Report: Theranos used shell company to secretly buy outside lab equipment

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Enlarge / Theranos CEO Elizabeth Holmes speaks at the Clinton Global Initiative Annual Meeting in New York City on September 29, 2015.

Wall Street Journal reported that the company “allegedly misled company directors” regarding its lab tests and used a shell company to buy commercial lab gear. These are just a few of the new revelations made by the Journal, which also include fake demonstrations for potential investors.

The new information came from unsealed depositions by 22 former Theranos employees or members of its board of directors. They were deposed by Partner Fund Management LP, a hedge fund currently suing Theranos in Delaware state court. Theranos is also facing multiple lawsuits in federal court in California and Arizona, among others.

The Journal, which did not publish the new filings, quoted former Theranos director Admiral Gary Roughead (Ret.), as saying that he was not aware that the company was using “extensive commercial analyzers” until it was reported in the press.

Ars contacted the Delaware Court of Chancery to obtain the new files, but a clerk told us that they were not yet on the docket. That clerk referred us to the law firm leading the case against Theranos, Heyman Enerio Gattuso & Hirzel, but attorneys there have not yet responded to our query.

The Journal described the filings as “some of the first substantive details to emerge from several court proceedings against the company, though they include only short excerpts from the depositions.”

Last year, federal regulators shut down Theranos’ labs and banned Holmes from the industry after problems with its technology and the company’s practices were revealed. Theranos is appealing the sanctions.

Theranos did not immediately respond to Ars’ request for comment, but told the Journal that the documents “reflected a ‘one-sided filing by one party to litigation.'”

In a related case currently underway in federal court in Arizona, lawyers representing Walgreens fired back on Thursday against Theranos’ attempt to get the case tossed. They called Theranos’ products at Walgreens stores “dangerously unreliable.”

On April 18, a federal judge in San Jose, California, allowed yet another lawsuit filed by yet another investor to largely move forward. That same day, Theranos came to an agreement with the Arizona Attorney General’s office: The company will reimburse state residents “for all amounts they paid for Theranos blood testing services between 2013 and 2016.” This amount totals $4.65 million.

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