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 Blood-testing company Theranos is being accused of deceiving a major investor to attract its nearly $100 million investment. 
 
 The charges were leveled against the embattled company in a lawsuit filed Monday by hedge fund Partner Fund Management in Delaware Court of Chancery, according to a letter to investors seen by the Wall Street Journal. 
 
 "Through a series of lies, material misstatements, and omissions, the defendants engaged in securities fraud and other violations by fraudulently inducing PFM to invest and maintain its investment in the company," the letter said, according to the newspaper. 
 
 The Palo Alto, California-based company dismissed the lawsuit as baseless, accusing Partner Fund Management of "engaging in revisionist history. 
 
 "Most of the company statements the plaintiff has cited in its suit were made after the time the plaintiff invested, and could not possibly have been the original basis for investment," Theranos said in an unsigned blog post. "This wholesale reliance on post-investment statements, therefore, negates the claim that the plaintiff was misled." 
 
 It's the latest twist in a downward spiral of a once-promising company that set out to innovate blood testing. Two years ago, it was valued at $9 billion. But it has faced increased scrutiny, along with civil and criminal investigations, since a Wall Street Journal report in October 2015 suggested Theranos' blood-testing devices were flawed. 
 
 In July, the CMMS revoked the company's Clinical Laboratory Improvement Amendments certificate, an action that prohibits Holmes from operating a lab for two years. Less than a week ago, Holmes announced plans to shut down all its clinical labs and Theranos Wellness Centers, closures that will result in 340 employees being laid off. ||||| The Wall Street Journal has yet another essential report from inside the meltdown of biomedical company Theranos. The company, which is currently the subject of a criminal probe for allegedly misleading investigators and government investigators, is reportedly offering investors more shares in exchange for a promise not to sue them. 
 
 
 
 The Theranos disaster-saga began after a series of damming WSJ reports revealed that the company was fudging testing results from its flagship blood testing device. The company is currently being sued by Walgreens, its investor and one of its biggest partners. Walgreens actually had Theranos testing devices in its stores before the controversy broke. CEO Elizabeth Holmes was also banned from operating a lab for two years, and the company ended up shuttering its lab in Arizona. 
 
 Theranos’ plan to pay off potential plaintiffs with “about two additional shares for each share they bought” was approved by the company’s board in February, the Journal reports. The stock itself would come from Holmes’s personal shares, a stake Forbes analysts marked down from an estimated $4.5 billion to “essentially worth nothing” last June. 
 
 “This is an affirmative development for the company, providing a path forward in partnership with employees, investors and other stakeholders,” said Daniel Warmenhoven, director Theranos, according to the Journal. “Elizabeth elected to contribute her own equity to protect any dilution of shares held by other parties.” 
 
 Previously, Holmes had almost complete control over the company she started in 2003, so much so that the board of directors didn’t have the power to remove her. Investors still have to approve the newly reported pay off, but if they do, it’ll be interesting to see what happens to Holmes after she gives up the power she once held so closely. 
 
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 [The Wall Street Journal] ||||| Until now, there has been one big reason to believe that Theranos, the controversial diagnostics startup, could survive despite widespread doubts about whether its technology, which the company once promised would revolutionize the blood testing business, even works: its investors, after putting $700 million into the startup, seemed solidly behind Theranos and its founder, Elizabeth Holmes. 
 
 Not any more. Partner Fund Management, a San Francisco-based hedge fund with $4 billion under management, filed a lawsuit alleging that it invested in Theranos based on misleading statements made by Holmes and Theranos. Two years ago, investors valued Theranos at $9 billion, and as a result FORBES once ranked Homes as the richest self-made women in the world. In June, we cut our estimate of her net worth to zero because doubts about Theranos' proprietary technology had just become too big to ignore. 
 
 "The suit, filed by a hedge fund, is without merit and Theranos will fight it vigorously," a Theranos spokesman said. "The hedge fund is engaging in revisionist history, making claims that are not rooted in facts. The company remains committed to its mission and is appreciative of its strong investor base that understands and continues to support those efforts." 
 
