"Theranos, CEO Holmes, and Former President Balwani Charged With Massive Fraud"

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Jonathan Cline

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Mar 15, 2018, 3:45:49 PM3/15/18
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The vaporware and hyped promises of Theranos surprisingly did not get much attention on this group thruout the company's history.  There has been a lot of vaporware and fraudulent claims in synbio, which obviously goes against fundamental principles of science.

""Holmes agreed to pay a $500,000 penalty, be barred from serving as an officer or director of a public company for 10 years, return the remaining 18.9 million shares that she obtained during the fraud, and relinquish her voting control of Theranos""



U.S. Securities and Exchange Commission Press Release


Theranos, CEO Holmes, and Former President Balwani Charged With Massive Fraud

Holmes Stripped of Control of Company for Defrauding Investors

FOR IMMEDIATE RELEASE
2018-41

Washington D.C., March 14, 2018 —

The Securities and Exchange Commission today charged Silicon Valley-based private company Theranos Inc., its founder and CEO Elizabeth Holmes, and its former President Ramesh “Sunny” Balwani with raising more than $700 million from investors through an elaborate, years-long fraud in which they exaggerated or made false statements about the company’s technology, business, and financial performance.  Theranos and Holmes have agreed to resolve the charges against them.  Importantly, in addition to a penalty, Holmes has agreed to give up majority voting control over the company, as well as to a reduction of her equity which, combined with shares she previously returned, materially reduces her equity stake.

The complaints allege that Theranos, Holmes, and Balwani made numerous false and misleading statements in investor presentations, product demonstrations, and media articles by which they deceived investors into believing that its key product – a portable blood analyzer – could conduct comprehensive blood tests from finger drops of blood, revolutionizing the blood testing industry.  In truth, according to the SEC’s complaint, Theranos’ proprietary analyzer could complete only a small number of tests, and the company conducted the vast majority of patient tests on modified and industry-standard commercial analyzers manufactured by others.

The complaints further charge that Theranos, Holmes, and Balwani claimed that Theranos’ products were deployed by the U.S. Department of Defense on the battlefield in Afghanistan and on medevac helicopters and that the company would generate more than $100 million in revenue in 2014.  In truth, Theranos’ technology was never deployed by the U.S. Department of Defense and generated a little more than $100,000 in revenue from operations in 2014.

“Investors are entitled to nothing less than complete truth and candor from companies and their executives,” said Steven Peikin, Co-Director of the SEC’s Enforcement Division.  “The charges against Theranos, Holmes, and Balwani make clear that there is no exemption from the anti-fraud provisions of the federal securities laws simply because a company is non-public, development-stage, or the subject of exuberant media attention.”

“As a result of Holmes’ alleged fraudulent conduct, she is being stripped of control of the company she founded, is returning millions of shares to Theranos, and is barred from serving as an officer or director of a public company for 10 years,” said Stephanie Avakian, Co-Director of the SEC’s Enforcement Division.  “This package of remedies exemplifies our efforts to impose tailored and meaningful sanctions that directly address the unlawful behavior charged and best remedies the harm done to shareholders.”

“The Theranos story is an important lesson for Silicon Valley,” said Jina Choi, Director of the SEC’s San Francisco Regional Office.  “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.”

Theranos and Holmes have agreed to settle the fraud charges levied against them.  Holmes agreed to pay a $500,000 penalty, be barred from serving as an officer or director of a public company for 10 years, return the remaining 18.9 million shares that she obtained during the fraud, and relinquish her voting control of Theranos by converting her super-majority Theranos Class B Common shares to Class A Common shares.  Due to the company’s liquidation preference, if Theranos is acquired or is otherwise liquidated, Holmes would not profit from her ownership until – assuming redemption of certain warrants – over $750 million is returned to defrauded investors and other preferred shareholders.  The settlements with Theranos and Holmes are subject to court approval.  Theranos and Holmes neither admitted nor denied the allegations in the SEC’s complaint.  The SEC will litigate its claims against Balwani in federal district court in the Northern District of California.

The SEC’s investigation was conducted by Jessica Chan, Rahul Kolhatkar, and Michael Foley and supervised by Monique Winkler and Erin Schneider in the San Francisco Regional Office.  The SEC’s litigation will be led by Jason Habermeyer and Marc Katz of the San Francisco office.

##


BBC News' Interpretation of the story


http://www.bbc.com/news/business-43406050

Theranos founder Elizabeth Holmes charged with $700m fraud

14 March 2018


The founder of a US start-up that promised to revolutionise blood testing has agreed to settle charges that she raised over $700m (£500m) fraudulently.

The Securities and Exchange Commission, a top US financial regulator, said Elizabeth Holmes and Theranos deceived investors about the firm's technology.

The agency also said the firm had falsely claimed its products had been used by the US army in Afghanistan.

Ms Holmes will lose control of the firm and be fined $500,000.

An SEC official called the fallout an "important lesson for Silicon Valley".

