Elizabeth Holmes Faces New Criminal Investigation, Must Provide Information to Congress

After a nightmare year and the drop in stock prices, Elizabeth Holmes of Theranos is finally having some wake-up calls. On the heels of news that Holmes is expected to testify in a federal…

Elizabeth Holmes Faces New Criminal Investigation, Must Provide Information to Congress

After a nightmare year and the drop in stock prices, Elizabeth Holmes of Theranos is finally having some wake-up calls.

On the heels of news that Holmes is expected to testify in a federal grand jury investigation, prosecutors have asked her to take responsibility for the company’s fraudulent business practices and products.

Specifically, federal prosecutors are asking Holmes to explain to Congress what led her to run her company in the manner she did.

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Rep. Bill Pascrell, a Democrat from New Jersey, released a statement on Wednesday, after he was briefed on the developments. “Over the past 12 months the failure of Theranos, which was founded by the convicted fraudster Elizabeth Holmes, has transformed into an epic public relations crisis for Ms. Holmes and she should accept responsibility for the damage she did to the public and employees, who she claimed to love,” he said.

“[Holmes] is not responsible for … the implementation of any Theranos technology, but merely tried to play a role in implementing that technology because Ms. Holmes’ greatest interests were focused on her own conviction that the therapies and treatments would work,” Mr. Pascrell added.

The criminal investigation has reportedly taken a new turn in recent months, drawing additional focus on Holmes after a San Jose, California jury found former Theranos CEO Sunny Balwani guilty of criminal fraud.

In March, the U.S. Securities and Exchange Commission also filed a lawsuit accusing Holmes and former Theranos executives of defrauding investors with its personal blood testing devices and procedures.

While the lawsuits and the criminal probe have resulted in increasing pressure for Holmes, the company has been shifting toward the goal of survival.

The blood testing company recently announced that it had engaged with Theranos Advisors LLC, which includes executive Alexis Bunn and Rich Lesser, the CEO of General Catalyst.

Michael Fumento, a CNBC contributor, writes a weekly column at CNBC.com and his column is carried on Twitter @MichaelFumento.

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