Elizabeth Holmes was sentenced to more than 11 years in prison years in prison after being convicted in January of fraud in running failed blood testing startup Theranos in January.
Judge Edward Davila handed down a sentence of 11 years and three months, with an additional three years of supervision after Holmes was released. The verdict also includes a $400 fine, or $100 for each count of fraud. Repayment will be made at a later date. Holmes was ordered to go into custody on April 27, 2023. She is expected to appeal her conviction.
Holmes, who was found guilty in January of four counts of investor fraud, faces up to 20 years in prison and a $250,000 fine plus compensation for each count.
Government lawyers were asking for a 15-year sentence plus probation and parole, while Holmes’ parole officer pushed for a nine-year sentence. Holmes’ defense team asked Davila, who was leading her case, to sentence her to up to 18 months in prison followed by probation and community service.
Before the verdict was announced, a tearful Holmes addressed the courthouse in San Jose, California. “I loved Theranos. It was my life’s work,” she said. “The people I tried to connect with Theranos were the people I loved and respected the most. I’m devastated by my mistakes.”
She also apologized to Theranos employees, investors and patients. “I’m so sorry. I gave everything to build and save our company,” she said. “I regret my mistakes with every cell in my body.”
In an argument before the judge on Friday about her verdict, Kevin Downey, one of Holmes’ attorneys, said that unlike other defendants in corporate fraud cases, the Theranos founder did not express greed by cashing out stock or money for ” Yachts and Airplanes”. Instead, the money will be “used for the construction of medical technology”.
Federal Attorney Jeffrey Schenk pointed out that the fraud brought Holmes fame, admiration, and a lifestyle, even if she didn’t make any financial gains. “Those are still benefits that she receives,” he said.
Holmes wraps up Friday’s hearing stunning sinking. Once celebrated as a tech industry icon for her company’s promises to test a range of conditions with just a few drops of blood, she is now the rare tech founder to be convicted for her company’s missteps and face jail time.
Holmes, now 38, founded Theranos in 2003 at the age of 19 and shortly thereafter 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 invented technology that could accurately and reliably test a range of medical conditions using just a few drops of blood drawn from a finger prick.
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 Secretary of Education Betsy DeVos. At its peak, Theranos was valued at $9 billion, making Holmes a billionaire on paper. She was lauded on magazine covers and frequently wore a signature black turtleneck, which invited comparisons to the late Apple CEO Steve Jobs. (She didn’t wear that look in the courtroom.)
The company began to unravel after a 2015 Wall Street Journal investigation found that the company had only performed 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 invalidated two years of blood test results. In 2018, Holmes and Theranos settled “massive fraud” charges with the Securities and Exchange Commission, but did not admit or deny any of the allegations as part of the deal. Theranos disintegrated soon after.
At her trial, Holmes claimed she was in the midst of a decades-long abusive relationship with her then-boyfriend and Theranos COO Ramesh “Sunny” Balwani while she ran the company. She claimed Balwani tried to control almost every aspect of her life, including disciplining her food, voice, and looks, and isolating from others. (Balwani’s attorneys dismissed her claims.)
In July, Balwani was found guilty of and faces the same charges on all 12 charges in a separate trial possible maximum jail time than her. Balwani is due to be sentenced on December 7th.
“The ramifications of Holmes and Balwani’s fraudulent conduct have been far-reaching and serious,” prosecutors wrote in a November court filing sentencing Holmes. “Dozens of investors lost over $700 million and scores of patients received unreliable or grossly inaccurate medical information from Theranos’ flawed tests, putting the health of those patients at serious risk.”
More than 100 people wrote letters to Davila in support of Holmes and asking for leniency in her sentencing. The list includes Holmes’ partner Billy Evans, many members of the Holmes and Evans families, early Theranos investor Tim Draper, and Sen. Cory Booker. Booker described meeting her at a dinner years before her indictment and bonding over the fact that they were both vegans and had nothing to eat but a bag of almonds, which they shared.
“I still believe that she holds onto 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’ sentencing might be complicated by developments in her life following her departure from Theranos. Holmes and her partner Evans, who met in 2017, have a young son. Holmes is also pregnant, according to recent court filings and her last court appearance in mid-October.
Mark MacDougall, a corporate defense attorney and former federal prosecutor, told CNN Business before the hearing The fact that Holmes has a young child could influence how she is judged.
“I don’t know how it can’t be just because judges are people,” he said.
MacDougall also said he didn’t see what a long sentence could do. “Elizabeth Holmes will never run a big company again,” he said. “She’ll never be able for something like that to happen again.”