"Innovators who seek to revolutionise 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," said Jina Choi, director of the SEC's San Francisco regional office.

Theranos was founded in 2003 when Ms Holmes was only 19, and sought to develop an innovative blood testing device.

The firm said its Edison device could test for conditions such as cancer and cholesterol with only a few drops of blood from a finger-prick, rather than taking vials from a vein.

In 2015 Forbes magazine estimated Ms Holmes' wealth at $4.5bn

However, in the same year reports in the Wall Street Journal suggested the devices were flawed and inaccurate.

By 2016 Forbes had revised its estimates of Ms Holmes' fortune to "nothing".


Charges

The charges were brought against Theranos and its former president Ramesh "Sunny" Balwani as well as Ms Holmes.

The SEC plans to bring a case against Mr Balwani.

The regulator alleged that Theranos, Ms Holmes and Mr Balwani made a series of false and misleading statements in investor presentations, product demonstrations and interviews.

It said: "Theranos, Holmes, and Balwani claimed that Theranos' products were deployed by the US Department of Defence on the battlefield in Afghanistan and on medevac helicopters and that the company would generate more than $100m in revenue in 2014.

"In truth, Theranos' technology was never deployed by the US Department of Defence and generated a little more than $100,000 in revenue from operations in 2014...

"In truth, according to the SEC's complaint, Theranos' proprietary analyser could complete only a small number of tests, and the company conducted the vast majority of patient tests on modified and industry-standard commercial analysers manufactured by others."


##




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Dennis Oleksyuk

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Mar 15, 2018, 7:46:04 PM3/15/18
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I'm really curious to know who are the vaporware companies in synbio these days.

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Dennis Oleksyuk

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Mar 19, 2018, 6:52:59 PM3/19/18
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Yeah, seems like statement about a lot of vaporware statement (implied businesses) is a vaporware itsealf. :--)

On Mon, Mar 19, 2018, 4:46 PM Ryan Vitug-Gavieres <ryanvitu...@gmail.com> wrote:
Damn!
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Cory J. Geesaman

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Apr 6, 2018, 10:01:50 AM4/6/18
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This is a pretty light sentence.  Shkreli did less (he even paid back his investors and committed the profits to actual R&D efforts) and got something like 9 years with no ability to see any of the profit.  Meanwhile, Holmes actually took the money while selling people fake diagnostic data AND gets to keep it if she pays back the investors for a mere half-a-million dollars (much less than she defrauded people of.)  If she were held to the same standard she would get life, at a minimum (not even counting the potential manslaughter charges due to fake diagnostics sold to end users.)

Oliver McClure

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Apr 10, 2018, 7:51:54 PM4/10/18
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Outside of microfluidics, I think that there is a lot of weirdness with gene therapy companies. A feeling, backed with no hard facts.

Oliver

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Matt Lawes

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Apr 10, 2018, 8:06:10 PM4/10/18
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Perhaps true regarding Gene Therapy, but Theranos was a blood testing technology / service company. Their mistake was hubris in trying to engineer analyze detection below limits imposed by analyte concentration and limited sample size, compounded by dishonesty once the reality became clear that a cool idea was fatally flawed. No amount of deceit and lying can cover up a scientific flaw of such fundamental nature .... 

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Cory J. Geesaman

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Apr 10, 2018, 11:52:53 PM4/10/18
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Honestly, their failing was that they are in Silicon Valley.  Silicon Valley isn't a tech bastion, it's a marketing/sales hub with marketing and sales people who are so adept they have convinced most of the world they actually make things.  This is all well and good when it comes to computing because it's made up bits, you can make it do whatever you want, but when you get into the sciences you run into walls where you can't just make your programmers grind for a few months on end without sleep to make the problem go away.

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Cathal Garvey

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Apr 11, 2018, 2:44:53 AM4/11/18
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Can confirm: there is a strong strain in VC of people who think it's OK to lie and lie to the public about the current status of your tech, and to backfill with money when you raise like a unicorn. Basically, say you can do X, even though you can't, because later you can spend infinite money to make X real. But, maybe you can't because it's literally impossible and you're too naive, stupid, or stubborn to see that.

I never permitted this BS when I was heading up IndieBio EU, but I could see it all around in the startup/accelerator space. I recommend healthy skepticism. Especially of people who uses phrases like "stealth mode" or "revolutionary", and always when someone raises billions without a product already in the market. Hell, any time someone raises billions, period.
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Rüdiger Trojok

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Apr 11, 2018, 10:47:03 PM4/11/18
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Hey Cathal, all,
agree. I observe the same behaviour pattern in the German Startup scene, although it seems to be aggravated in silicon valley. Notable cases of the past are Cambrian Genomics' DNA Laser Printer, the entire Glowing Plant project and more recently the wild claims of the ODIN on their (contaminated and dysfunctional) CRISPR products and Ascendence  HIV cure and other ridiculous projects.

