Elizabeth Holmes sentenced to 11 years in prison for Theranos fraud

Ten months after pleading guilty to fraud, former youngest billionaire Elizabeth Holmes was sentenced to 11.25 years in prison plus three years of supervised release. At trial, she was found guilty of four out of 11 points related to defrauding investors, but she was found not guilty of defrauding patients.

The former founder and CEO of Theranos, Holmes could have faced up to 20 years in prison on each of the four counts. In comparison, a former pharmaceutical executive Martin Shkreli was sentenced to seven years in prison for securities fraud, but was released after just over four years.

In a courthouse in San Jose, both sides of United States v. Elizabeth Holmes presented their cases on whether Judge Edward Davila can hear “Holmes”reckless disregard” to patients at sentencing. Davila rejected this offer because at the original trial Holmes was found guilty only of defrauding investors.

Nevertheless, it took more than four hours before Holmes’ sentence was decided. Alex Schultz, father of whistleblower Tyler Schultz, spoke in court, recounting how his son slept with a knife under his pillow when he suspected he was being followed by Theranos private investigators.

Then Holmes herself spoke. “I regret my failures with every cell in my body,” she said. Judge Davila then delivered his ruling.

Holmes is expected to report to prison in April. She is currently pregnant with her second child.

Fraud at Theranos

Holmes founded Theranos in 2003 after dropping out of Stanford. She pitched investors and partners to a technology that would revolutionize the health care system — instead of drawing blood intravenously and waiting days for test results, her technology would draw a small sample of blood and immediately perform dozens of tests on it. Soon she was the CEO of a company with a valuation of 10 billion dollars, but it turned out that the technology didn’t work.

Theranos has been defunct since 2018, but the criminal trial against Holmes only began last fall after delays due to the pandemic and the birth of her first child. According to a letter from Holmes’ husband in a public filing in court, is now pregnant with her second child. The document includes 282 pages of other letters from friends, family and business associates of Holmes, ranging from childhood photos and drawings to notes from high-profile supporters such as Sen. Cory Booker (D-NJ) and venture capitalist Tim Draper.

“While there is significant public outcry against Theranos and Elizabeth, attitudes across much of the venture world are very different,” Draper wrote. “Venture-backed startups often announce and bring products to market before they’re ready.”

The former CEO’s sentencing was further delayed because her lawyers tried to ask for a new trial, arguing that new evidence came to light after former Theranos lab director Adam Rosendorff visited Holmes at home in an attempt to find closure.

Rosendorff, who worked at Theranos between 2013 and 2014, testified for six days last year during Holmes’ four-month trial. With his highly technical knowledge of the inner workings of Theranos labs, Rosendorff’s testimony was key to the trial. In court he said that Holmes knew Theranos’ technology led to inaccurate blood test results, but insisted that it be used on patients anyway. After repeatedly voicing his concerns about the flawed technology, he eventually left Theranos.

Holmes’ lawyers argued that when Rosendorff visited her home this summer, he expressed guilt about making Theranos look worse than it did in court. But Judge Edward Davila found no basis for these accusations. Rosendorff reaffirmed that last year’s readings were accurate. The former director of the laboratory specified that he I felt sorry for Holmes’s child, who will grow up without a mother if he is sent to prison, but not for Holmes himself.

Holmes’ former friend and Theranos chief operating officer, Ramesh “Sunny” Balwani, awaits sentencing. He is sentenced to 12 out of 12 points in his own trial, where a jury found him guilty of defrauding both patients and investors.

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