Elizabeth Holmes was sentenced to more than 11 years in prison Friday after she was convicted in January of defrauding investors while running the failed startup Theranos.
Judge Edward Davila imposed a sentence of 11 years and three months in prison, with an additional three years of supervised release after Holmes is released. The sentence also includes a $400 fine, or $100 for each count of fraud. Reimbursement will be determined at a later date. Holmes was ordered to remand herself in custody on April 27, 2023. She is expected to appeal her conviction.
Holmes, who was found guilty in January of four counts of defrauding investors, faces up to 20 years in prison and a $250,000 fine plus restitution for each count.
Attorneys for the government asked for a 15-year sentence, as well as probation and restitution, while Holmes’ probation officer pushed for a nine-year term. Holmes’ defense team asked Davila, who led her case, to sentence her to up to 18 months in prison followed by probation and community service.
Before the sentencing was announced, a tearful Holmes addressed the court in San Jose, California. “I loved Theranos. It was my life’s work,” she said. “The people I tried to get involved with Theranos were the ones I loved and respected the most. I’m devastated by my mistakes.”
She also apologized to the employees, investors and patients of Theranos. “I am so, so sorry. I gave everything I had to build our company and save our company,” she said. “I regret my mistakes with every cell in my body.”
In arguments before the judge on Friday regarding the sentence, Kevin Downey, one of Holmes’ lawyers, said that unlike other defendants in corporate fraud cases, the Theranos founder did not express greed by cashing out stocks or spending money on “yachts and planes. ” Instead, the money was “used to build medical technology.”
Federal prosecutor Jeffrey Schenk pointed out that Holmes gained fame, adulation and a lifestyle from the scam, even though she did not reap any financial gains. “These are still benefits she is receiving,” he said.
Friday’s sentencing limits Holmes’ astonishing doom. Once hailed as a tech industry icon for her company’s promises to test for a range of conditions with just a few drops of blood, she is now the rare tech entrepreneur to be convicted and face jail time for her company’s missteps.
Holmes, now 38, started Theranos in 2003 at the age of 19 and soon after 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 for a variety of conditions using just a few drops of blood taken 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 Education Secretary Betsy DeVos. At its peak, Theranos was valued at $9 billion, making Holmes a billionaire on paper. She was hailed on magazine covers, often wearing a distinctive black turtleneck that invited comparisons to the late Apple CEO Steve Jobs. (She hasn’t worn that look in court.)
The company began to unravel after a 2015 Wall Street Journal investigation found that the company had only ever 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 voided two years of blood test results. In 2018, Holmes and Theranos settled allegations of “massive fraud” with the Securities and Exchange Commission, but admitted or denied some of the allegations as part of the settlement. Theranos dissolved soon after.
In her lawsuit, Holmes alleged that she was in the midst of a decade-long abusive relationship with her then-boyfriend and Therano COO Ramesh “Sunny” Balwani while she was running the company. Balwani, she alleged, tried to control almost every aspect of her life, including disciplining her eating, her voice and her image, and isolating her from others. (Balwani’s lawyers rejected her claims.)
In July, Balwani was found guilty of all 12 charges in a separate trial and faces the same potential maximum jail time like her. Balwani is scheduled to be sentenced on December 7.
“The effects of Holmes and Balwani’s misconduct were far-reaching and serious,” federal prosecutors wrote in a November court filing regarding Holmes’ sentencing. “Dozens of investors lost over $700 million and many patients received unreliable or completely inaccurate medical information from Theranos’ flawed tests, putting these patients’ health at serious risk.”
More than 100 people wrote letters in support of Holmes to Davila, 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 Senator Cory Booker. Booker described meeting her at a dinner for years before she charged and bonded over the fact that they were both vegan with nothing to eat but a bag of almonds, which they shared.
“I still believe that she holds on to the hope that she can make a contribution to the lives of others and that, despite her faults, she can make the world a better place,” Booker wrote, noting that he continues to regard her as a friend.
Ahead of the hearing, there were also questions about how Holmes’ sentencing could be complicated by developments in her life after she resigned from Theranos. Holmes and her partner, Evans, who met in 2017, have a young son. Holmes is also pregnant, as confirmed by recent court documents and her last court appearance in mid-October.
Mark MacDougall, a white-collar defense attorney and former federal prosecutor, told CNN Business before the hearing that the fact that Holmes has a young child may affect how she is sentenced.
“I don’t know how it can’t, just because judges are human,” he said.
MacDougall also said he doesn’t see what a long prison sentence leads to. “Elizabeth Holmes is never going to run a big company again,” he said. “She’s never going to be in a position for something like this to happen again.”