Investors backing those projects seem to count on snowball system effects and believe they can get out of it early enough. And this type of culture makes people who do not lie
and are honestly talking about difficulties as unsuccessful. Open sourcing more work will also help to demystify hypes and unravel lies and wrong assumptions quicker.
I think this is unethical behaviour, as it drags resources away from more serious and promising projects into those fraudulent ones. 

In the Theranos case i have the impression that investors now generally avoid the field of microfluidics and on chip diagnostics, which is a very damaging to the field. Meanwhile the technology has matured on academic grounds but does not receive adequate financial support...
I suggest startup program managers and investors to instead of praising the liars promote those who have a more realistic perspective, even if they are not the "loudest".
Best,
Rüdiger

PS: if anyone is on the analytica in munich today say hi!
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Jonathan Cline

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Apr 12, 2018, 8:28:35 PM4/12/18
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Most journalists reporting on Theranos were scientifically illiterate and complacent.  Were the journalists also complicit?  Where was the investigative reporting into the obvious fact that the company had no valid technology yet contracts to treat medical samples?  Yet most of the news articles focused more on Holmes' clothing choice of wearing turtlenecks rather than raise questions regarding the scientific research.  The journalists at Forbes for example, where Theranos was heavily favorited and flouted as having high valuation..where are they now?  



Theranos Lays Off Most of Its Remaining Workforce 

Tuesday’s cuts take blood-testing firm’s head count to two dozen or fewer employees


By 
John Carreyrou

Blood-testing firm Theranos Inc. laid off most of its remaining workforce in a last-ditch effort to preserve cash and avert bankruptcy for a few more months, according to people familiar with the matter.

Tuesday’s layoffs take the company’s head count from about 125 employees to two dozen or fewer, according to the people familiar with the matter. As recently as late 2015, Theranos had about 800 employees.

Elizabeth Holmes, the Silicon Valley firm’s founder and chief executive officer, announced the layoffs at an all-employee meeting at Theranos’s offices in Newark, Calif., less than a month after settling civil fraud charges with the Securities and Exchange Commission.

Under the SEC settlement, she was forced to relinquish her voting control over the company she founded 15 years ago as a 19-year-old Stanford dropout, give back a big chunk of her stock and pay a $500,000 penalty. She also agreed to be barred from serving as an officer or director in a public company for 10 years.

Neither Ms. Holmes nor Theranos admitted or denied wrongdoing. Ms. Holmes and her former No. 2 executive, Sunny Balwani, remain under criminal investigation by the U.S. attorney’s office in San Francisco, according to people familiar with the matter. Mr. Balwani has denied the SEC fraud charges, filed in a California federal court, and hasn’t settled with the agency.

The company didn’t respond to a request for comment.

The latest round of layoffs is the company’s third since The Wall Street Journal revealed in October 2015 that it was misleading investors and the public about the state of its technology. At the time, Theranos was only using its proprietary blood-testing devices for a fraction of the nearly 250 tests it offered consumers and was performing the rest on commercial analyzers, the Journal revealed.

This belied Ms. Holmes’s claims that she had invented groundbreaking new technology that enabled Theranos to run “the full range” of laboratory tests from just a drop or two of blood pricked from a patient’s finger. Those claims had enabled her to raise hundreds of millions of dollars from investors at a more than $9 billion valuation, making her the world’s youngest self-made female billionaire.

Theranos has since voided nearly one million blood-test results in Arizona and California. Federal inspections of its two labs uncovered numerous problems, including data showing that its proprietary machines were producing unreliable test results. The company shut the labs down in late 2016 and pivoted to trying to commercialize a new device called the miniLab.

At the end of last year, Theranos secured a $100 million loan from the private equity firm Fortress Investment Group LLC to keep it afloat, but it received just $65 million of that upfront, according to an email Ms. Holmes sent to her investors Tuesday.

To access the next tranches of the loan, Theranos has to meet certain product and operational milestones. One of them is obtaining Food and Drug Administration approval for a blood test to detect Zika, the mosquito-borne virus that deforms the brains of infants, on the miniLab.

In her email to investors, Ms. Holmes said the company still was experiencing problems with the reliability of the Zika test’s chemistry. She said the layoffs should enable Theranos to keep its cash reserves above $3 million until the end of July.

Once its cash falls under that threshold, the terms of the Fortress loan agreement allow the New York private-equity firm to seize the company’s assets and to liquidate them, she said.

In the email, Ms. Holmes appealed to the company’s investors for more funding, saying she was willing to sell a large stake at a favorable price. But she acknowledged that, even with a new cash injection, the company’s future remained “highly uncertain.”

Until Tuesday, Ms. Holmes still had two personal assistants and two security guards who drove her around in a black Cadillac Escalade SUV, according to the people familiar with the matter. 

Write to John Carreyrou at john.ca...@wsj.com

Appeared in the April 11, 2018, print edition as 'Theranos Deepens Workforce Cuts.'

