Elizabeth Holmes gets more than 11 years in prison for Theranos fraud

A US federal judge gave a disgraced verdict Theranos CEO Elizabeth Holmes to more than 11 years in prison for duping investors into the failed startup that promised to revolutionize blood testing but instead made her a symbol of Silicon Valley’s culture of bold self-promotion.

The sentence imposed by US District Judge Edward Davila was shorter than the 15-year sentence required by federal prosecutors but far harsher than the leniency her legal team was asking for the mother of a one-year-old son with another child on the way.

Holmes, who was CEO during the company’s tumultuous 15-year history, was convicted in January in the trial surrounding the company’s claims of having developed a medical device that could diagnose a variety of diseases and conditions from a few drops of blood could recognize. But the technique never worked.

Theranos founder and CEO Elizabeth Holmes faces up to 20 years in prison.
Theranos founder and CEO Elizabeth Holmes has been in prison for 11 years. (AP)

The conviction in the same San Jose, California, courtroom where Holmes was convicted on four counts of investor fraud and conspiracy in January marks another climax in a saga that has been dissected into an HBO documentary and an award-winning Hulu series about her rise and painful fall.

Holmes, 38, faced a maximum of 20 years, but her legal team asked the judge for a sentence of no more than 18 months, preferably served under house arrest.

Her lawyers argued that as a well-meaning entrepreneur who is now a devoted mother with another child on the way, Holmes deserved lenient treatment. Her arguments were supported by more than 130 letters submitted by family, friends and former colleagues praising Holmes.

Prosecutors are also seeking $1.2 billion in damages from Holmes. The amount covers most of the nearly $1.5 billion Holmes raised from a list of sophisticated investors including software magnate Larry Ellison, media mogul Rupert Murdoch and the Walton family behind Walmart.

While courting investors, Holmes utilized a senior Theranos board that included former Secretary of Defense James Mattis, who was tested against her during her trial, and two former Secretary of State, Henry Kissinger and the late George Shultz, whose son filed a statement, in which Holmes was blown up for devising a plan that played Shultz “for the fool”.

Elizabeth Holmes will serve at least 11 years in prison.
Elizabeth Holmes will serve at least 11 years in prison. (AP)

Holmes is due to report to prison on April 27. After giving birth to a son just before her trial began last year, she became pregnant sometime this year while she was out on bail.

Although her lawyers made no mention of the pregnancy in an 82-page memo presented to the judge last week, the pregnancy was confirmed in a letter from her current partner, William “Billy” Evans, who urged the judge to be merciful .

If Holmes’ pregnancy played a role in determining her sentence, the decision could prove controversial. A 2019 study found that more than 1,000 pregnant women were sent to federal or state prisons over a 12-month study period; 753 of them gave birth in custody.

According to a 2016 Bureau of Justice Statistics survey, more than half of the women sent to a federal prison — 58 percent — said they were mothers of minor children.

US Attorney Robert Leach said Holmes deserved a severe sentence for orchestrating what he described as one of the most egregious white-collar crimes ever committed in Silicon Valley. In a scathing 46-page memo, Leach told the judge he had an opportunity to send a message that would curb the hubris and hyperbole fueled by the tech boom.

Holmes “has capitalized on her investors’ hopes that a young, dynamic entrepreneur is transforming healthcare,” Leach wrote. “And through her deception, she achieved spectacular fame, adoration, and billions of dollars in wealth.”

Elizabeth Holmes' idol was the late Apple CEO and founder Steve Jobs.
Elizabeth Holmes’ idol was the late Apple CEO and founder Steve Jobs. (AP)

Although Holmes was acquitted by a jury on four counts of fraud and conspiracy involving patients undergoing Theranos blood tests, Leach also urged Davila to consider the health hazards posed by Holmes’ behavior.

Holmes’ attorney Kevin Downey painted her as a selfless visionary who spent 14 years of her life revolutionizing healthcare.

Although evidence presented during her trial showed the blood tests gave wildly unreliable results that could have led patients to wrong treatments, her lawyers claimed that Holmes never stopped perfecting the technology until Theranos collapsed in 2018.

They also pointed out that Holmes has never sold any of their Theranos shares — a $10 billion stake in 2014, when Holmes was being hailed on the covers of business magazines as the next Steve Jobs.

Defense against criminal charges has left Holmes “substantial debts from which she is unlikely to recover,” Downey wrote, hinting that she is unlikely to pay any compensation that Davila may order as part of her sentence.

“Holmes is not a threat to society,” Downey wrote.

Downey also asked Davila to consider the alleged sexual and emotional abuse Holmes suffered while she was romantically involved with Ramesh “Sunny” Balwani, who became a Theranos investor, top executive, and eventual acquisition of her crimes.

Balwani, 57, is due to be sentenced December 7 after being convicted of 12 counts of fraud and conspiracy at a trial in July.

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