News

Judge sentences Elizabeth Holmes to over 11 years in prison

Theranos founder ordered to surrender to federal custody on April 27

Elizabeth Holmes, former CEO of Theranos, arrives at the federal courthouse in San Jose on Oct. 1, 2021. Courtesy Harika Maddala/Bay City News.

A federal judge sentenced Theranos founder and CEO Elizabeth Holmes to 11 years and three months in prison on Friday, citing the need for investors in Silicon Valley startups to be able to take "risks free from fraud."

U.S. District Judge Edward Davila ordered Holmes to surrender to federal custody on April 27, 2023, apparently taking into account the fact that Holmes is pregnant with her second child.

Holmes was convicted of four counts of wire fraud based on false and misleading statements she made to investors in Theranos, the now-defunct blood testing company that was based in Palo Alto.

She was acquitted of four counts of wire fraud related to tests given to actual patients. The jury did not reach a verdict on three remaining counts involving investors.

The sentencing on Friday capped a four-hour hearing during which prosecutors had pushed for a 15-year sentence. Holmes' lawyers requested a sentence of 18 months of home confinement.

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The packed courtroom heard an emotional appeal from Alex Shultz, son of the late George Shultz, a former Theranos board member, and father of Tyler Shultz, a Theranos employee who had tried to alert his grandfather to the concealment going on at the company and the defects in its blood-testing technology.

Holmes, Alex Shultz said, had "desecrated his family."

Holmes spoke last, telling the judge that she loved Theranos and that the company was her "life's work."

"I am so, so sorry," Holmes said. "In looking back there are so many things I would do differently if I had the chance."

She told the judge that going forward she just wants to contribute by helping "one person at a time."

Explaining his decision, Davila harkened back to the agricultural days of Silicon Valley, then talked about the change brought about when the area became known for its innovation.

"The world relies on us," Davila said. "This is a fraud case where an exciting venture went forward ... only to be dashed by misrepresentations, hubris and just plain lies."

Davila calculated the prison term using federal sentencing guidelines, which take into account the number of victims of fraud and their overall losses. Holmes' fraud, Davila said, affected at least 10 investors whose losses totaled more than $120 million. He denied a defense request for a variance from the guidelines based on Holmes' acceptance of responsibility, saying that Holmes had not met the requirements for such a deduction.

Once her prison term is served, Holmes will spend three years under supervised release, Davila ordered.

He told the lawyers to agree on a future hearing date at which Holmes' restitution obligation will be determined.

Prosecutors have asked for a restitution order of over $800 million. The defense has asked that Holmes not be required to pay any restitution, arguing that she "essentially has no assets."

The court's probation officer agreed with the conclusion that Holmes has no money.

Holmes' defense team told the judge that they plan to file papers asking that Holmes be allowed to remain free on bail until an appeal of the judgment is decided.

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Judge sentences Elizabeth Holmes to over 11 years in prison

Theranos founder ordered to surrender to federal custody on April 27

by Susan Nash / Bay City News Foundation /

Uploaded: Fri, Nov 18, 2022, 3:44 pm
Updated: Mon, Nov 21, 2022, 8:34 am

A federal judge sentenced Theranos founder and CEO Elizabeth Holmes to 11 years and three months in prison on Friday, citing the need for investors in Silicon Valley startups to be able to take "risks free from fraud."

U.S. District Judge Edward Davila ordered Holmes to surrender to federal custody on April 27, 2023, apparently taking into account the fact that Holmes is pregnant with her second child.

Holmes was convicted of four counts of wire fraud based on false and misleading statements she made to investors in Theranos, the now-defunct blood testing company that was based in Palo Alto.

She was acquitted of four counts of wire fraud related to tests given to actual patients. The jury did not reach a verdict on three remaining counts involving investors.

The sentencing on Friday capped a four-hour hearing during which prosecutors had pushed for a 15-year sentence. Holmes' lawyers requested a sentence of 18 months of home confinement.

The packed courtroom heard an emotional appeal from Alex Shultz, son of the late George Shultz, a former Theranos board member, and father of Tyler Shultz, a Theranos employee who had tried to alert his grandfather to the concealment going on at the company and the defects in its blood-testing technology.

Holmes, Alex Shultz said, had "desecrated his family."

Holmes spoke last, telling the judge that she loved Theranos and that the company was her "life's work."

"I am so, so sorry," Holmes said. "In looking back there are so many things I would do differently if I had the chance."

She told the judge that going forward she just wants to contribute by helping "one person at a time."

Explaining his decision, Davila harkened back to the agricultural days of Silicon Valley, then talked about the change brought about when the area became known for its innovation.

"The world relies on us," Davila said. "This is a fraud case where an exciting venture went forward ... only to be dashed by misrepresentations, hubris and just plain lies."

