Report: Justice Department Demands Documents From Theranos
SAN FRANCISCO (CBS SF) – Embattled Bay Area startup Theranos, already facing possible federally-imposed sanctions, has now drawn the attention of the Justice Department and the Securities and Exchange Commission, according to media reports Tuesday.
The New York Times reported the laboratory testing company had sent a note out to its venture capital investors saying that the Justice Department has requested documents from East Bay firm.
In the note, the paper reported, was also mention of a probe by the Securities and Exchange Commission.
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U.S. Attorney's Office and the SEC declined to comment to the Times and the firm currently is not facing any formal accusations.
Founded by Elizabeth Holmes, Theranos was a high flyer among the biotech startups in the Silicon Valley.
The firm said it was developing technology that would cut the cost and access to many common medical blood tests.
But questions – brought to light by a series of articles from the Wall Street Journal -- have arisen over the quality of those testing methods.
Last week, Theranos spokeswoman Brooke Buchanan confirmed to KPIX 5 that the company had received a letter from the federal Centers for Medicare and Medicaid Services proposing stiff sanctions against Holmes and the company which has labs in the East Bay and Arizona.
The sanctions were in response to problems discovered when federal investigators visited the company's East Bay lab.
Among those sanctions was a ban on Holmes and Theranos President Sunny Balwani from owning or operating any lab for at least two years. The agency also said it will take away the company's federal license for its existing California lab.
The firm was given 10 days to response to the letter with reasons why the sanctions should not be put into place. It reportedly has responded and was awaiting word from the federal agency.