 Partner Fund Management's suit creates more headaches for Theranos, which last week announced it would exit the business of running blood testing centers and try to get new medical devices approved by the Food and Drug Administration instead. For one thing, the hedge fund's allegations will create more negative headlines. The suit could also lead to other investors trying to recoup funds, something Theranos can ill afford as it tries to pivot. Worse, the allegation that Theranos lied to investors could draw further scrutiny from government investigators. Lying to investors can be against the law. 
 
 The suit, which was first reported by the Wall Street Journal, is detailed in a letter sent by the fund to its investors, a copy of which was obtained by FORBES. The letter states: "Among other things, Theranos and its principals knowingly and repeatedly lied that they had developed proprietary technologies that worked, were on the cusp of receiving all necessary regulatory clearances and approvals, and concealed the truth about the commercial viability of their technologies and methods." 
 
 The letter says the fund "meticulously" documented its due diligence of Theranos, including interactions with Holmes herself and with her former chief operating officer, Sunny Balwani. "This documentation substantiates the myriad deceptions, falsehoods, and fraudulent conduct by Theranos, Holmes, and Balwani in connection with PFM’s investment," its says. Right now, the complaint itself is confidential, because it is filed in a Delaware court designed to protect the interests of companies. But Partner Fund Management (it calls itself PFM) says it wants to make its complaint public. "PFM believes that the entire complaint belongs in the public domain and will oppose any effort by the defendants to extend their obsession with secrecy to this lawsuit," the letter says. ||||| “The minute you have a back-up plan, you’ve admitted you’re not going to succeed.” – Theranos CEO and founder Elizabeth Holmes 
 
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 Tomorrow will be six months to the day since the Wall Street Journal’s John Carreyrou broke the news that all is not well at Theranos, the $9 billion Silicon Valley unicorn founded by Stanford dropout Elizabeth Holmes at 19. For the once-celebrated entrepreneurial icon, things have not gone well, to say the least. 
 
 Earlier this week, the Journal revealed the latest in a long string of blockbuster revelations, that federal regulators are close to revoking the license of the company’s California lab and banning Holmes and Theranos president Sunny Balwani from running or owning any lab for two years. 
 
 The company could appeal, but would not likely prevail. The data’s pretty damning and the writing’s on the wall. The company’s supposedly breakthrough technology simply doesn’t work. And Theranos has done just about everything it possibly could to shoot itself in the foot. If I didn’t know any better, I’d think that was the plan all along. 
 
 The question is, how could this have happened? How could such a highly valued startup on its way to upending the $76 billion laboratory diagnostics industry by replacing test tubes of blood drawn from a vein with a few drops from a finger stick fall so far so fast? And how could Holmes’ star, which shone so brightly, fall practically overnight. 
 
 If you had to find a way to destroy a brand and blow a $9 billion valuation, you’d be hard pressed to come up with a better plan than the one Holmes has pursued since October 16, 2015. If you had just six months to kill Theranos, this is how you’d do it: 
 
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 When an investigative journalist from the Wall Street Journal calls to tell you he’s got credible sources saying bad things about your company on the record and wants to chat about it, assume he’s not really serious. Keep stonewalling him and hope he finds something more exciting to write about. 
 
 When the story finally breaks, and it’s a front-page blockbuster that casts serious doubt on the efficacy and accuracy of your technology, claim that it’s “inaccurate, misleading and defamatory” and that the allegations are “grounded in baseless assertions by disgruntled former employees and industry incumbents.” 
 
 Post long rambling rants on your website that deny everything the two-time Pulitzer Prize winning investigative reporter wrote because he’s simply flat out wrong. Attack him as being out to get you from the start. Call your posts “Theranos Facts” without actually stating any facts that can be verified by an objective third party. 
 
