Former Theranos President Ramesh "Sunny" Balwani exaggerated the amount of money the company was going to generate in 2014 by a factor of 1,000, according to a Securities and Exchange Commission complaint filed Wednesday.
"Balwani and Holmes told Investors that Theranos had generated or would generate over $100 million in revenues in 2014 and that it was on track to make $1 billion in revenues in 2015, but this information had no basis," the SEC complaint reads.
Moreover, financial documents provided to investors claim Theranos would bring in a combined $95 million in revenue from multiple lines of business, including pharmaceutical services and lab services in hospitals and doctors' offices. None of those businesses was generating revenue.
In total, the startup generated little more than $100,000 in revenue that year — and the SEC alleges Balwani must have known.
In October 2014, the same month he was selling potential investors revenue projections between $120 million and $140 million, Balwani told Theranos' potential insurers that the company was operating at an $8 million to $9 million monthly net loss, according to the SEC.
CEO Elizabeth Holmes and Balwani were both charged with "massive fraud." Theranos said Holmes agreed to settle and pay a $500,000 fine and will be barred from serving as a director or officer of a public company for 10 years. The SEC characterizes Balwani's financial dealings as "reckless."
Holmes created a culture of secrecy at Theranos that helped to disguise the company's struggles with innovation and drew the wool over potential investors' eyes.
But former ImClone Systems CEO Samuel Waksal, a veteran of biotech and himself notoriously convicted of insider trading in 2003, called the ruse years ago.
"In the world of science, we care about intellectual property," Waksal said Wednesday on CNBC's "Power Lunch." "But the one thing we don't do, when asked about a scientific breakthrough, we don't simply say it is a secret."