Matt Lawes

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Apr 12, 2018, 8:50:22 PM4/12/18
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It's not just journalists... here in Cleveland Ohio the current darling startup is a multi analyte from really small volume of blood testing device company. $1.3 Million in and the founder could tell if the technology works or not ... but guess who is cleaning up at all the stupid 'Startup competitions'. So judges and bureaucrats are capable of equal stupidity - do they NOT know they are getting suckered by Theranos 2.0 Redux???? If it wasn't so sad I would laugh at their ignorant stupidity ...

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Matt Lawes

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Apr 12, 2018, 8:51:51 PM4/12/18
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Typo... $1.3 Million in and the founder COULDNT tell 

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Ryan Vitug-Gavieres

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May 21, 2018, 1:19:03 AM5/21/18
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https://www.cbsnews.com/news/the-theranos-elizabeth-holmes-deception/

Update CBS News has done a segment on Theranos for 60 Minutes.

Ryan Vitug-Gavieres

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Jun 9, 2018, 6:51:03 PM6/9/18
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Ryan Vitug-Gavieres

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Jun 9, 2018, 6:52:45 PM6/9/18
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https://kjzz.org/content/645805/bad-blood-new-book-explores-theranos-medical-scandal

Update a book on Theranos is coming out and its an exposé of its leader.

Matt Lawes

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Jun 9, 2018, 6:54:42 PM6/9/18
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Sent from my iPhone

> On Jun 9, 2018, at 6:52 PM, Ryan Vitug-Gavieres <ryanvitu...@gmail.com> wrote:
>
> https://kjzz.org/content/645805/bad-blood-new-book-explores-theranos-medical-scandal
>
> Update a book on Theranos is coming out and its an exposé of its leader.
>
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> Learn more at www.diybio.org
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Matt Lawes

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Jun 9, 2018, 6:55:41 PM6/9/18
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Lol I'd love to 'short' stocks in that new company!!!!

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> On Jun 9, 2018, at 6:52 PM, Ryan Vitug-Gavieres <ryanvitu...@gmail.com> wrote:
>
> https://kjzz.org/content/645805/bad-blood-new-book-explores-theranos-medical-scandal
>
> Update a book on Theranos is coming out and its an exposé of its leader.
>
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Ryan Vitug-Gavieres

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Jun 9, 2018, 7:30:36 PM6/9/18
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Ryan Vitug-Gavieres

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Jun 10, 2018, 7:53:56 AM6/10/18
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Now ReasonTV has made a Documentary on the Theranos scandal. Elizabeth Holmes is suspicious for one reason she is one of a few people who claimed to have started a biotech company without a college degree. As far as I Know most biotech startups leaders tended to have MD's, Pharmacy degrees or PhD in Biology plus MBA. I'm surprised that the medical boards or the FDA did not see that as a red flag.

Jonathan Cline

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Jun 11, 2018, 2:40:10 AM6/11/18
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On Sunday, June 10, 2018 at 4:53:56 AM UTC-7, Ryan Vitug-Gavieres wrote:
Now ReasonTV has made a Documentary on the Theranos scandal. Elizabeth Holmes is suspicious for one reason she is one of a few people who claimed to have started a biotech company without a college degree. As far as I Know most biotech startups leaders tended to have MD's, Pharmacy degrees or PhD in Biology plus MBA. I'm surprised that the medical boards or the FDA did not see that as a red flag.

Various levels of education can lead to starting a biotech company.   Microbreweries are essentially simple biotech companies and they are started by high school graduates.  Her education level by itself is not suspicious. The early journalism relied highly on the (likely exaggerated) stories of Holmes being heavily mentored & advised by Stanford's principal scientists.   (Question.. where are they now, what were they really doing then?) 

What is suspicious is claiming to have made revolutionary breakthroughs in biorelated nanotechnology without any prior research publications and without verification of findings by independent research teams.  It is highly suspicious for a company to claim successful, novel use of microfluidics when hundreds of researchers around the world have failed to make the technology work as desired after decades of work.  The Board of Directors instantly looked suspicious regarding credibility of the company- not a single research expert among them, and apparently based on how things turned out, it looks like these personalities are simply gullible bureaucrats.   (Note: the Board of Directors was staffed by high ranking military officers, yet the massive lie about the Theranos product beta test successes in the U.S. forces in the Middle East, was not questioned?)

What is suspicious is that no one insisted on basic, simple answers back in 2008.   This isn't like an Enron financial accounting fraud, it's healthcare, medicine, and nanotechnology.  The journalists hyped her story far beyond all prior hype.  Any journalist could have talked to any number of research teams in the field and uncovered the improbable nature of her claims.

What is suspicious is the sexist favoritism afforded to the CEO from the early days across business circles and journalism because she was female, blonde, attractive, and copying Steve Job's fashion style- meanwhile, not providing any scientific evidence.  This was touched on in the previously linked podcast which summarizes the book.  Objective journalists should know much better.  It does not take much hard research to discover that the claimed technology could not exist as claimed.  Yet everyone gave her the "free pass".  It is probably one of the most significant factors in this story of fraud.  Compare to the first team announcing the discovery of cold fusion- which was a surprising, if later proven false, breakthrough- the team were absolutely destroyed by criticism across all avenues (criticized so harshly, that research into that area of high energy physics is still taboo today).