 Express your outrage to a TV personality, decrying that, “This is what happens when you work to change things. First they think you’re crazy. Then they fight you. And then all of a sudden you change the world.” Act shocked and appalled that “the Journal would publish something like this …” 
 
 Compulsively proclaim “unparalleled transparency” while being completely opaque. Use impressive numbers with lots of zeros when talking about how many tests you’ve run, patients you’ve served, and pages of data you’ve submitted to the media while providing zero evidence of the accuracy of your tests. 
 
 Threaten the widow of your former chief scientist with legal trouble after learning that she spoke to the Journal and said that her husband, who coauthored 23 patents during eight years with the company, repeatedly told her before he committed suicide that, “nothing was working.” 
 
 Suggest that you voluntarily filed for FDA approval because it’s the highest standard. Watch as an FDA investigation concludes that your proprietary nanotainer is an unapproved medical device and approves the use of your proprietary technology for just one of the more than 240 blood tests you offer. Act as if that was all part of the plan. 
 
 Ensure that none of the investors who pumped more than $750 million into your company are actually on your board of directors. Instead, stack the board with insiders and retired big-name politicians and administrators who have no real vested interest in the company. 
 
 Claim that you haven’t submitted your proprietary technology for peer-review by independent third parties or medical journals because you have to protect the family jewels from evil competitors. But when push comes to shove, say you’ll do it. Really soon. Really. But never actually do it. 
 
 Announce plenty of partnerships with big-name healthcare providers like the Cleveland Clinic and San Francisco-based Dignity Health. Never mind that not one of those relationships ever gets off the ground. 
 
 Go dark when it’s revealed that Safeway is abandoning plans to open Theranos wellness centers in 800 supermarkets, even after spending $350 million on the initiative. Mum’s the word when Walgreen’s halts expansion of your relationship and searches desperately for a way to distance itself from a growing scandal. 
 
 When the Centers for Medicare and Medicaid Services (CMS) investigate and find “serious deficiencies” that post “immediate jeopardy to patient health and safety” at your California Lab, brush it off as minor issues you’ve coincidentally already corrected, but actually haven’t. 
 
 Make sure you’re nowhere to be found when researchers at Mount Sinai show that your cholesterol test results are way off and a scathing 121-page CMS report reveals that your proprietary Edison tester yields unacceptably inaccurate and erratic results on a whole bunch of blood tests. 
 
 After a dozen years of development, hiring more than a thousand employees, and burning through ungodly amounts of cash, Holmes’ plan was apparently to make an enormous splash, go live on real people, and hope nobody notices that the stuff doesn’t work. At least that’s how it seems to me. 
 
 And when the media got wind of it, she went into denial, avoidance and attack mode. 
 
 Holmes recently told a group of Stanford graduate business students that, “The minute you have a back-up plan, you've admitted you’re not going to succeed.” That may be good advice if you’re writing an app, but when human beings are counting on you for an accurate diagnosis, it’s delusional.
– Just when you thought things couldn't get worse for Theranos, this: One of its major investors has sued the company and its founder, Elizabeth Holmes, in an effort to get back its $96 million investment and then some. Partner Fund Management argues "the defendants engaged in securities fraud and other violations by fraudulently inducing PFM to invest and maintain its investment in the company," per the Wall Street Journal. More specifically, Theranos—which said it could conduct blood tests using a single drop—"knowingly and repeatedly lied that they had developed proprietary technologies that worked" and misled investors about its quest for FDA approval and its partnership with Walgreens, the hedge fund says, per Forbes. A Theranos rep, however, says the suit filed at the Delaware Court of Chancery on Monday "is without merit and Theranos will fight it vigorously." "Most of the company statements the plaintiff has cited in its suit were made after the time the plaintiff invested, and could not possibly have been the original basis for investment," Theranos adds in a blog post, per CNET. "This wholesale reliance on post-investment statements, therefore, negates the claim that the plaintiff was misled." The suit is just the latest hurdle for Theranos. As Holmes has been banned from running labs for two years, the company recently announced it would close its labs and lay off 340 workers to focus on commercializing mini blood-testing labs.