with
the loan meant to keep the company solvent into 2018.[12][84][85] The loan was secured by Theranos' patents.[86] On April 10, 2018, the company laid off the majority of workers
in a renewed bid to avoid bankruptcy. The company's total headcount was
down to fewer than 25 employees, after having 800 employees at its
peak.[1][87]
In March 2018 the US Securities and Exchange Commission charged
Theranos, its CEO Elizabeth Holmes and former president Ramesh "Sunny"
Balwani, claiming they had engaged in an "elaborate, years-long fraud"
wherein they "deceived investors into believing that its key
product – a portable blood analyzer – could conduct
comprehensive blood tests from finger drops of blood."[88][89] Holmes reached a settlement with the SEC, which requires her to
pay $500,000, forfeit 19 million shares of company stock, and be barred
from having a leadership position in any public company for ten
years.[90] Balwani did not settle with the SEC.[91]
On June 15, 2018, Holmes and Balwani were indicted on multiple counts of wire fraud and conspiracy to commit wire fraud. According to the indictment,
investors and doctors and patients were defrauded. It is alleged the
defendants were aware of the unreliability and inaccuracy of their
products, but concealed that information. If convicted, they each face a
maximum fine of $250,000 and 20 years in prison. The case has been
assigned to Lucy H. Koh, United States District Judge of the United States District Court for the Northern District of
California.[92][93]
Shutdown[edit]
On September 4, 2018, Theranos announced in an email to investors that
it would cease operations and release its assets and remaining cash to
creditors after all efforts to find a buyer came to nothing. Most of the
company's remaining employees were laid off on the previous Friday,
August 31. However, Theranos' General Counsel and new CEO David Taylor
and a few support staffers remained on payroll for a few more days.[21] The Wall Street Journal reported that any equity
investments in the company were made worthless by the shutdown.
Technology and products[edit]
Theranos claimed to have developed devices to automate and miniaturize
blood tests using microscopic blood volumes. Theranos dubbed its blood
collection vessel the "nanotainer" and its analysis machine the
"Edison."[94][95][96] The technology has been criticized for not being peer reviewed.[97][98] Theranos claimed to have data verifying the accuracy and
reliability of its tests that would be published.[99] In February 2016, Theranos announced that it would permit the
Cleveland Clinic to complete a validation study of its technology.[100]In March 2016, a study authored by 13 scientists appeared in
the Journal of Clinical Investigation, where it was stated that the company's blood test results were
flagged "outside their normal range 1.6x more often than other testing
services", that 68 percent of lab measurements evaluated "showed
significant interservice variability", and that "lipid panel test
results between Theranos and other clinical services" were
"nonequivalent".[101] In August 2016, the company introduced a new robotic, capillary
blood testing unit named "miniLab" at the 2016 annual meeting of
the American Association for Clinical Chemistry, but did not present any data supporting the claimed abilities of the
device.[102][103][104]
Corporate Affairs[edit]
Location[edit]
Theranos was headquartered in Palo Alto, California. It previously had
laboratories in Newark, California and Scottsdale, Arizona.[105]
Management[edit]
From its incorporation in 2003 until 2018, Holmes was the company's
chief executive officer. She recruited Channing Robertson, a chemical-engineering professor at Stanford, to be a technical
advisor and the company's first board member during its early years.
Holmes' then-boyfriend Sunny Balwani, a software engineer whom Holmes had met during high school, joined
the company as its president and chief operating officer in 2009.[106] In July 2011, Holmes was introduced to former U.S. Secretary of
State George P. Shultz, who joined the Theranos board of directors that month.[107] Over the next three years, Shultz helped to introduce almost all
the outside directors on the "all-star board," which included William Perry (former U.S. Secretary of Defense), Henry Kissinger (former U.S. Secretary of State), Sam Nunn(former U.S. Senator), Bill Frist (former U.S. Senator and heart-transplant surgeon), Gary Roughead (Admiral, USN, retired), James Mattis(General, USMC), Richard Kovacevich (former Wells Fargo Chairman and CEO) and Riley Bechtel (chairman of the board and former CEO at Bechtel Group).[107][108][109] The board was criticized for consisting "mainly of directors with
diplomatic or military backgrounds."[23]
In April 2016, Theranos announced its medical advisory board which
included past presidents or board members of the American Association for Clinical Chemistry.[110] Members were invited to review the company's proprietary
technologies and advise on the integration into clinical practice.[110] The board included past presidents or board members of the
American Association for Clinical Chemistry such as Susan A.