Being barred from serving as an executive in a public company for only 10 years is light punishment considering the depth of the problem.  Ten years is a short amount of time, that's less time than it might take someone to get a BS through Ph D at Stanford. :-x  

 
On Thursday, March 15, 2018 at 1:45:49 PM UTC-6, Jonathan Cline wrote:
The vaporware and hyped promises of Theranos surprisingly did not get much attention on this group thruout the company's history.  There has been a lot of vaporware and fraudulent claims in synbio, which obviously goes against fundamental principles of science.

""Holmes agreed to pay a $500,000 penalty, be barred from serving as an officer or director of a public company for 10 years, return the remaining 18.9 million shares that she obtained during the fraud, and relinquish her voting control of Theranos""




Ryan Vitug-Gavieres

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Jun 13, 2018, 5:15:08 PM6/13/18
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Well in the Biotech industry we call vaporware Snake Oil. But initially Snake Oil meant that companies were making claims but they were not vetted by the FDA or went through rigorous tests in a peer review study.

Ryan Vitug-Gavieres

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Jun 15, 2018, 9:09:34 PM6/15/18
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Ryan Vitug-Gavieres

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Jun 15, 2018, 10:01:54 PM6/15/18
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djwr...@gmail.com

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Jun 16, 2018, 12:52:06 AM6/16/18
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Some of the sock puppets on the board of directors should be defendants as well. There is way too much impunity at that level. 

Wikipedia  

From its incorporation in 2003 until 2018, Holmes was the company's chief executive officer. She recruited Channing Robertson, a chemical-engineering professor at Stanford, to be a technical advisor and the company's first board member during its early years. Holmes' then-boyfriend Sunny Balwani, a software engineer 18 years her senior whom Holmes had met during high school, joined the company as its president and chief operating officer in 2009.[70] In July 2011, Holmes was introduced to former Secretary of State George Shultz, who joined the Theranos board of directors that same month.[71] Over the next three years, Shultz helped to introduce almost all the outside directors on the "all-star board," which included William Perry (former Secretary of Defense), Henry Kissinger (former Secretary of State), Sam Nunn (former U.S. Senator), Bill Frist (former U.S. Senator and heart-transplant surgeon), Gary Roughead (Admiral, USN, retired), James Mattis (General, USMC), Richard Kovacevich (former Wells Fargo Chairman and CEO) and Riley Bechtel (chairman of the board and former CEO at Bechtel Group).[71][72][73] The board was criticized for consisting "mainly of directors with diplomatic or military backgrounds."[24]

On Jun 15, 2018, at 7:36 PM, Ryan Vitug-Gavieres <ryanvitu...@gmail.com> wrote:



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Ryan Vitug-Gavieres

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Jun 16, 2018, 9:55:15 AM6/16/18
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http://www.chicagotribune.com/business/ct-biz-theranos-ceo-indicted-20180615-story.html

Yes and some of the reports and most notably John Carreyrou mentioned that in the Bad Blood book and in various YouTube interviews that Elizabeth Holmes was obsessed with the Steve Jobs image allegedly and even stalked Apples ad and pr consultants because she wanted Theranos to be the Apple of Biotech.

But that got overshadowed by the medical fraud and financial fraud that took place at the company and how Balwani and Holmes ordered spies, henchmen and stalkers to go after whistleblowers who revealed the false clinical blood tests at Theranos and Walgreens.

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Ryan Vitug-Gavieres

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Jun 16, 2018, 10:38:47 AM6/16/18
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Ryan Vitug-Gavieres

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Jun 22, 2018, 9:51:57 AM6/22/18
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https://www.vanityfair.com/news/2018/06/theranos-former-president-has-a-jaw-dropping-explanation-for-why-hes-innocent


Update on Theranos leaders.

Former Theranos president Ramesh “Sunny” Balwani, who was indicted Friday on two counts of conspiracy to commit wire fraud and nine counts of wire fraud, is fighting back with a curious legal defense: while prosecutors accuse Balwani and former C.E.O. Elizabeth Holmes of a “multi-million-dollar scheme to defraud investors,” Balwani’s lawyer says that his client couldn’t have committed a crime because he never made any money. “In over 28 years of practicing law, as both a federal prosecutor and a defense attorney, I have never seen a case like this one, where the government brings a criminal prosecution against a defendant who obtained no financial benefit and lost millions of dollars of his own money,” attorney Jeffrey Coopersmith told me. “Mr. Balwani committed no crimes. He did not defraud Theranos investors, who were among the most sophisticated in the world. He did not defraud consumers, but instead worked tirelessly to empower them with access to their own health information. Mr. Balwani is innocent, and looks forward to clearing his name at trial.”


