Attorneys Representing Elizabeth Holmes Claim the Theranos Founder Hasn't Paid Them in a Year

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Elizabeth Holmes, the founder of the now-shuttered blood-test startup Theranos, may need to find new counsel in a class-action lawsuit after her attorneys said they have not received payment for their legal work in more than a year.

On Friday, Holmes’ attorneys from the firm Cooley LLP, who are representing her in a civil lawsuit brought against Theranos and Walgreens, filed a motion with the courts to withdraw from the case over Holmes’ failure to pay them for their work. The case is a class-action lawsuit related to Theranos’ blood-testing services that were conducted through Walgreens stores in Arizona. The lawsuits were filed following Theranos’ 2016 announcement that it had to void 31,000 test results to the Walgreens customers. The tests were conducted at 40 different Walgreens sites in Arizona. Many of the customers at the Walgreens stores used the test results as part of their medical treatments, which are similar complaints made against the company by other plaintiffs who sued Theranos after the company Invalidated two years of its test results to doctors and customers.

Walgreens severed its ties with Theranos following the voiding of the massive amounts of blood tests and the Deerfield, Ill.-based drugstore giant filed a $140 million breach of contract lawsuit against Theranos. The companies reached a tentative agreement in 2017 to settle that lawsuit for about $30 million.

Plaintiffs in the class-action lawsuit against Theranos and Walgreens have accused the companies of medical battery and fraud, CNBC reported. Her attorneys representing her in this case told the judge they have no expectations that Holmes will ever pay them for their legal services. The judge has yet to rule on the motion, which Holmes has been made aware of, according to the reports.

At one time, Holmes was worth billions of dollars but has lost it all in the wake of Theranos' crash.

Not only is Holmes battling this lawsuit, she is also facing criminal charges alongside Theranos’ former president and her former boyfriend, Ramesh “Sunny” Balwani. The two have been charged with multiple counts of fraud. From 2013 to 2015 Holmes and Balwani raised more than $700 million from investors through what the U.S. Securities and Exchange Commission called “years-long fraud” in which they exaggerated or lied about the efficacy of the company’s proprietary technology and the state of its finances, according to the complaint. The company also made false claims about its relationship with the Department of Defense and its regulatory status with the U.S. Food and Drug Administration during that time period, the complaint, announced in 2018, said.

The SEC complaint alleges that Holmes and Balwani made those false and misleading statements during investor presentations and product demonstrations. The company routinely promoted the capabilities of its blood-testing technology that it claimed would revolutionize the healthcare industry. The SEC said the company’s technology could only perform a small number of tests and the majority of patient tests it did conduct were done on “modified and industry-standard commercial analyzers manufactured by others.”

While Holmes has pled not guilty to the criminal charges, last year after the U.S. Securities and Exchange Commission brought charges against the duo, she agreed to pay a $500,000 fine. Both Balwani and Holmes face up to 20 years in prison if convicted of these charges. Holmes is scheduled to appear in court regarding these charges on Nov. 4, CNBC said. There was no word on whether or not Holmes’ criminal attorneys are being paid.

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