Elizabeth Holmes sentenced to more than 11 years in prison for fraud



CNN

Elizabeth Holmes was sentenced to more than 11 a year in prison Friday after she was convicted in January of defrauding investors while running the failed blood-testing startup Theranos.

Judge Edward Davila sentenced Holmes to 11 years and three months in prison, with another three years of supervised release. The sentence also includes a $400 fine, or $100 for each fraud count. Refund will be arranged later. Holmes was ordered to take herself into custody on April 27, 2023.

Holmes, who was found guilty in January on four counts of defrauding investors, faced up to 20 years in prison as well as a $250,000 fine plus restitution for each count.

Lawyers asked the government for a 15-year prison term, as well as probation and restitution, while Holmes’ probation officer pushed for a nine-year term. Holmes’ defense team asked Davila, who was in charge of her case, to sentence her to up to 18 months in prison followed by probation and community service.

Before the sentence was announced, Holmes spoke positively to the court in San Jose, California. “I loved Theranos. It was my life’s work,” she said. “The people I tried to connect with at Theranos were the people I loved and respected the most. I am destroyed by my failures.”

She also apologized to Theranos employees, investors and patients. “I’m so sorry. I gave everything I had to build our company and to save our company,” she said. “I regret my failures with every cell in my body.”

In arguments before the judge on Friday about his sentence, Kevin Downey, one of Holmes’ lawyers, said that unlike other defendants in corporate fraud cases, the Theranos founder did not show greed by transferring shares or spending money on “yachts and planes. ” Instead, the money was used to build medical technology.

Federal prosecutor Jeffrey Schenk pointed out that Holmes gained fame, respect and lifestyle from the fraud, even if she did not make financial gains. “These are benefits she is still receiving,” he said.

Holmes’ sentencing hearing ends Friday great fall. Once famous as a tech industry icon for her company’s promises to test for a range of conditions with just a few drops of blood, the rare tech founder will now be convicted and face jail time for misunderstandings of her company.

Holmes, now 38, started Theranos in 2003 at the age of 19 and soon after dropped out of Stanford University to pursue the company full-time. After a decade under the radar, Holmes began courting the press with claims that Theranos had created technology that could accurately and reliably test for a range of conditions using just a few drops of blood taken from a prick. finger

Elizabeth Holmes (L), the founder of Theranos, and her partner, Billy Evans (R), leave the Robert F. Peckham Federal Building and the United States Courthouse in San Jose, California, on October 17, 2022.

Theranos 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 valued at $9 billion, making Holmes a paper billionaire. She was praised on magazine covers, often wearing a signature black turtleneck that drew comparisons to late Apple CEO Steve Jobs. (She hasn’t worn that look in the courtroom.)

The company began to settle after a Wall Street Journal investigation in 2015 found that the company performed only about a dozen of the hundreds of tests it offered using its proprietary blood testing device, and with questionable accuracy. Instead, Theranos relied on third-party manufactured devices from traditional blood testing companies.

In 2016, Theranos voided two years of blood test results. In 2018, Holmes and Theranos settled “massive fraud” charges with the Securities and Exchange Commission, but neither admitted nor denied any of the allegations as part of the settlement. Theranos was dissolved soon after.

In her trial, Holmes alleged that she was in the midst of an abusive decade-long relationship with her then-boyfriend while Theranos COO Ramesh “Sunny” Balwani ran the company. Balwani, she alleged, tried to control almost every aspect of her life, including controlling her eating, voice and image, and isolating her from others. (Balwani’s solicitors denied her claims.)

In July, Balwani was found guilty of all 12 charges in a separate trial and faces maximum potential prison time for her. Balwani is due to be sentenced on December 7.

“The effects of Holmes and Balwani’s fraudulent conduct were widespread and severe,” federal prosecutors wrote in a November court filing regarding Holmes’ sentencing. “Thousands of investors lost over $700 million and many patients received unreliable or completely inaccurate medical information from Theranos’ faulty tests, putting the health of those patients at serious risk.”

More than 100 people wrote letters supporting Holmes to Davila, asking for leniency in her sentence. The list includes Holmes partner Billy Evans, many members of the Holmes and Evans families, early Theranos investor Tim Draper, and Senator Cory Booker. Booker described meeting her at dinner years before she was charged claiming they were both vegans and had nothing to eat but a bag of almonds, they shared.

“I still believe that she has the hope that she can contribute to the lives of others, and that despite her mistakes, she can make the world a better place,” Booker wrote, noting that he continues to think of her. as a friend.

Before the hearing, there were also questions about how Holmes’ sentence might be complicated by developments in her life after leaving Theranos. Holmes and her partner, Evans, have a young son together in 2017. Holmes is also pregnant, as confirmed by recent court filings and her most recent court appearance in mid-October.

Mark MacDougall, a white-collar defense lawyer and former federal prosecutor, told CNN Business before the hearing the fact that Holmes has a young child may affect how she is sentenced.

“I don’t know how it’s not possible, just because judges are human,” he said.

MacDougall also said he doesn’t see the point of a long prison sentence. “Elizabeth Holmes will never run a big company again,” he said. “She will never be able to do something like this again.”

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