ecutors see the matter quite differently. According to Wall Street Journal journalist John Carreyrou, whose relentless reporting exposed Holmes and Balwani’s multi-billion-dollar blood-testing start-up as an elaborate fraud, Theranos never managed to build the “revolutionary” technology it promised would deliver better, faster results for patients. In March, after more than two years of federal investigations, layoffs, and class-action lawsuits, the S.E.C. charged Holmes and Balwani with “massive fraud” for raising more than $700 million from investors in a years-long scheme “in which they exaggerated or made false statements about the company’s technology, business, and financial performance.” (Neither Holmes nor Theranos was required to admit wrongdoing as part of a settlement agreement, in which Holmes surrendered voting control and complied with a 10-year ban from serving as an officer or director of a public company.) Holmes and Balwani, her ex-boyfriend, have both pleaded not guilty to the most recent charges, for which they could face as much as 20 years in prison if convicted.

As extraordinary as Balwani’s defense sounds, legal experts say he could have a compelling case. “The fact that he did not benefit financially may help persuade a judge or jury that he had no motive and that he did not do anything wrong,” said Randall Kessler, an Emory University School of Law litigation professor. At the same time, he told me, the argument that Balwani didn’t profit from the alleged scheme could be deemed legally irrelevant. “As a simple example, if a doctor agrees to operate on someone for free, that does not relieve them from acting within the appropriate standard of care,” Kessler explained. “If a lawyer handles a case pro bono (for free), they still must do the same. If a bank robber robs a bank and discovers the money bags he took are filled with shredded paper, it is still bank robbery. But still, the fact in this more complex case, that the defendant may not have profited at all, does seem to help the defense to a degree.”

Ryan Vitug-Gavieres

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Jun 22, 2018, 9:54:47 AM6/22/18
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http://www.businessinsider.com/theranos-defender-tim-draper-says-elizabeth-holmes-was-doing-good-work-forced-to-fail-2018-6

Tim Draper yes the same Tim Draper who is famous for pushing for a superpac ballot initiate in California to split the state into different parts is named in a rant over the Theranos issue.

Ryan Vitug-Gavieres

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Jun 22, 2018, 9:55:17 AM6/22/18
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Jonathan Cline

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Jun 22, 2018, 12:05:56 PM6/22/18
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Start a list of every journalist who wrote a nonobjective,
positive-leaning article about Theranos between the years 2005-2015.
That's ten years in which any of the journalists could have called any
typical university microfluidics or nanotechnology research lab in the
world to discount Theranos's vaporware statements. Science reporters
are supposed to report science objectively, not inflate dangerous
hype.


On 6/22/18, Ryan Vitug-Gavieres <ryanvitu...@gmail.com> wrote:
> https://www.reuters.com/article/health-theranos/theranos-founder-holmes-seeks-stay-of-lawsuit-after-indictment-idUSL1N1TN28J
>
> More updates.

Matt Lawes

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Jun 22, 2018, 12:11:43 PM6/22/18
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Lol. It's just easier to start the much shorter list of 'journalists' who write scientifically accurate, objective and unhyped articles about science in general.
We eve have "Theranos-lite, part deux" winning 'startup competitions' here in Cleveland Ohio. It's simultaneously awful, embarrassing and hilariously funny. I asked the principal after they had spent $1.7M ingrants / investor money if their technology worked. The answer ... 'I'm not sure' ..... lmfao.

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Dakota Hamill

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Jun 22, 2018, 12:19:53 PM6/22/18
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What's the company from Ohio 

Matt Lawes

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Jun 22, 2018, 12:25:20 PM6/22/18
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Not sure I want to mention publicly because that's how you get sued. 
Let's just say that if you went to the Morgenthaler Pavey Startup competition at https://www.mpstartup.com you should get enough information to dig on your own from there. 😊

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Dig fan

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Jun 22, 2018, 2:15:51 PM6/22/18
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Start with this during the time Holmes was coming into play. As a person who did take biotech and biology major classes and graduated all the biotech experts in my area never heard of Elizabeth Holmes until the scandal was released to the public.  Somehow Holmes is a complete unknown in cities where biotech is a big deal like South San Francisco, Vacaville and Davis areas. Nobody in Indiebio the Biotech accelerator or even the DIY Biology groups like Biocurious or any maker space group heard of her crew. The problem here was that the heat and backlash was focused on something else though.

Jonathan Cline

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Jun 22, 2018, 2:40:44 PM6/22/18
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"all the biotech experts in my area never heard of Elizabeth Holmes
... Nobody in Indiebio the Biotech accelerator or even the DIY Biology
groups like Biocurious or any maker space group heard of her crew. "

That is indicative of a different problem: why are research principals
& science groups so unaware of the biotech business environment
especially considering very obvious headlines. No one is simply
skimming the headlines of Forbes, etc? That's simply not a good route
for a startup environment (basically, it's a pretty uneducated
approach). Holmes was very, very prominent in the news, and the
stories blatantly stood out because they were so unbelievable.
(Young researcher makes a so-called amazing discovery, drops out of
Stanford, and is rapidly estimated as having one of the largest net
worths of all time for a young scientist?)

