After ten months of grueling court trials, Elizabeth Holmes, founder of the blood testing startup Theranos, which was once valued at $9 billion, has been sentenced to 11 years and three months in prison.
Elizabeth Holmes was arrested for fraud after an investigation revealed that she had scammed investors off hundreds of millions of dollars.
Her ex-lover and former Theranos executive, Ramesh “Sunny” Balwani, had earlier been convicted of all 12 fraud charges brought against him- despite pleading not guilty- and is looking at two decades behind bars.
Holmes and Theranos
In 2003, Elizabeth Holmes dropped out of Stanford University to create Theranos, a company that was supposed to revolutionize diagnosing disease.
According to Holmes, Theranos would, with the help of its Edison test, be able to detect conditions such as cancer and diabetes with a few drops of blood.
Her innovative idea was praised by democrats and other influential people, such that she raised more than US$700 million from venture capitalists and private investors.
Her claims were scrutinized when medical research professor John Ioannidis and later Eleftherios Diamandis, along with investigative journalist John Carreyrou of The Wall Street Journal, questioned the validity of Theranos’s technology.
From there on, the company faced a string of legal problems until it was dissolved in 2018.
In San Jose, California, U.S. District Judge Edward Davila sentenced Holmes, 38, on three counts of investor fraud and one count of conspiracy to commit wire fraud on Friday, after a jury convicted her last January following a three-month trial, Reuters reported.
She was initially tried on 11 counts of fraud for claims made to investors and patients of her Silicon Valley blood-testing company, Theranos; convicted on four counts and acquitted on four other counts. The jury remained at an impasse on the additional three charges, according to The New York Times.
Petition for Leniency
Prosecutors had pressed for a 15-year prison sentence, restitution, and a lengthy probation period after her release, while Holmes’ probation officer argued for a nine-year term.
However, Holmes’ defense team proposed that she be sentenced to only 18 months in prison, accompanied by probation and community service.
Sen. Cory Booker (D., N.J.) and about a hundred others had written petitions to the federal Judiciary, asking that leniency be considered in her sentencing.
Elizabeth “has within her a sincere desire to help others by fighting world hunger and climate change,” he penned, adding that he knew her for about six years before the charges were brought.
Her current partner, Billy Evans, also wrote a letter to the federal Judiciary.
“She had set out to dedicate her life to one of continued service, to rebuild her identity through a life worth living, sacrificing herself by building a life inextricably tied to seeing her vision for access to healthcare,” he wrote, adding that Elizabeth could not have been any of the things they portrayed her to be.
In the end, judge Edward Davila ruled that Holmes would spend 135 months in federal prison. She will then serve three years of supervised release.
Davila commented on the case before giving the sentence, calling it “troubling on so many levels.”
“This is a fraud case where an exciting venture went forward with great expectations only to be dashed by untruths, misrepresentations, plain hubris, and lies,” the Judge said.
U.S. Attorney Stephanie Hinds gave his views on the sentence for Holmes, explaining that it “reflects the audacity of her massive fraud and the staggering damage she caused.”
In her testimony, Holmes told the jury that her judgment had been impaired due to the sexual, emotional, and physiological abuse she suffered at the hands of her former romantic and business partner, Ramesh “Sunny” Balwani.
Holmes’s defense attorneys also tried to paint a picture of naivety, saying she didn’t mean to defraud investors. Her attorney Kevin Downey said Holmes never cashed out any stock even as the company’s fortunes tumbled.
From People’s report, prosecutors did not seem to buy the defense either.
“The person on trial is 37 years old,” U.S. Attorney John Bostic said in his closing arguments. “That is certainly old enough to know the difference between right and wrong.”
Pregnant With Second Baby As She Goes To Prison
The convicted Theranos founder is expecting her second baby with partner Billy Evans. Per court filings obtained by The Times, she became pregnant after being convicted in January.
Based on her sentence, it is expected that Elizabeth Holmes will welcome her second child behind bars.