November 27, 2022

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Elizabeth Holmes has been sentenced to more than 11 years in prison by Reuters for Theranos fraud

3 min read

©Reuters. FILE PHOTO: Theranos founder Elizabeth Holmes and her family exit federal court after attending her fraud trial in San Jose, California, USA on January 3, 2022. REUTERS/Brittany Hosea-Small/File Photo

By Jody Godoy and Dan Levine

SAN JOSE, Calif. (Reuters) – A California judge sentenced Theranos founder Elizabeth Holmes to 11 years and three months in prison for defrauding investors in her now-defunct blood testing startup, which was once worth $9 billion.

US District Judge Edward Davila in San Jose, California, convicted Holmes on three counts of investor fraud and one count of conspiracy. A jury convicted 38-year-old Holmes in January after a three-month trial.

Dressed in a dark blouse and black skirt, Holmes hugged her parents and partner after the verdict was announced.

During the hearing, Holmes cried as she said she was “devastated” by her failure and would have done many things differently if given the chance.

“I am deeply ashamed of what people have gone through because I let them down,” she said.

Before delivering the verdict, Davila called the case “troubling on so many levels” and questioned what motivated Holmes, a “brilliant” entrepreneur, to misrepresent her company to investors.

“This is a scam where an exciting endeavor has been pursued with great expectations, only to be thwarted by untruths, misrepresentations, outright hubris and lies,” he said.

The judge set Holmes’ delivery date for April. Her lawyers are expected to ask the judge to allow her to remain free on bail while she is on appeal.

Assistant US Attorney Jeff Schenk told the judge before announcing the sentence that a 15-year sentence would “make a statement that the ends do not justify the means.”

Holmes’ attorney Kevin Downey requested house arrest for Holmes, saying leniency was warranted because, unlike someone who committed a “great crime,” it wasn’t motivated by greed.

According to court documents, the Federal Office for Probation had recommended a prison sentence of 9 years.

Prosecutors and a lawyer for Holmes declined to comment as they left court.

Prosecutors said in court that Holmes misrepresented Theranos’ technology and finances, including by claiming that its miniaturized blood-testing device was capable of performing a series of tests on a few drops of blood. The company secretly relied on conventional equipment from other companies to conduct patient testing, prosecutors said.

Holmes testified in her own defense and said she believed her statements were accurate at the time.

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

The once $9 billion company Theranos Inc promised to revolutionize the way patients receive diagnostics by replacing traditional laboratories with small machines intended for use in homes, drugstores and even on the battlefield are.

Forbes named Holmes the world’s youngest self-made billionaire in 2014, when she was 30 and her stake in Theranos was worth $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 appeal her sentence and Davila’s decisions upholding her convictions in the US 9th Circuit Court of Circuits.

Before the verdict was announced, Davila asked if 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 their supposedly revolutionary technology.

“What’s the matter?” asked family member Holmes,

according to Schultz.

“There are no problems,” Holmes replied.

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