A California judge rejected Theranos founder Elizabeth Holmes’s request to dismiss the wire fraud and conspiracy case against her, even as he narrowed the scope of some of the charges.
Federal Judge Edward Davila refused to toss all 11 charges against Holmes and ex-Theranos president Ramesh “Sunny” Balwani, who were accused of scamming investors, doctors and patients with bogus blood-testing services.
But the judge ruled Tuesday that prosecutors can’t undergird three of the charges with claims that Holmes and Balwani defrauded doctors and patients who did not pay for Theranos tests themselves.
The 2018 indictment prosecutors brought against the pair failed to show that insured patients and doctors were victims of the scheme because insurance companies actually footed the bills for Theranos’s tests, Davila found. But the judge indicated that prosecutors can still pursue the charges based on claims that Holmes and Balwani scammed patients who did pay for the company’s inaccurate tests.
“They did not receive the accurate and reliable test that they were promised,” Davila wrote in his 39-page decision.
Theranos, which shut down in 2018, started to unravel after a series of reports in The Wall Street Journal raised questions about its blood-testing technology. Prosecutors have accused Holmes and Balwani of offering blood tests with devices that they promoted as revolutionary but knew were unreliable and inaccurate.
They also got money from investors and promoted their business based on bogus claims, officials have alleged. A trial in the case is set to begin in August.
In addition to facing a criminal case, Holmes agreed to pay $500,000 in a settlement with the Securities and Exchange Commission, which accused her and Balwani of bilking investors out of more than $700 million. Holmes did not admit or deny the allegations and Balwani pledged to fight the charges.