Elizabeth Holmes to be sentenced this week as Theranos saga nears conclusion
Elizabeth Holmes, the founder of Theranos, will be sentenced this week to up to 20 years in prison for her role in the blood testing company that tumbled from the heights of Silicon Valley after its fraudulent claims were exposed.
The sentencing is set to take place in a California courtroom on Friday, after a federal judge denied Holmes’s request for a new trial last week. Holmes had requested a new trial after she said a key witness for the prosecution apologized for the role he played in her conviction.
That witness, the former Theranos lab director Adam Rosendorff, appeared in August at the home Holmes shares with her partner, William Evans, to express his remorse, lawyers for the founder said in the denied motion. Rosendorff later stood by his original testimony, saying he had only regretted that Holmes – mother to a young child – was facing years in prison.
Holmes was convicted in January on four counts of fraud after a nearly four-month- long trial, in which prosecutors called 29 witnesses to detail her 15-year reign as CEO.
She is likely to face some substantial time behind bars, experts say. Federal sentencing guidelines suggest more time for larger dollar amounts of fraud, and evidence in court for the charges she was convicted on included wire fraud totaling more than $140m.
“My best forecast based on the way sentencing guidelines work is that she will receive somewhere in the four to five year range,” said James Melendres, a white collar defense lawyer and former federal prosecutor. “But I would not be surprised if she had a sentence significantly greater than that – maybe even in excess of 10 years.”
During her trial, the founder accused her co-conspirator and former romantic partner Sunny Balwani of abuse, claims he has denied. In a separate trial, Balwani was convicted on all 12 fraud charges brought against him for his role at the company. He faces his own sentencing in December.
Lawyers for Holmes have cast her as a scapegoat who overcame a toxic relationship to become a loving mother in an effort to avoid a lengthy prison sentence. In an 82-page document filed the week before sentencing, they argued that sending Holmes to prison is unnecessary, partly because she has already been stigmatized by intense media coverage that has turned her into a “caricature to be mocked and vilified”.
Holmes’ lawyers argued she should be sentenced to no more than 18 months. “We acknowledge that this may seem a tall order given the public perception of this case especially when Ms Holmes is viewed as the caricature, not the person,” the filing said.
On Friday, however, prosecutors requested Holmes be sentenced to 15 years and $800m in restitution, arguing it would “reflect the seriousness of the offenses, provide for just punishment for the offenses, and deter Holmes and others”.
The sentencing will mark an end to Holmes’s journey with Theranos, a company she dropped out of Stanford to found at 19 years old. She promised a revolutionary technology that could run hundreds of health tests on just a drop of blood, despite little scientific evidence it worked, forging partnerships with major healthcare companies like Walgreens.
Holmes appeared at conferences and on the covers of magazines as Theranos took Silicon Valley by storm, raising hundreds of millions of dollars from big name investors like media mogul Rupert Murdoch, the former secretary of state Henry Kissinger and the former defense secretary James Mattis, who went on to testify against her.
But cracks began to show in 2015 when Wall Street Journal reporting revealed that its in-house tests had glaring inaccuracies, and that the company was performing other tests using traditional blood drawing methodology and outside labs.
Holmes, 38, was charged in 2018 with 12 counts of fraud for her role in the company. The trial began in 2021 following delays after Holmes revealed she was pregnant. The proceedings attracted a media frenzy outside the San Jose courthouse where Holmes testified that she did not knowingly commit fraud, and that she believed in the company’s promise.
Holmes was convicted of four charges, including one count of conspiracy to defraud investors and three counts of wire fraud against investors, but acquitted on three charges relating to patients who received inaccurate test results. The jury remained deadlocked on three of the charges.
The conviction and sentencing could mark a new era for Silicon Valley, an industry that for years has fostered a culture of “fake it till you make it”, where founders are to make big promises, often with little proof, to raise interest and funds for their startups.
The fact that the government succeeded in its prosecution of Holmes and Balwani is “significant”, said Neama Rahmani, a former federal prosecutor and co-founder of West Coast Trial Lawyers.
“Executives are going to be a lot more careful about what they say during the start-up phase, what they say to investors,” he said. “This shows the government is going to hold you accountable.”