Elizabeth Holmes was sentenced to more than 11 years in prison Friday after being convicted in January of defrauding investors while running the failed blood-testing startup Theranos.
Judge Edward Davila imposed a prison term of 11 years and three months, with an additional three years of supervised release following Holmes’ release. The penalty also includes a $400 fine, or $100 for each count of fraud. Restoration will be set at a later date. Holmes was remanded in custody until April 27, 2023.
Holmes, who was found guilty in January of four counts of defrauding investors, faced 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’ officer pushed for a nine-year sentence. Holmes’ defense team asked Davila, who presided over 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 Thiranos. It was my life’s work,” he said. “The people I tried to engage with at Theranos were the people I loved and respected the most. I am devastated by my failures.”
He also apologized to Theranos employees, investors and patients. “I am very sorry. I gave everything I had to build our company and save our company,” he said. “I regret my failures with every cell in my body.”
In arguments before the judge Friday for her 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 in stock or spending money on “yachts and airplanes. ” Instead, the money was “used to manufacture medical technology”.
Federal prosecutor Jeffrey Schenk pointed out that Holmes gained fame, adulation and a lifestyle from the scam, even if there was no financial benefit. “Those are still benefits he’s getting,” he said.
Friday’s sentencing brings to a close the stunning fall of Holmes. Once hailed as a tech industry icon for her company’s promises to test a range of ailments with just a few drops of blood, she is now the rare tech founder to be convicted and face prison time for her company’s mistakes.
Holmes, now 38, started Theranos in 2003 at age 19 and soon 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 range of conditions using just a few drops of blood taken from a finger prick.
Theranos has 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 lauded on magazine covers, often wearing a signature black turtleneck that drew comparisons to late Apple CEO Steve Jobs. (She hasn’t worn this look in the courtroom.)
The company began to unravel after a Wall Street Journal investigation in 2015 found that the company had performed only 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 devices from traditional blood testing companies.
In 2016, Theranos voided two years’ worth of blood test results. In 2018, Holmes and Theranos settled charges of “mass fraud” with the Securities and Exchange Commission, but neither admitted nor denied any of the allegations as part of the settlement. Thiranos disbanded soon after.
In her lawsuit, Holmes claimed she was in the midst of a decade-long abusive relationship with her then-boyfriend and Theranos COO Ramesh “Sunny” Balwani while she ran the company. Balwani, she claimed, tried to control almost every aspect of her life, including her eating discipline, her voice and image, and her isolation from others. (Balwani’s lawyers have denied her claims.)
In July, Balwani was found guilty of all 12 charges in a separate trial and faces the same possible maximum prison time as her. Balwani is scheduled to be sentenced on December 7.
“The consequences of Holmes and Balwani’s fraudulent conduct were far-reaching and serious,” federal prosecutors wrote in a November court filing regarding Holmes’ sentencing. “Dozens of investors lost more than $700 million, and many patients received unreliable or completely inaccurate medical information from Theranos’ flawed tests, putting the health of these patients at serious risk.”
More than 100 people wrote letters in support of Holmes to Davila, asking for leniency in her sentence. The list includes Holmes’ partner Billy Evans, several members of the Holmes and Evans families, early Theranos investor Tim Draper and Senator Cory Booker. Booker described meeting her at a dinner party years before he was charged and accepting that they were both vegans with nothing to eat but a bag of almonds, which they shared.
“I still believe she holds out hope that she can contribute to the lives of others and that she can, despite her mistakes, make the world a better place,” Booker wrote, noting that he continues to consider her a friend.
Before the hearing, there were also questions about how Holmes’ sentencing could be complicated by developments in her life after she left Theranos. Holmes and her partner Evans, who met in 2017, have a young son. Holmes is also pregnant, as confirmed by recent court filings and her most recent 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 could affect how she is sentenced.
“I don’t know how it can’t be, just because judges are human,” he said.
MacDougall also said he doesn’t see what a long prison sentence accomplishes. “Elizabeth Holmes is never going to run a big company again,” he said. “He’ll never be able to let that happen again.”
