Theo Raeken claimed to be a bitten werewolf but is, in fact, one of the Dread Doctors' experiments.
He claims to be a former 4th grade classmate of Scott McCall and Stiles Stilinski. He says he returned to Beacon Hills with his parents specifically to join Scott's pack. It appears his true plan was to take away Scott's pack and his Alpha status.
Theo is played by actor Cody Christian.
Officially, Theo's sister died of exposure after being lost in the woods 8 years ago but Theo was apparently with her and did nothing as he watched her suffer with a broken leg in a freezing creek.
Stiles found portions of Theo's story don't add up, specifically his father's signature on a school form seems to be forged.
Theo's "parents" seem terrified of him and he is seen preparing to crush his father's hand with a hammer to explain away Stiles "evidence" against him.
Lydia, through her visions, learned that Theo killed his sister on purpose so that the Dread Doctors could transplant her heart into him making him a natural chimera.
Theo is part werecoyote which allows him to fully transform into an animal.