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

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



CNN

Elizabeth Holmes was sentenced to more than 11 years in prison on Friday following her conviction in January for defrauding investors while running the failed start of blood test Theranos.

Judge Edward Davila imposed a prison sentence of 11 years and three months, with an additional three years of supervision after Holmes is released. The penalty also includes a $400 fine, or $100 for each count of fraud. Refund will be determined at a later date. Holmes was ordered to take himself into custody on April 27, 2023.

Holmes, who was found guilty in January on four charges of defrauding investorsrisked up to 20 years in prison and a $250,000 fine plus restitution for each count.

Government lawyers called for a 15-year prison sentence, as well as probation and restitution, while Holmes’ probation officer pushed for a nine-year term. Holmes’ defense team asked Davila, who presided over her case, to sentence her to 18 months in prison, followed by probation and community service.

Before the sentencing was announced, a tearful Holmes spoke to the court in San Jose, California. “I loved Theranos. It was my life’s work,” she said. “The people I tried to involve in Theranos were the people I loved and respected the most. I am devastated by my shortcomings.”

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

In arguments in court on Friday over her sentence, Kevin Downey, one of Holmes’ lawyers, said that unlike other defendants in corporate fraud cases, the Theranos founder was not expressing greed by cashing in stock 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, admiration and a lifestyle through the fraud, even though she made no financial profit. “These are still benefits she receives,” he said.

Friday’s sentencing hearing concludes Holmes stunning downfall. Once hailed as a tech industry icon for her company’s promises to test for a range of conditions with just a few drops of blood, she’s now the rare tech founder to be convicted and jailed for her company’s missteps .

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

Theranos raised $945 million from an impressive roster of investors, including media magnate Rupert Murdoch, Oracle founder Larry Ellison, Walmart’s Walton family, and the billionaire family of former Secretary of Education Betsy DeVos. At its peak, Theranos was valued at $9 billion, making Holmes a billionaire on paper. She was praised on magazine covers and often wore a signature black turtleneck that drew comparisons to the late Apple CEO Steve Jobs. (She didn’t wear that look in court.)

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

In 2016, Theranos invalidated the results of two years of blood tests. In 2018, Holmes and Theranos settled accusations of “massive fraud”. with the Securities and Exchange Commission, but has not admitted or denied any of the allegations as part of the deal. Theranos dissolved soon after.

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

In July Balwani was found guilty of all 12 charges in a separate process and stands for the same thing possible maximum jail time if they. Balwani will be sentenced on December 7.

“The consequences of Holmes and Balwani’s fraudulent conduct were far-reaching and severe,” federal prosecutors wrote in a November court case about Holmes’s conviction. “Dozens of investors lost more than $700 million and countless patients received unreliable or wholly inaccurate medical information from Theranos’ flawed tests, putting those patients’ health at serious risk.”

More than 100 people wrote letters in support of Holmes to Davila, asking for clemency in her sentencing. The list includes Holmes’ partner Billy Evans, many members of Holmes and Evans’ families, early Theranos investor Tim Draper, and Senator Cory Booker. Booker described meeting her at a diner years before being charged and bonding over the fact that they were both vegan and had nothing to eat but a sack of almonds, which they shared.

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

Ahead of the hearing, there were also questions about how Holmes’ sentencing might be complicated by developments in her life following Theranos’ resignation. 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 trial in mid-October.

Mark MacDougall, a white-collar attorney 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 couldn’t be, just because judges are human beings,” he said.

MacDougall also said he doesn’t see what a long prison sentence brings. “Elizabeth Holmes will never run a big company again,” he said. “She will never be able to let something like this happen again.”

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