() — Elizabeth Holmes was sentenced to more than 11 years in prison on Friday following her January conviction for defrauding investors while running the failed Theranos blood testing company.
Judge Edward Davila imposed a sentence of 11 years and three months in prison, with another three years of supervision after Holmes is released. The sentence also includes a fine of $400 or $100 for each count of fraud. The refund will be fixed at a later date. Holmes was ordered to surrender into custody on April 27, 2023. She is expected to appeal her conviction.
Holmes, who was convicted in January of four counts of defrauding investors, faced up to 20 years in prison and a $250,000 fine plus restitution for each count.
Government attorneys asked for a 15-year prison term, as well as probation and restitution, while Holmes’s probation officer pushed for a nine-year sentence. Holmes’ defense team asked Dávila, who presided over her case, to sentence her to up to 18 months in prison followed by probation and community service.
Before the sentence was announced, Holmes tearfully spoke in court in San Jose, California. “I loved Theranos. It was my life’s work,” he said. “The people I tried to get involved with with Theranos were the people I loved and respected the most. I am devastated by my failures.”
He also apologized to Theranos employees, investors and patients. “I’m so sorry. I gave everything I had to build our company and save it,” he said. “I regret my failures with every cell in my body.”
Elizabeth Holmes, the founder of Theranos who was convicted of fraud earlier this year, was sentenced today by a judge in a court in San Jose, California. Here she is shown making a statement to the judge before sentencing.
“The judge imposed a powerful ruling confirming that fraud cannot masquerade as innovation in Silicon Valley,” said George Demos, a former SEC attorney and adjunct professor of law at UC Davis. “When given the opportunity to speak, Elizabeth Holmes made a statement that she takes responsibility for Theranos, but she did not say that she takes responsibility for the fraud.”
In arguments before the judge on Friday about her sentencing, Kevin Downey, one of Holmes’ lawyers, said that unlike other defendants in corporate fraud cases, the Theranos founder did not express greed by cashing in on shares or spending money. in “yachts and planes”. Instead, the money was “used to build medical technology.”
U.S. Attorney Jeffrey Schenk noted that Holmes gained fame, admiration and a lifestyle through the fraud, even if he did not gain financially. “These are still benefits that she receives,” he said.
From young prodigy to dealing with jail
Friday’s sentencing hearing caps off Holmes’ shocking downfall. Once hailed as an icon of the tech industry for her company’s promises to test for a variety of conditions with just a few drops of blood, she is now the rare tech founder who was convicted and faces prison for her company’s missteps. .
Holmes, who is now 38 years old, founded Theranos in 2003 at the age of 19 and shortly thereafter dropped out of Stanford University to pursue the business full-time. After a decade under the radar, Holmes began courting the press with claims that Theranos had invented technology that could accurately and reliably assess a variety of conditions using just a few drops of blood drawn from a finger prick. .
Theranos raised $945 million from an impressive list of investors, including media mogul Rupert Murdoch, Oracle founder Larry Ellison, the Walton family of Walmart and the billionaire family of former Education Secretary Betsy DeVos. At its peak, Theranos was valued at $9 billion, making Holmes a billionaire on paper. She was praised on magazine covers, often donning a signature black turtleneck that she invited comparisons to the late Apple CEO Steve Jobs. (She hasn’t worn that outfit in the courtroom.)
The company began to fall apart after a 2015 Wall Street Journal investigation found the company had only performed about a dozen of the hundreds of tests it offered using its proprietary blood-testing device, and with questionable accuracy. Instead, Theranos relied on devices made by third parties from traditional blood testing companies.
In 2016, Theranos overturned two years of blood test results. In 2018, Holmes and Theranos were established charges of “mass fraud” with the Securities and Exchange Commission, but they did not admit or deny any of the allegations as part of the deal. Theranos se disbanded soon after.
Abusive relationship with her boyfriend in Theranos
At her trial, Holmes alleged that she was in the middle of a decade-long abusive relationship with her then-boyfriend and Theranos COO Ramesh “Sunny” Balwani while running the company. Balwani, she alleged, tried to control almost every aspect of her life, including disciplining her diet, her voice and her image, and isolating her from others. (Balwani’s lawyers denied her claims.)
In July, Balwani was found guilty of the 12 charges in a separate trial and faces the same potential maximum prison time as she. Balwani is scheduled to be sentenced on December 7.
“The effects of Holmes’s and Balwani’s fraudulent conduct were severe and far-reaching,” federal prosecutors wrote in a November court filing on Holmes’ sentencing. “Dozens of investors lost more than $700 million, and numerous patients received unreliable or grossly inaccurate medical information from Theranos’ faulty tests, putting the health of those patients at serious risk.”
More than 100 people wrote letters in support of Holmes to Dávila, asking for clemency on his sentencing. The list includes Holmes’ partner, Billy Evans, many members of the Holmes and Evans families, Theranos’ early investor Tim Draper, and Senator Cory Booker. Booker described meeting her at a dinner party years before she was accused of it and they bonded over the fact that they were both vegans and had nothing to eat but a bag of almonds, which they shared.
“I still believe that she holds out hope that she can make contributions to the lives of others and that she can, despite the mistakes, make the world a better place,” Booker wrote, noting that she continues to consider her a friend.
Before the hearing, there were also questions about how Holmes’ sentencing could be complicated by events in his life after leaving Theranos. Holmes and his partner, Evans, who met in 2017, have a young son. Holmes is also pregnant, as confirmed by recent court documents and her most recent court appearance in mid-October.
Mark MacDougall, a white-collar defense attorney and former federal prosecutor, told Business ahead of the hearing that the fact that Holmes has a young child could affect sentencing.
“I don’t know how it can’t, just because the judges are human,” he said.
MacDougall also said he doesn’t see what a long prison sentence accomplishes. “Elizabeth Holmes will never run a great company again,” he noted. “She will never be in a position for something like this to happen again.”