Evans, William Foege, former director U.S. Centers for Disease Control and Prevention (CDC), David Helfet, director of the Orthopedic Trauma Service at
the Hospital for Special Surgery and professors, Ann M. Gronowski, Larry
J. Kricka, Jack Ladenson, Andy O. Miller and Steven Spitalnik.[111][112]
Balwani left his position as President and COO in May 2016. At that
time, the company announced its new board members, Fabrizio Bonanni
(former executive vice president of Amgen), Richard Kovacevich and William Foege, who would help to publicly
introduce its technologies.[113][114][115]
In May 2016 members of the Theranos board of directors were:[116]
- Elizabeth Holmes, founder and CEO
- Riley Bechtel, former Bechtel Group CEO
- David Boies, a founder and the chairman of Boies Schiller Flexner
- William Foege, former director CDC
- Richard Kovacevich, former Wells Fargo CEO and chairman
- James Mattis, later U.S. Secretary of Defense
- Fabrizio Bonanni, former executive vice president of Amgen
In December 2016, it was announced the Theranos management team would be
restructured with the departure of Riley Bechtel. In January 2017
incoming U.S. Secretary of Defense nominee James Mattis resigned from
the Theranos board. In January 2017 the Theranos board of directors
included:[117] Elizabeth Holmes, William Foege, Fabrizio Bonanni, and Daniel
Warmenhoven, former NetApp CEO, who replaced Riley Bechtel.
It was also announced in November 2016 that the celebrity-studded "board
of counselors" would be scrapped in January 2017.[118]
Valuation[edit]
Theranos raised millions of dollars in its first years. In 2004,
Theranos was based in a rented basement near the Stanford campus.[119] By December 2004 the company had more than $6 million from
investors at a valuation of $30 million.[120] The company had about $45 million total fundraising after Series B and Series C funding in 2006.[121] Theranos raised an additional $45 million in 2010 at a valuation
of $1 billion.[120][122] The company moved to the former headquarters of Facebook in June 2012.[123][124] The company had significant news coverage starting in September
2013 after profiles in the San Francisco Business Times and Wall Street Journal.[23] By 2014, Theranos had raised more than $400 million with an
estimated value of $9 billion.[125] In 2016, Forbes revised the estimated net worth of the company to $800 million
taking into account the $724 million of capital raised.[11]
In May 2017, participating shareholders provided a release of any
potential claims against Theranos in exchange for shares of the
company's new preferred stock. Holders of more than 99 percent of the shares elected to participate.
CEO Elizabeth Holmes contributed shares to the company and gave
up equity to offset potential dilution to non-participating
shareholders.[126]
In May 2018 John Carreyrou reported that American business and government leaders lost more
than $600 million by privately investing in Theranos.[127] Major investments had been made by the Walton family ($150 million), Rupert Murdoch ($121 million), Betsy DeVos ($100 million), and the Cox family (of Cox Media Group) ($100 million).[13] The final liquidation of the company in September 2018 rendered
these investments completely worthless.[21]
Books and documentaries[edit]
John Carreyrou, the Wall Street Journal reporter whose
work exposed Theranos, published a book-length treatment in May 2018
titled Bad Blood: Secrets and Lies in a Silicon Valley Startup.[128] As of June 2016, a film version was in the works starring Jennifer Lawrence as Elizabeth Holmes, written by Vanessa Taylor and directed by Adam McKay.[129]
In January 2019, ABC News Nightline released a podcast and documentary about the Holmes story
called The Dropout.[130]
Alex Gibney created a documentary titled The Inventor: Out for Blood in Silicon Valley about Holmes and Theranos, which made its official debut at
the Sundance Film Festival in Park City, Utah on January 24, 2019.[131]
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