It is also indicative of how easy it would have been for any
journalist to debunk the company's story. A research breakthrough of
such magnitude should be conceptually verifiable to any student and
especially any expert in the field. If any of the company's claims
were possible, Holmes would have been well known in biotech research
circles, and definitely in the microfluidics area. All these science
and business journalists didn't place a single 10 minute investigative
phone call in this regard?


On 6/22/18, Dig fan <ryanvitu...@gmail.com> wrote:
> Start with this during the time Holmes was coming into play. As a person
> who did take biotech and biology major classes and graduated all the
> biotech experts in my area never heard of Elizabeth Holmes until the
> scandal was released to the public. Somehow Holmes is a complete unknown
> in cities where biotech is a big deal like South San Francisco, Vacaville
> and Davis areas. Nobody in Indiebio the Biotech accelerator or even the DIY
>
> Biology groups like Biocurious or any maker space group heard of her crew.
> The problem here was that the heat and backlash was focused on something
> else though.
>
> On Friday, June 22, 2018 at 10:05:56 AM UTC-6, Jonathan Cline wrote:
>>
>> Start a list of every journalist who wrote a nonobjective,
>> positive-leaning article about Theranos between the years 2005-2015.
>> That's ten years in which any of the journalists could have called any
>> typical university microfluidics or nanotechnology research lab in the
>> world to discount Theranos's vaporware statements. Science reporters
>> are supposed to report science objectively, not inflate dangerous
>> hype.
>>
>>
>> On 6/22/18, Ryan Vitug-Gavieres <ryanvitu...@gmail.com <javascript:>>

Matt Lawes

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Jun 22, 2018, 3:01:35 PM6/22/18
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Exactly, a quick call to someone like Steve Quake - also at Stanford (and an inventor if the Fluidigm microfluidics platform) would have revealed some of the considerable doubts over Theranos claims.

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Cathal Garvey

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Jun 22, 2018, 3:05:26 PM6/22/18
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When I was heading the original IndieBio in Ireland, I heard of Theranos - but I was skeptical to begin with. Anything that's kept secret like that ("Stealth Mode") is usually BS, in my experience, and the cracks started to show pretty quickly in Theranos' case.
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Dig fan

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Jun 23, 2018, 12:28:14 AM6/23/18
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If you were a Biotech insider at the time approx 2003 when Holmes started her company. Most of the Insiders I knew like my Biology Teachers at my University and Community College were zeroing in on Stem Cell Research debates, the Genome project from J Craig Venter and Francis Collins rivalry at the time you did not see this at play though. If a Phd in Biology or a Phlebotomist and Hematologist investigated the hype that Holmes staff was making an FDA approval would have not came into play though.

Cory J. Geesaman

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Jun 25, 2018, 12:24:03 PM6/25/18
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It's perfectly possible (and more frequent than not) that someone with no formal education or formal education only outside their field will become proficient in that field.  I've worked in electronics and software design/architecture along with business analytics for over a decade with zero formal training in any of them - you'd be hard pressed to find a programmer who is actually more capable in virtually any area of system development than someone who started programming when they were a child and did it out of passion instead of chasing profit or formal degrees and certifications.  Hell, my only actual formal training of any kind is biotech and it's because after over half a decade following DIYbio I've still found the subject difficult to master but that doesn't mean there are people who have the biotech aptitude stemming from passionate research for it like many software developers have within their fields.  Degrees and certifications exist primarily to let investors know you have the ability to do a thing without getting to know you, but when you get to the level where investors are actual VCs instead of low level business managers they don't really have the option of not getting to know you so the degrees and certifications are pretty much meaningless other than to say you spent half a decade or more in the adult daycare system instead of doing industrious things.  The bigger issue there is that "getting to know" someone tends to favor people who are charismatic, 99.999999999% of such people aren't scientists or engineers, so you always get snake oil salesmen - the ones who happen to have snake oil which isn't technically impossible end up making it while those that had such a severe misunderstanding of the topic as to be selling the impossible don't.

Matt Lawes

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Jun 25, 2018, 12:47:49 PM6/25/18
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It's one thing to work in an industry or field without fancy degrees, but to have neither formal education nor practical experience is kind of lethal combination at the technology leading edge.......
I've taught myself in areas outside of my primary discipline- ideally graduation through a good PhD program will give you the skills to learn on your own........ 
>matt
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Dakota Hamill

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Jun 25, 2018, 12:54:19 PM6/25/18
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Out of curiosity I wonder what happened to the VC partners that lead the investments in Theranos from their respective firms.

I imagine all VCs have taken a loss on big or small plays and battlescars are a right of passage to some degree in that Industry but, seems like it would call into question many of their other investments.

Or perhaps they just pointed the finger back at Theranos and said they straight up lied to us, wasn't out fault. 


