Silicon Valley billionaire charged with 'massive fraud'

Theranos founder Elizabeth Holmes, 34, and her top associate are accused of lying about the company's technology and defrauding investors.
3:05 | 03/15/18

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Transcript for Silicon Valley billionaire charged with 'massive fraud'
Now to new fallout for former silicon valley superstar Elizabeth Holmes founded a company that claimed to revolutionize blood testing but now she's being charged with running a massive fraud. ABC's chief business correspondent Rebecca Jarvis is here with more and, Rebecca, I remember her being on the cover of all these magazines about a big success story. What happened. Such a fall from grace here, good morning. Yes, this was silicon valley's golden girl. She attracted all sorts of Washington heavyweights to her theranos board including Henry Kissinger, even general James Mattis who quit after being nominated for defense secretary and now charged with a massive fraud. She's the Stanford dropout once hailed as the youngest self-made female billionaire appearing on the cover of magazines like "Fortune" and "Forbes" often in her signature black turtleneck just like Steve jobs. The individual is the answer to the challenges of health care. Reporter: This morning a stunning fall from grace. Elizabeth Holmes who spent years claiming the lab tests at her hot start-up theranos could detect hundreds of diseases with a few pricks of blood now charged by the S.E.C. With a massive fraud. The 34-year-old and her top associate accused of lying about the technology which regulators say never actually worked like it should and allegedly defrauding investors out of $700 million. How would you describe her? She loves attention and she really plays up to power. Reporter: Just last year we visited the theranos headquarters in silicon valley. The building appeared mostly empty. Oh, hi, yes, we're here with ABC news. This is private property. We don't allow filming on property here. Reporter: Back then former employee Erica Chung recalls an environment of unprecedented secrecy, something she testified about in a separate lawsuit against the company. I have not experienced anything, anything like working at theranos and the level of secrecy and the amount of hiding that goes on in any other company. As part of the settlement Elizabeth Holmes will pay a $500,000 fine and cannot serve as a director, officer of a publicly traded company for ten years and had to return 18.9 million shares of the company's stock. But neither she nor the company has admitted or denied any wrongdoing. Theranos' independent director said the company is pleased to be bringing this matter to a close and looks forward to advancing its technology, Michael. Rebecca, if you were a regular investor, will you lose money. Everybody who at this point put money in isn't necessarily getting anything out. The only way they get anything out is if this money can make or this company can make money or if they sell the company and ultimately makes money. Is this the end of it for her or could she face lawsuits. She could likely face lawsuits. They opened a criminal investigation and that is unclosed. She has settled some lawsuits already. Yes, many. Thanks so much. Cecilia. Thanks, guys. A major recall from Ford

This transcript has been automatically generated and may not be 100% accurate.

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