A major investor in Theranos has decided to sue the health-technology company for allegedly lying to potential investors.
Theranos was founded by Elizabeth Holmes, a Hillary Clinton supporter who hosted a fundraiser for the Democratic nominee earlier this year. A longtime health care adviser to Bill and Hillary Clinton, Chris Jennings, has also been an adviser for Theranos.
Partner Fund Management LP, a San Francisco-based hedge fund, filed the suit Monday, the Wall Street Journal reports.
"Through a series of lies, material misstatements, and omissions, the defendants engaged in securities fraud and other violations by fraudulently inducing PFM to invest and maintain its investment in the company," a letter to Partner Fund Management’s investors said.
The hedge fund invested approximately $100 million in the company out of a total $800 million that investors poured in.
Theranos said in response that "the suit is without merit" and will be fought "vigorously."
Theranos has been plagued by problems for the past year, especially in the wake of revelations that it performed poor quality control of its blood testing equipment. The Silicon Valley company also reportedly put patient and staff safety at risk. Recently, Theranos had to lay off 40 percent of its workforce and close blood testing facilities. Holmes was banned from operating labs for at least two years by federal regulators in July.
Theranos’ promise for a new type of blood testing that would benefit patients brought the valuation of the company to $9 billion in 2014. Forbes dropped Holmes’ net worth from $4.5 billion to zero in June amid multiple investigations into her company’s affairs.