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Cory J. Geesaman

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Jun 27, 2018, 9:35:19 AM6/27/18
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I agree that experience is a definite requirement to be effective and grounded.  I was just pointing out that the degree isn't super important in itself, especially at that level - it mostly fills in for having to interview a person.  I think the big issue with Theranos was that Holmes is married to someone who is well connected (and has had his own scams brought to light a few times in the past) and likely got in the door that way.  My comment was more directed at the concept that funding and business in general are mostly snake oil salesmanship and relatively detached from any form of technical competence.

Cabalen sciences

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Jul 10, 2018, 1:33:59 PM7/10/18
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https://mobile.audible.com/pd/Nonfiction/Bad-Blood-Audiobook/B07CXTQZRR

Check out this audiobook in detail its a 12 hour file and the podcast is better if you listen to the details.

Cabalen sciences

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Sep 5, 2018, 10:33:42 PM9/5/18
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https://www.npr.org/2018/09/05/644844174/theranos-blood-testing-company-accused-of-massive-fraud-says-it-will-dissolve

Here is an update on Elizabeth Holmes

Theranos — the Silicon Valley blood-testing startup whose former top executives are accused of carrying out a massive, years-long fraud — is shutting down.

David Taylor, who became CEO in June, said Theranos will dissolve after it attempts to pay creditors with its remaining cash. The news was first reported by The Wall Street Journal, which published the letter.

The letter explains that the company "intends to enter into an assignment for the benefit of creditors." This arrangement would allow for all of Theranos' assets, other than its intellectual property, to be assigned to a third party in trust for the company's creditors. The company says it has about $5 million remaining in cash.

"Because the Company's cash is not nearly sufficient to pay all of its creditors in full, there will be no distributions to shareholders," the letter states. After the assignment process, the company intends to dissolve. The Journal reports that most of the company's remaining employees worked their last day on Aug. 31, while Taylor and a few others have just a few more days on the payroll.

Under founder and now-former CEO Elizabeth Holmes, Theranos raised more than $700 million from investors and was valued at $9 billion at its peak.

Holmes had claimed that the company's technology could run comprehensive lab tests using just a few drops of blood — a pitch that appealed to Walgreens, which partnered with Theranos to offer the blood tests in its stores.

Instead, in a criminal indictment, the Justice Department says that Holmes and her then-boyfriend, former President and COO Ramesh "Sunny" Balwani, perpetrated "a multi-million dollar scheme to defraud investors, and a separate scheme to defraud doctors and patients."

They each face nine counts of wire fraud and two counts of conspiracy to commit wire fraud.

"Holmes and Balwani knew that many of their representations about the analyzer were false," the Justice Department said when the charges were announced in June. "For example, allegedly, Holmes and Balwani knew that the analyzer, in truth, had accuracy and reliability problems, performed a limited number of tests, was slower than some competing devices, and, in some respects, could not compete with existing, more conventional machines. "

As NPR's James Doubek reported in March, Holmes has already settled civil charges brought by the Securities and Exchange Commission, agreeing to pay a $500,000 penalty and to refrain from serving as a director or officer of a publicly traded company for 10 years. As part of the settlement, Holmes and Theranos did not admit or deny the allegations.


Cabalen sciences

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Sep 5, 2018, 10:34:42 PM9/5/18
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Cabalen sciences

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Nov 2, 2018, 9:42:29 AM11/2/18
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http://theranos.com/
Here is a Notice from Theranos as on November 2nd, 2018

Please be advised that on September 12, 2018, Theranos, Inc. (“Company” or “Theranos”) entered into an Assignment for the Benefit of Creditors (“Assignment”) and appointed Theranos (assignment for the benefit of creditors), LLC as assignee (“Assignee”).  An Assignment is a state level insolvency proceeding undertaken under state law, in this case California, with the primary governing law found in California Code of Civil Procedure sections 493.010 to 493.060, sections 1800 to 1802, and section 1204.  

Under California law, creditors will be notified within 30 days of the Assignment by a written notice.  This notice will outline the process by which creditors may file a proof of claim to establish a claim for any obligations due.; the deadline to file a claim is approximately 180 days (as required by law) from the date of the Assignment (March 11, 2019).  All inquiries should be directed to Thera...@proofofclaims.com.

For the Company, the Assignee will compile all claims of creditors and distribute recoveries, if any, on a pro-rata basis to creditors based on each claim’s priority following the filing deadline.  

The Assignment entity is a California limited liability company, Theranos (assignment for the benefit of creditors), LLC (“Assignee”).  The Assignee is a special purpose entity established to liquidate the assets of the Company, compile claims, and distribute proceeds, if any, to creditors according to the priority established in the California Code and is affiliated with Sherwood Partners, Inc.   Except for the relationship created by the Assignment, the Company and Assignee have no corporate affiliations to each other.  


Cabalen sciences

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Nov 2, 2018, 9:49:49 AM11/2/18
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Cabalen sciences

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Mar 17, 2019, 7:21:24 PM3/17/19
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Jonathan Cline

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Mar 21, 2019, 7:44:30 PM3/21/19