On Friday, a federal judge will decide whether disgraced Theranos CEO Elizabeth Holmes should serve a lengthy prison sentence for defrauding investors and endangering patients while buying fake blood test technology.
Holmes’ sentencing in a San Jose, Calif., courtroom where he was tried on four counts of investor fraud and conspiracy January marks its most poignant moment in the saga, which is dissected in an HBO documentary and award-winning Hulu series about his meteoric rise and fatal fall.
U.S. District Judge Edward Davila will play a central role in considering the federal government’s recommendation Sending Holmes, 38, to 15 years in federal prison. That’s slightly less than the maximum sentence of 20 years he could have faced, but far longer than the legal team’s attempt to limit his prison term to no more than 18 months.preferably kept under house arrest.
Her lawyers argued that Holmes deserved more lenient treatment as a well-intentioned entrepreneur who was a devoted mother with another child on the way. Their arguments were supported by more than 130 letters praising Holmes from family, friends and former colleagues.
The probation report presented to Davila also recommended a nine-year sentence for Holmes.
Prosecutors also want Holmes to pay $804 million in restitution. The sum includes most of the nearly $1 billion Holmes has raised from a sophisticated list of investors that includes software magnate Larry Ellison, media mogul Rupert Murdoch and the Walton family behind Walmart.
In courting investors, Holmes used the high-powered Theranos board, which included former US Defense Secretary James Mattis, who testified against him. during his trial and the late George Shultz, who filed a statement accusing two former US Secretaries of State, Henry Kissinger and his son Holmes, of having devised a scheme to play Shultz “for fools”.
Davila’s decision and the reporting date of Holmes’ potential prison term may be affected by the former entrepreneur’s second pregnancy in two years. After giving birth to a son shortly before her trial began last year, Holmes became pregnant while out on bail this year.
Although her lawyers did not mention the pregnancy in the 82-page memo they submitted to Davila last week, the pregnancy was confirmed in a letter from her current partner, William “Billy” Evans, who urged the judge to show leniency.
In the 12-page letter, which includes pictures of Holmes cuddling her 1-year-old son, Evans noted that Holmes participated in a Golden Gate Bridge swim earlier this year while pregnant. He also noted that Holmes suffered from COVID while pregnant in August. Evans did not disclose Holmes’ due date in his letter.
Duncan Levin, a former federal prosecutor who is now a defense attorney, predicted that Davila’s sentencing decision will not be affected by the pregnancy, but expects the judge to allow her to remain free until the baby is born.
“He will no longer be a flight risk once he is sentenced as he is while awaiting sentencing,” Levin said. “We should temper our sentences with some measure of humanity.”
Another former federal prosecutor, Amanda Kramer, predicted the pregnancy makes Davila more likely to face criticism regardless of what sentence he imposes.
“There’s a pretty healthy debate about what kind of sentence is needed to have a general deterrent effect to send a message to others who might be thinking of going from peddling to material misrepresentation,” Kramer said.
Federal prosecutor Robert Leach made a strong case that Holmes deserved a serious sentence for the fraud, which he described as one of the worst white-collar crimes ever committed in Silicon Valley. In an angry 46-page memo, Leach told the judge he had an opportunity to send a message that curbed the arrogance and hyperbole created by the tech boom of the past decade.
Holmes “chased his investors’ hopes that a young, dynamic entrepreneur was transforming health care,” Leach wrote. “And with his trickery, he has achieved incredible fame, adoration and a fortune of billions of dollars.”
Although Holmes was acquitted by a jury on four counts of fraud and conspiracy involving patients who administered Theranos blood tests, Leach asked Davila to consider the health threats posed by Holmes’ behavior.
Holmes’ attorney, Kevin Downey, described him as a dedicated visionary who spent 14 years of his life trying to revolutionize health care with a technology that is supposed to be able to scan for hundreds of diseases and other foods with just a few drops of blood.
Although evidence presented during his trial showed that the tests produced extremely unreliable results that could have misled patients, his lawyers argued that Holmes never stopped trying to improve the technology until Theranos collapsed in 2018. his Theranos stock — a stake worth $4.5 billion in 2014, when Holmes was hailed as the next Steve Jobs on the covers of business magazines.
Defending himself against the criminal charges has left Holmes with “significant debt from which he cannot recover,” Downey wrote, adding that he is unlikely to pay any restitution Davila may order as part of his sentence.
“Holmes is not a threat to the community,” Downey said.
Downey also asked Davila to consider the alleged sexual and emotional abuse Holmes suffered during her romance with Ramesh “Sunny” Balwani, a Theranos investor, top executive and eventual accomplice. Balwani, 57, is scheduled to be sentenced on December 7 after pleading guilty in a July trial. 12 counts of fraud and conspiracy.