Theranos founder accused of bilking lawyers in civil case

The Associated Press
Posted 10/3/19

PHOENIX — The founder of scandalized blood-testing startup Theranos is now being accused of skipping out on bills owed to the lawyers defending her against fraud charges in a civil lawsuit.

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Theranos founder accused of bilking lawyers in civil case

Posted

PHOENIX — The founder of scandalized blood-testing startup Theranos is now being accused of skipping out on bills owed to the lawyers defending her against fraud charges in a civil lawsuit.

Elizabeth Holmes, who ran Theranos until its 2018 collapse, hasn’t paid her Palo Alto, California, attorney John Dwyer and his colleagues for the past year, according to documents filed Monday in Phoenix federal court.

The lawyers want to quit the case because they don’t ever expect to be paid. The documents cited Ms. Holmes “current financial situation” without elaborating.

Mr. Dwyer didn’t immediately respond to a request for comment Friday. A message left for Ms. Holmes’ attorney in a separate criminal case in San Jose, California, wasn’t immediately returned.

Ms. Holmes has pleaded not guilty to the criminal charges of conspiracy and fraud in a case that is scheduled to go to trial next summer.

A trial date hasn’t been set for the civil lawsuit filed against Ms. Holmes, Theranos and Walgreens, which offered Theranos’ blood-testing technology in Arizona and California. The lawsuit was filed on behalf of consumers who paid for Theranos’ blood testing service.

Ms. Holmes, a former Stanford University student, started Theranos in Palo Alto on the promise it had developed a way to perform complex blood analysis with a finger prick.

Federal authorities asserted that Theranos’ technology didn’t work as advertised, duping both the company’s investors and customers.

In April 2017, Arizona Attorney General Mark Brnovich obtained a full refund for every Arizonan who purchased a Theranos blood test. Theranos agreed to pay $4.65 million in consumer restitution as part of a consent judgment reached with the Arizona Attorney General’s Office.

Between 2013 and 2016, Theranos sold about 1.5 million blood tests to more than 175,000 Arizonans, a release in 2018 stated. According to Theranos, 10% of the tests were voided or corrected. Each customer who filed a claim was reimbursed the full amount the customer paid for testing regardless of whether the results were voided or corrected.

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