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

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

Theranos founder Elizabeth Holmes arrives with her family and partner Billy Evans at the federal courthouse in San Jose, California on Nov 18, 2022. (Photo: Reuters/Brittany Hosea-Small)

SAN JOSE, California: A California judge sentenced Theranos founder Elizabeth Holmes to 11 years and three months in prison on Friday (Nov 18) for defrauding investors in her now-defunct blood testing startup that was once valued at US$9 billion.

US District Judge Edward Davila in San Jose, California, sentenced Holmes on three counts of investor fraud and one count of conspiracy. A jury convicted Holmes, 38, in January following a trial that spanned three months.

Holmes, dressed in a dark blouse and black skirt, hugged her parents and her partner after the sentence was handed down.

During the hearing, Holmes cried as she said she was "devastated" by her failures and would have done many things differently if she had the chance.

"I have felt deep shame for what people went through because I failed them," she said.

Before handing down the sentence, Davila called the case "troubling on so many levels", questioning what motivated Holmes, a "brilliant" entrepreneur, to misrepresent her company to investors.

"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," he said.

The judge set Holmes' surrender date for April. Her lawyers are expected to ask the judge to allow her to remain free on bail during her appeal.

Assistant US Attorney Jeff Schenk told the judge before he handed down the sentence that a 15-year sentence would be "making a statement that the ends don't justify the means".

Holmes' attorney Kevin Downey sought home confinement for Holmes, saying leniency was justified because unlike someone who committed a "great crime" she was not motivated by greed.

The federal probation office had recommended a 9-year prison sentence, according to court papers.

Prosecutors and an attorney for Holmes declined to comment as they left court.

Prosecutors said at trial that Holmes misrepresented Theranos' technology and finances, including by claiming that its miniaturised blood testing machine was able to run an array of tests from a few drops of blood. The company secretly relied on conventional machines from other companies to run patients' tests, prosecutors said.

Holmes testified in her own defense, saying she believed her statements were accurate at the time.

Though she was convicted on four counts, Holmes was acquitted on four other counts alleging she defrauded patients who paid for Theranos tests.

Once valued at US$9 billion, Theranos Inc promised to revolutionize how patients receive diagnoses by replacing traditional labs with small machines envisioned for use in homes, drugstores and even on the battlefield.

Forbes dubbed Holmes the world's youngest female self-made billionaire in 2014, when she was 30 and her stake in Theranos was worth US$4.5 billion.

But the startup collapsed after a series of articles in the Wall Street Journal in 2015 questioned its technology.

Holmes is expected to challenge her sentence and Davila's rulings upholding her convictions at the 9th US Circuit Court of Appeals.

Before handing down the sentence, Davila asked if any victims of Holmes' fraud were in court.

Alex Shultz, whose son Tyler Shultz worked at Theranos and whose father, former US Secretary of State George Shultz, invested in the company, told the judge how a family member once heard Holmes describe her supposedly revolutionary technology.

"What's the hitch?'" the family member asked Holmes, according to Shultz.

"There is no hitch," Holmes responded.

Source: Reuters/rj


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