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Theranos Settles Investor Suit as Funds Run Low

The Wall Street Journal. logo The Wall Street Journal. 7/22/2018 Christopher Weaver

a sign on the side of a building© Andrej Sokolow/DPA/Zuma Press Theranos Inc., running on financial fumes, settled a suit filed by investors who had alleged they were defrauded by the blood-testing firm.

The pact ends a civil case brought by Robert Colman, a former Silicon Valley investment banker, and other plaintiffs who made indirect investments in Theranos, court records filed Friday show. They alleged that Theranos made false and misleading statements about its technology.

The company previously reached costly settlements with a major investor and its former retail partner Walgreens Co., and settled civil fraud allegations by the Securities and Exchange Commission in March without admitting or denying wrongdoing. Last month, federal prosecutors filed criminal charges against its founder and CEO Elizabeth Holmes and former president Sunny Balwani, alleging that they defrauded investors, doctors and patients. Ms. Holmes—who stepped down as CEO ahead of the charges--and Mr. Balwani pleaded not guilty.

In the wake of these legal costs, Theranos has been subsisting on a loan backed by its patent portfolio since late last year. The terms of Friday’s settlement weren’t disclosed in the court filings.

Reed Kathrein, an attorney representing Mr. Colman and the other plaintiffs, declined to comment. Michael Mugmon, a lawyer for Theranos, and David Taylor, Theranos’s new CEO, didn’t respond to requests for comment.

Meantime, the Walgreens Boots Alliance Inc. unit filed a second suit this month, alleging Theranos had failed to make good on a payment related to its earlier settlement. A Walgreens spokesman didn’t respond to a request for comment.

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Theranos had claimed it had developed technology that could deliver dozens of lab results using just a few drops of blood. A series of Wall Street Journal articles beginning in October 2015 revealed that the company’s technology fell far short of its claims.

Mr. Colman’s lawsuit, in federal court in northern California, could continue to have implications for the Theranos saga. Documentary filmmaker Alex Gibney asked the judge in the case to make public video depositions from two court cases, including of Theranos insiders.

Mr. Gibney said in court filings that he is making an HBO documentary about Theranos.

The U.S. magistrate judge presiding over the case earlier ordered Theranos’s lawyers to begin efforts to release at least some portions of those videos. Theranos and Mr. Colman’s lawyers asked the judge, Nathaniel Cousins, to continue to preside over related matters that have emerged from the suit.

Write to Christopher Weaver at


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