Elizabeth Holmes faces prison as sentencing begins in fraud case
She was convicted of four counts of wire fraud and conspiracy to commit wire fraud after a four-month trial that included testimony and stories about billionaire investors, former US officials’ support and patients who had used the company’s technology. Holmes also took the stand during seven days of emotional testimony, defending her actions as being in good faith and denying that she was aware of the fraud.
Holmes will appear in a somber courtroom in the heart of Silicon Valley today for a federal sentencing hearing where federal prosecutors have asked the judge to sentence her to 15 years in prison and demand an $800 million fine to pay back investors and businesses. partners.
“Her reality distortion field put, and will continue to put, people at risk,” prosecutors wrote in a memo to the judge. “She stands before the court unrepentant. She assumes no responsibility. On the contrary, she insists that she is the victim. She’s not.”
Representatives for Holmes did not respond to a request for comment. Since Theranos crumbled, Holmes has kept a low profile. She lives in Silicon Valley with her partner and son, and has volunteered at a sexual assault survivor hotline. She was pregnant during a hearing in San Jose last month.
Holmes started the company in 2003 when she was just 19 years old with the promise of developing technology that would eliminate the need to draw tubes and tubes of blood to perform diagnostic tests. She quickly attracted investors, attracting hundreds of millions of dollars in investment from prominent businessmen and political figures, including Larry Ellison, Rupert Murdoch and others. Holmes also attracted great statesmen such as Henry Kissinger and Jim Mattis to her board.
She rented space in a well-known office park in Silicon Valley and employed hundreds of employees. After her startup went public with its ambitions about a decade ago, Holmes rose to fame. She was one of the few young female founders in a competitive tech world that still often has white, male CEOs. The media took notice, putting her on the covers of magazines including Forbes, Fortune and Inc., as well as speaking at conferences and giving a TEDMED speech. She signed deals with Walgreens and Safeway to put her technology — a tiny blood-testing machine, known as Edison, that claimed to use “nanotainers” that needed only a fingerprick’s worth of blood to test for everything from cholesterol to herpes.
But internally, it was a different story, according to testimony from her trial last year. Theranos’ proprietary technology could effectively run only about a dozen tests, and witnesses said it did not always do these reliably.
During the trial, former employees testified about growing concern at the company about how quickly Theranos was pushing to use the technology on patients. Former Walgreens and Safeway executives said they were unaware that Theranos was using other companies’ traditional machines to process blood samples. And former Defense Secretary Jim Mattis, who sat on the company’s board, said he would have had a different view of the company if he had known the limitations of the Theranos blood testing device.
“It would have dampened my enthusiasm considerably,” he told the court.
A Wall Street Journal investigation in 2015 revealed that Theranos relied on traditional laboratory testing machines and typical blood samples to run many of its tests.
Regulators began investigating the company, and Theranos went on the defensive. Holmes’ empire and public image began to crumble.
A federal regulator of laboratories found deficiencies at the company’s laboratory that “immediately endanger the health and safety of patients.” Holmes was eventually banned from owning or operating a medical laboratory for at least two years. And in 2018, she was charged with massive fraud by the Securities and Exchange Commission, which she paid a hefty fine to settle. She left Theranos that year, and the company closed soon after.
She has since been the subject of an HBO documentary, a Hulu TV series, a best-selling book and several podcasts.
Holmes testified on the stand for more than 20 hours during the trial last year, speaking publicly for one of the first times in years and drawing a throng of reporters and members of the public to see her in person. She told the jury she always acted in good faith – trying to create and maintain a technology that would help people.
Holmes admitted on the stand that Theranos ran blood tests on modified third-party machines without telling its business partners, and that she added the logos of two pharmaceutical companies to studies the company sent to investors. She said she had no intention of deceiving them.
“They weren’t interested in today or tomorrow or next month,” she said on the stand. “They were interested in what kind of change we could make.”
Throughout the trial, Holmes’ lawyers argued that she made mistakes as a young CEO but acted with good intentions and believed in the company she created.
“Theranos certainly did not view mistakes as crimes; they saw them as part of the road to success, attorney Lance Wade said at the start of the trial.
Holmes’ defense attorneys asked the judge to sentence her to 18 months in prison, or home detention plus hours of community service.
“She founded and built Theranos for indisputably good reasons,” they wrote to the judge. “She worked tirelessly with hundreds of brilliant and committed staff to improve access to affordable health information.”
Holmes has been trying to get a new trial for months. Holmes’ team previously filed three motions for a new trial, all of which were denied by Federal District Judge Edward J. Davila.
A recusal cited a meeting between a prominent witness in the trial, former Theranos lab director Adam Rosendorff, who apparently showed up at Holmes’ home and spoke with her partner, Billy Evans.
In a memo about the conversation, Evans said Rosendorff was “desperate” to talk to Holmes and commented that prosecutors were trying to make everyone look bad.
“And that this weighed on him, he said he had trouble sleeping,” Evans wrote.
The judge allowed an evidentiary hearing with Rosendorff, but ultimately denied the motion.
Holmes’ former business and romantic partner, Sunny Balwani, was charged alongside Holmes before his case was later dropped when Holmes alleged he had abused her for years. Balwani has denied the allegations.
Balwani was convicted of all 12 counts of conspiracy and wire fraud with which he was charged. His sentencing is scheduled for December.
More than 100 people wrote letters in support of Holmes for her sentencing, including former employees, investors and even New Jersey Sen. Cory Booker, who said he met Holmes years before she was charged.
“In the years since, I have always been struck by the way our conversations focused on her desires to make a positive impact on the world,” he wrote.
Holmes’ partner Evans also wrote to the judge and tried to describe a different Holmes than what was portrayed in the media. He praised her “willingness to sacrifice herself for the greater good is something I greatly admire in her.”
He also wrote that “earlier this year, while pregnant, she decided she wanted to swim the Golden Gate Bridge,” which worried Evans.
“Rain or shine she practiced and her determination overwhelmed the odds against her,” he wrote. “Two weeks before the event, she made the cut-off time when she swam the breaststroke. I was wrong, you would think that by now I would learn not to dismiss her endurance.”
