You know about financial scams, phishing emails, and eCommerce website types of frauds. But have you ever thought there are some people focused on a particularly lucrative niche. It’s a medical equipment scam.
Some make money by investing in unparalleled devices that change the medical procedures for the better.. While some are prone to look for loopholes, counterfeit others’ experiments and products. The worst they approach is the most vulnerable, senior citizens offering their services.
Also, they approach enthusiast investors and collect the money for the suspicious project. Let’s take a closer look at that.
The most blatant case of medical scam – Theranos case
Why is the founder of medical technology company Theranos, Elizabeth Holmes, facing twenty years in prison for massive fraud? Let’s look back on the fall of this former star of new technologies.
On August 31, Elizabeth Holmes, 37, first appeared in federal court in San José, California. She was preparing that day to attend the jury selection for a trial that would determine whether or not she was guilty of massive fraud.
During this highly publicized three-month trial, the founder of Theranos will have to try to convince the courts that she is not responsible for lying to her investors. And to patients who believed in her technology, sometimes in danger to their health.
What was the value proposition of the startup Theranos?
Founded in 2003 and based in Palo Alto, California’s promised land of startups, Theranos planned to scale-produce diagnostic tools that are faster and cheaper than traditional labs. Methods, described as revolutionary, were supposed to allow up to 200 analyzes from a few drops of blood.
Its online platform – presented as revolutionary – was used for 12 different tests out of more than 200 tests offered by the company. For example, the test to measure cholesterol costs $ 3 with Theranos against $ 50 in conventional laboratories.
In November 2013, Theranos announced a partnership with Walgreens, a pharmacy chain present throughout the United States, and thus came out of the shadows. She begins offering low-cost blood tests in the city of Phoenix, ranging from cholesterol to cancer.
At the end of 2014, its valuation reached more than 9 billion dollars.
In June 2016, everything rushed. Theranos confessed to U.S. authorities that the tens of thousands of tests carried out in 2014 and 2015 with its Edison platform were invalid, the Wall Street Journal reported.
At the start of 2017, it cut 41% of its workforce, while it was able to count up to around 800 people in total.
The end-user, the patients, are the most vulnerable category in the whole concept of medical fraud. Investors are hemorrhaging money believing they invest in human medical products and processes. Just like when investing in Initial Coin Offering or any other business, the investors should be extremely vigilant. The team of lawyers and experts in the field are required to monitor anything from scratch. As a senior citizen, patient, or laboratory owner, be careful to whom you entrust your money when it comes to buying new medical devices.