Theranos, the controversial blood-testing startup, is facing a criminal investigation into whether it misled investors about its technology.
The company, which has come under scrutiny following reports about irregularities with its tests, is the subject of a criminal probe by the US attorney’s office, as well as a civil probe from the SEC, according to a memo the company sent to its partners on Monday.
Walgreens, which had a partnership to offer the Theranos tests to its customers, and the New York State Department of Health have received subpoenas in recent weeks, seeking documents and other information about the representations that Theranos made, according to a report in The Wall Street Journal.
“In the past, we have generally not commented on the specifics of these inquiries out of deference to our regulators and in light of specific requests for confidentiality. However in light of consistent press attention in this area we want you to hear about them from us,” reads Theranos’ memo, which was obtained by Business Insider.
Theranos initially came under fire after an October 2015 article in The Journal questioned the accuracy of its tests, which the company had initially said could be done using only a single drop of blood. The privately held company was valued at $9 billion in a 2014 funding round, according to the WSJ.
In an emailed statement to Business Insider, a Theranos representative said that “the company continues to work closely with regulators and is cooperating fully with all investigations.”
The Theranos memo notes that separate investigations by the FDA and the Departments of Health in Arizona and Pennsylvania have been “successfully closed out.”
The WSJ said that federal investigators are also looking at whether Theranos misled government officials, which could be a federal crime. The investigation is at an early stage and the subpoenas do not mean that prosecutors are seeking an indictment, the report noted.
Here’s a copy of the memo that Theranos sent to its partners on Monday:
Memo:
To: Theranos Partners
From: Theranos, Inc.
Subject: Regulatory Update
Date: Monday, April 18, 2016
As we’ve previously shared with you and as could be expected, surrounding critical Wall Street Journal articles a number of regulators began investigations.
In the past, we have generally not commented on the specifics of these inquiries out of deference to our regulators and in light of specific requests for confidentiality. However in light of consistent press attention in this area we want you to hear about them from us.
Investigations or inspections were opened by the State Departments of Health in Pennsylvania and Arizona; CMS, FDA, the Securities Exchange Commission (SEC), and the U.S. Attorney’s Office for the Northern District of California. The investigations by the Departments of Health of Pennsylvania and Arizona and the FDA have been successfully closed out. The investigations by the SEC and the U.S. Attorney’s Office, which began following the publication of certain news articles, are focused on requesting documents and ongoing, in addition to the CMS inspection. The company continues to work closely with regulators and is cooperating fully with all investigations.
We welcome further review of our technologies, performance, and data, which is why we voluntarily engaged with FDA years ago. We recently hosted three scientific review sessions in Palo Alto with leading laboratory and medical experts, many of whom joined our Scientific and Medical Advisory Board as a result, and are now working with us to introduce our technologies through peer reviewed publications.
As reported by Business Insider