A California judge ordered Elizabeth Holmes to spend more than 11 years in prison for fraudulently building her blood-testing startup Theranos into a $9bn company that collapsed in scandal – a sharp contrast from the 18 months’ house arrest she had pleaded for.
The sentence imposed on Friday by US District Judge Edward Davila in San Jose, California, is far closer to the 15-year term prosecutors asked for than what Holmes’ lawyers sought: home detention or 18 months in prison at most, according to a Bloomberg report on the News24 site.
The sentencing caps a years-long saga that has riveted Silicon Valley, inspiring books, TV documentaries, podcasts and films about the Stanford University dropout who became a celebrity entrepreneur, only to see her company crash when its technology was exposed as a failure.
Holmes’ lawyers asked Davila to let Holmes remain free on bail while she appeals, which he said he would decide at a later date. He ordered Holmes to report to prison in April, though which facility hasn’t been determined yet.
In court, Holmes, visibly pregnant with her second child, stood up to hug her parents when she heard the sentence, who, along with her partner Billy Evans, were sitting in the first row of the courtroom behind her.
Before the sentencing decision, Holmes addressed the courtroom in tears, apologising to victims and investors and saying she took full responsibility for Theranos, while not admitting to any crimes.
Davila has handled the case since Holmes and Ramesh “Sunny” Balwani, her former lover and partner and the former president of Theranos, were indicted in 2018.
A jury convicted Holmes in January of four counts of wire fraud and conspiracy after prosecutors presented evidence and witness testimony that she knew the blood-testing devices she pitched as revolutionary to venture capitalists and wealthy investors didn’t actually work. The charges carried a maximum prison term of 20 years.
The judge said he would address victim restitution at a future date. The government proposed that Holmes be ordered to pay $800m to investors who lost money in Theranos, while Davila calculated the losses attributed to Holmes’s fraud at $121m.
Her lawyers have said she has “essentially no assets”. A pre-sentencing report said her “modest assets” are outweighed by $450 000 in loans for her civil settlement with securities regulators and more than $30m in liabilities for legal fees.
When the judge asked if any victims wished to speak, just one person volunteered. Alex Shultz is the son of the late George Shultz, the former secretary of state who served on Theranos’ star-studded board, and the father of Tyler Shultz, who briefly worked at Theranos before losing faith in the company’s technology and becoming a whistleblower.
Alex Shultz reprised in court how his son was intimidated by a private investigator and lawyers hired by Theranos after he turned on Holmes.
“My son slept with a knife under his pillow thinking someone was going to murder him,” he said. “It was a gruelling experience. I feel like my family home was desecrated by Elizabeth and her lawyers.”
Prosecutors had argued a lengthy prison term is justified, given the scope of the fraud and the need to send a deterrence message to the startup sector where “fake it till you make it” braggadocio has been ubiquitous.
During her four-month trial, Holmes chose to testify in her own defence. She gave a tearful account of being raped while she was an undergraduate at Stanford and claimed she was psychologically, physically and sexually abused by Balwani – allegations he denied.
Balwani, who was convicted in July after a separate trial, faces sentencing in December.
See more from MedicalBrief archives:
Theranos fraud convict wants new trial before November sentencing
Former Theranos collaborator Ramesh Balwani convicted of fraud
Theranos: A cautionary tale on how not to commercialise medical advances
Founder of blood-test startup convicted of fraud