Disgraced blood-testing firm Theranos said late Friday that founder Elizabeth Holmes has resigned as CEO, but remains chair of the board.
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Holmes, who left Stanford University’s School of Engineering in 2003 to build Theranos, has been replaced by the much-diminished firm's general counsel, David Taylor, who remains the company's top lawyer.
Holmes and Theranos were charged with raising more than $700 million from investors through a fraudulent scheme that took place over the course of years. They allegedly made misleading statements about the California-based company’s portable blood analyzer, which is a machine that can test and process small samples of blood.
While Theranos touted the technology as revolutionary, the blood analyzer had only been successfully tested a few times, the Securities and Exchange Commission concluded.
The company allegedly claimed that the product was used by the Defense Department on the battlefield in Afghanistan, generating $100 million in revenue for the company in 2014. The SEC found that the government did not use Theranos’ technology and that revenue in 2014 barely surpassed $100,000.
After the SEC charged her and the company with fraud earlier this year, Holmes was stripped of control and is barred from serving as an officer or director at any public company for the next decade.
Further, she was obliged to return approximately 18.9 million shares of stock and relinquish her super-voting equity rights. As part of the settlement, neither the company nor Holmes admitted or denied any wrongdoing.
The Wall Street Journal reported in April that Theranos would cut its workforce “from about 125 employees to two dozen or fewer,” according to sources familiar with the matter.