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Elizabeth Holmes received more than 11 penalties He was jailed for years on Friday after being accused of defrauding investors while running his failed blood test startup Theranos in January.
Judge Edward Davila sentenced Holmes to 11 years and three months in prison, and after his release, Holmes will be on supervised release for another three years. The penalty also includes a fine of $400 or $100 for each count of fraud. Refunds will be scheduled at a later date. Holmes was remanded in custody on April 27, 2023. He is expected to appeal his sentence.
Holmes, who pleaded guilty in January to four counts of defrauding investors, faces up to 20 years in prison, a $250,000 fine and restitution on each count.
The government’s attorneys had asked for a sentence of 15 years in prison, as well as probation and restitution, while Holmes’ probation officer had asked for nine years in prison. Holmes’ defense team asked Davila, who led his case, to sentence him to up to 18 months in prison, followed by probation and community service.
A tearful Holmes spoke in court in San Jose, California, before the sentence was announced. “I loved Theranos. It was my life’s work,” he said. “The people I tried to reach out to at Theranos were the people I loved and respected the most. I am disappointed by my failures.”
He also apologized to Theranos employees, investors and patients. “I am very sorry. I did everything I could to build our company and save our company,” he said. “I regret my failure with every cell in my body.”
In his sentencing arguments before the judge on Friday, Kevin Downey, one of Holmes’ attorneys, said that unlike other defendants in corporate fraud cases, the Theranos founder was not stingy by cashing out stock or “spending money on yachts and airplanes. ” Instead, the money was “used to create medical technology”.
Federal prosecutor Jeffrey Schenk noted that Holmes gained notoriety, admiration and a lifestyle from the fraud, even if he did not make a financial profit. “Those are still the benefits he’s getting,” he said.
Friday’s court hearing is not for Holmes. amazing fall. Once hailed as a tech industry icon for his company’s promises to test a range of conditions with a few drops of blood, he is now the rare tech founder convicted and serving prison time for his company’s missteps.
Holmes, now 38, started Theranos in 2003 at the age of 19, and shortly thereafter dropped out of Stanford University to work at the company full-time. After a decade of staying under the radar, Holmes began courting the press with Theranos’ claims that it had invented technology that could accurately and reliably test for a range of conditions using a few drops of blood taken from a fingertip.
Theranos has raised $945 million from an impressive list of investors, including media mogul Rupert Murdoch, Oracle founder Larry Ellison, Walmart’s Walton family and the billionaire family of former Education Secretary Betsy DeVos. At its peak, Theranos was worth $9 billion, making Holmes a billionaire on paper. He was often lauded on magazine covers wearing a signature black turtleneck that invited comparisons to the late Apple CEO Steve Jobs. (She did not wear this look in the courtroom.)
The company came under fire in 2015 after a Wall Street Journal investigation found that the company performed only about a dozen of the hundreds of tests it offered using a special blood test device, with questionable accuracy. Instead, Theranos relied on third-party devices from traditional blood testing companies.
In 2016, Theranos canceled two years of blood test results. In 2018, Holmes and Theranos settled charges of “massive fraud” with the Securities and Exchange Commission, but did not admit or deny any of the allegations as part of the settlement. Soon after, Theranos collapsed.
In her lawsuit, Holmes claimed that while running the company, she was in the midst of a decade-long abusive relationship with her then-boyfriend and Theranos CEO Ramesh “Sunny” Balwani. Balwani, she claimed, tried to control almost every aspect of her life, including controlling her food intake, voice and image, and isolating her from others. (Balwani’s lawyers denied his allegations.)
In July, Balwani was found guilty of all 12 charges in a separate trial and faces the same charges. the potential maximum prison term as his. Balwani is scheduled to be sentenced on December 7.
“The effects of Holmes and Balwani’s fraudulent conduct were far-reaching and severe,” federal prosecutors wrote in a November filing for Holmes’ sentencing. “Dozens of investors lost more than $700 million, and numerous patients received unreliable or completely inaccurate medical information from Theranos’ flawed tests, putting these patients’ health at serious risk.”
More than 100 people have written letters to Davila in support of Holmes, asking for leniency in his sentence. The list includes Holmes’ partner Billy Evans, many members of the Holmes and Evans families, Tim Draper, the first investor in Theranos, and Sen. Cory Booker. Booker described meeting her for dinner years before he was charged and bonding over the fact that they were vegetarians who had nothing to eat but a bag of almonds they shared.
“I still believe that he has the hope that he can contribute to the lives of others and make the world a better place despite his mistakes,” Booker said, noting that he continues to consider him a friend.
Before the hearing, there were also questions about how Holmes’ sentencing could complicate developments in his life after resigning from Theranos. Holmes and her 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.
White-collar defense attorney and former federal prosecutor Mark MacDougall told CNN Business ahead of the hearing. The fact that Holmes has a young child could affect how he is sentenced.
“I don’t know how it can’t be because judges are human,” he said.
MacDougall also said he didn’t see what the long prison sentence was for. “Elizabeth Holmes will never run a big company again,” he said. “He’ll never be in a position to let something like this happen again.”