Elizabeth Holmes, a Clinton donor who was named a Presidential Ambassador for Global Entrepreneurship under former President Barack Obama, has settled with the Securities and Exchange Commission after being charged with "massive fraud" on Wednesday.
Holmes, 34, was the founder and CEO of Theranos, a privately owned Silicon Valley health tech company once valued at $9 billion. The SEC alleges the company deceived investors when raising more than $700 million from late 2013 to 2015, and as a result, Holmes will pay a $500,000 fine and be barred from serving as a director or officer of a public company for 10 years, according to CNBC.
The SEC alleged that Theranos raised more than $700 million from late 2013 to 2015 while "deceiving investors by making it appear as if Theranos had successfully developed a commercially-ready portable blood analyzer that could perform a full range of laboratory tests from a small sample of blood."
The SEC also said Theranos deceived investors by "hosting misleading technology demonstrations, and overstating the extent of Theranos' relationships with commercial partners," noting that at times Theranos' technology performed could only do about 12 tests of the over 200 tests advertised. The SEC also said former Theranos President Ramesh "Sunny" Balwani and Holmes lied about the extent of Thernos' involvement with the military.
Theranos previously settled a lawsuit with one of its biggest investors, Partner Fund Management, which invested more than $96 million in Theranos in 2014. Holmes has already said she plans to give away shares to the "most significant shareholders."
Theranos also settled with the state of Arizona for $4.8 million last year over consumer fraud claims pertaining to its "flawed" Edison device blood tests.
"The Theranos story is an important lesson for Silicon Valley," Jina Choi, director of the SEC's San Francisco regional office, said in a statement. '"Innovators who seek to revolutionize and disrupt an industry must tell investors the truth about what their technology can do today, not just what they hope it might do someday."
Obama invited Holmes to the White House back in 2015, where she was named a Presidential Ambassador for Global Entrepreneurship. The Clintons have also embraced Holmes, including Bill Clinton, who had a lengthy discussion with her at the Clinton Global Initiative’s annual meeting in 2015. Holmes talked about bringing "equality" to the health care sector.
Holmes was also scheduled to host a $2,700-a-head fundraiser for Hillary Clinton in March 2016 at the Theranos Palo Alto, California headquarters, an event Chelsea Clinton was scheduled to attend. However, the fundraiser changed locations after her campaign was criticized for holding an event at the offices of a company under federal investigation.
Holmes remained a host for the fundraiser, and Chelsea Clinton still attended the event.
"[The event] is not connected to a specific company or policy, but a chance to talk directly to women in tech," the Clinton campaign told CNBC at the time. "We frequently send initial invitations while host committees are still being formed and locations finalized. This was never a health care event and the location wasn't set. It will not be at Theranos."
The Washington Free Beacon reached out to Obama's office for comment but did not receive a response by time of publication.