Elizabeth Holmes, the Stanford dropout, startup founder, and Theranos CEO who lied over and over about her blood testing startup, can expect time behind bars in the near future. Holmes was sentenced to 11.25 years in prison and 3 years of supervised release in San Jose federal court on Friday. The sentence came down after over four hours of reiterative arguments from both sides.
Judge Edward Davila’s final decision was less than what federal prosecutors wanted, but much much more than what Holmes’ defense had asked the court a few weeks ago. Attorneys relitigated much of the case up until now. According to reporters in the courtroom, the prosecution argued that a lengthy sentence would argue “the ends don’t justify the means,” while the defense tried to show Holmes as a smart, responsible young woman who “going forward, will do good.”
Davila said that the case was “troubling on so many levels,” since Holmes was a bright young woman. Still, he added that “failure is normal, but failure by fraud is not OK.”
Federal prosecutors had asked the court for a 15-year sentence, though probation officers recommend just nine years. Holmes’ Theranos, a blood testing startup, offered enormous promises to patients and investors her company’s devices could run multiple blood tests on just one single drop of blood.
Holmes spoke at her sentencing, reportedly crying and speaking from a prepared statement: “I am devastated by my failings. I have felt deep pain for what people went through, because I failed them... I regret my failings with every cell of my body.”
Davila noted he limited the number of investors to 10 to calculate fines, naming major folk like media mogul Rupert Murdoch and the DeVos family. He also said that the total loss to investors was just $121 million, but set a future hearing for restitution to some time in the future. Prosecutors had argued for estimated restitution to investors of $804 million, but its very, very unlikely she has those funds. Holmes’ defense instead claimed the calculation should be closer to $40 million.
Earlier that morning, Holmes had to push through the crowds gathered outside the courthouse in San Jose, California linked hand-in-hand with partner Billy Evans, mother, Noel Holmes, and father Christian Holmes. The Theranos CEO had appeared visibly pregnant in her most recent court appearances, according to multiple reports, and her pregnancy was confirmed by her partner Billy Evans who, in a letter to the court, asked the judge for leniency.
She will have some time between now and when she sees the inside of a cell. Legal analyst Dean Johnson told NBC Bay Area on Friday that Holmes’ attorneys are likely to file a stay for an appeal, a process which could take up to a year or more and in that time Holmes can remain free. Johnson said her pregnancy cannot factor into sentencing, as per federal sentencing guidelines, though compassion for a new mother might have still played a role.
Theranos was once valued at $9 billion after raising $945 million from investors, but the company’s fall has proved such a kick in the pants to the “genius” startup founder narrative that had taken over Silicon Valley. Prosecutors had argued that a lengthy sentence would have sent the right message to deter other tech fraud, according to court documents.
Back in January, a jury found Holmes guilty of just four of the original 11 counts she was accused of. The Theranos founder was found guilty of wire fraud and conspiracy for defrauding Theranos investors, but she managed to avoid the charges of defrauding Theranos patients.
Since then, she’s tried several times to push back the sentencing date or otherwise get a new trial. She claimed that a key witness for the prosecution, lab director Adam Rosendorff, had been somehow insincere in his testimony, based on a voicemail he left Holmes. Davila dismissed any claims that any change in testimony would have changed the outcome of the trial. Holmes’ attorneys then asked the judge to limit her sentence to just 18 months of house arrest compared to the full maximum of 80 years based on the charges, though such an emotion appeal is a routine mitigation measure supposed to be done by any attorney in criminal proceedings.
During the sentencing, federal prosecutor John Bostic said that Holmes once said “they don’t put attractive people like me in jail,” though Kevin Downey, one of Holme’s attorneys, argued that was citing witnesses who never took the stand during trial.
Holmes received 130 letters in support of a lighter sentence, including one rather glowing character letter including Sen. from New Jersey Cory Booker who said “I believe that Ms. Holmes has within her a sincere desire to help others, to be of meaningful service, and possesses the capacity to redeem herself.” Booker relays that he had been Holme’s friend for about six years prior to her being indicted in 2018.
Other prominent people wrote in support of Holmes. The actor Ricki Noel Lander, who said she had a “close friendship” with Holmes, said the Theranos founder was “trustworthy.” Many other letters came from childhood or family friends, old co-workers, and even some old investors. Tim Draper, founder of the venture capital firm Draper Associates that had originally backed Theranos, said “When we backed Theranos, we knew it was a long shot,” and argued “she seemed to get (and take) a lot of bad advice and things went south.”
In court documents advocating for a lenient sentencing, Holmes attorneys called her “an intelligent, fearless woman who took on a huge project that should have changed the world and nearly succeeded.” The documents also noted that the prospect of jail time was “terrifying” considering she is the mother of a 1-year-old son.
At the time she founded Theranos, the young Holmes was considered a “wunderkind” who was able to change the world with her intelligence. That rise and fall seems to be reflected in Sam Bankman-Fried, who’s crypto empire centered on the exchange FTX has proved to be a castle built on a mountain of sand. Bankman-Fried is now being investigated by the U.S. Attorney’s Office and Department of Justice.
Davila said during the sentencing hearing that while Holmes was leader of the company, he implied that former Theranos president and COO Ramesh “Sunny” Balwani was more liable for the actual fraud and conspiracy. Balwani was also found guilty of fraud and is expected to be sentenced Dec. 7.