Davila calculated the prison term using federal sentencing guidelines, which take into account the number of victims of fraud and their overall losses. Holmes' fraud, Davila said, affected at least 10 investors whose losses totaled more than $120 million. He denied a defense request for a variance from the guidelines based on Holmes' acceptance of responsibility, saying that Holmes had not met the requirements for such a deduction.

Once her prison term is served, Holmes will spend three years under supervised release, Davila ordered.

He told the lawyers to agree on a future hearing date at which Holmes' restitution obligation will be determined.

Prosecutors have asked for a restitution order of over $800 million. The defense has asked that Holmes not be required to pay any restitution, arguing that she "essentially has no assets."

The court's probation officer agreed with the conclusion that Holmes has no money.

Holmes' defense team told the judge that they plan to file papers asking that Holmes be allowed to remain free on bail until an appeal of the judgment is decided.

Comments

historyguy
Registered user
Portola Valley
on Nov 18, 2022 at 4:18 pm
historyguy, Portola Valley
Registered user
on Nov 18, 2022 at 4:18 pm

The verdict sounds fair to me and the judge's comments make clear why Holmes is going to prison.


Rhodoreae
Registered user
Ventura
on Nov 18, 2022 at 4:42 pm
Rhodoreae, Ventura
Registered user
on Nov 18, 2022 at 4:42 pm

She never apologized for her unbelievably harsh treatment of Ian Gibbons and other employees. She never apologized to the patients who received incorrect life-altering test results from her defective equipment.

I feel sorry for her children.


Me
Registered user
Palo Alto High School
on Nov 18, 2022 at 4:51 pm
Me, Palo Alto High School
Registered user
on Nov 18, 2022 at 4:51 pm

Gave birth to a child, is currently pregnant, supposedly lost her dog to a coyote, all for leniency. Glad the judge gave her 11 years of the max of 20 (although she should get 50). But how many years will she actually serve? 2 and out on good behavior?


Heckity
Registered user
Barron Park
on Nov 18, 2022 at 6:29 pm
Heckity, Barron Park
Registered user
on Nov 18, 2022 at 6:29 pm

Happy that she received a decent sentence, but saddened to know that her children will one day learn that she became pregnant with them as a means to stay out of jail, which didn't work. Total sociopath.


Online Name
Registered user
Embarcadero Oaks/Leland
on Nov 18, 2022 at 8:05 pm
Online Name, Embarcadero Oaks/Leland
Registered user
on Nov 18, 2022 at 8:05 pm

If you haven't read the book "Bad Blood" about the background, including how she terrorized employees, threatened and stalked reporters, drove the chief scientist to suicide etc,,. you really should.

Glad to read that Alex Shultz is being quoted here and elsewhere describing what they did to his family which, according to "Bad Blood" has $400,000 in legal fees fighting off the Theranos lawyers and hope they file a civil suit for damages.

Anyone who tells a Walgreen's employee to ignore testing problems because they don't "send pretty people like me <Holmes> to jail" deserves a much longer sentence.

Wondering why she didn't just plead insanity instead of her transparent "Anchor Baby Leniency" ploy and "My Mean Abusive Boyfriend Made Me Do It" defense.

Shameful on so many counts.


Citizen
Registered user
College Terrace
on Nov 18, 2022 at 8:15 pm
Citizen , College Terrace
Registered user
on Nov 18, 2022 at 8:15 pm

Why so few years? Fraud, deceit, abuse, etc. She deserved more.


Jennifer
Registered user
another community
on Nov 18, 2022 at 9:19 pm
Jennifer, another community
Registered user
on Nov 18, 2022 at 9:19 pm

I feel sorry for her kids too. Her sentence seems fair, and if these are federal charges, she'll serve 85% of her sentence.

I've read Bad Blood. They're both con artists, but Balwani is the mastermind. She was in her senior year of high school when she met Balwani, a 37-year-old married man who was controlling and abusive. It's not hard to read between the lines. I think the judge feels somewhat sorry for her, or she'd give birth in prison. Other women have.


Bystander
Registered user
Another Palo Alto neighborhood
on Nov 19, 2022 at 8:04 am
Bystander, Another Palo Alto neighborhood
Registered user
on Nov 19, 2022 at 8:04 am

I spent some time thinking deeply about this.

Reading some of the comments above and some of the commentators on the news talking about sending a message, this needs to be punished, blah blah blah, shows a blatant one sided attitude about crime from the legal community. If only our criminal justice system had the same attitude about some of the crimes we see every day in California, the theft of catalytic converters, the porch pirates stealing bags of dog food or whatever other online purchases from our homes, the gangs of thieves working high end Stanford department stores or even those taking from CVS in San Francisco causing all the drugstores to close in certain areas!

There is a certain double standard going on in which petty criminals are excused because of perceived victimhood and nothing more than a slap on the wrist allows them to be back on the streets repeating the same crime over and over again. Repeat offenders are allowed to get away with their crimes all the time and nothing is being done.

I just think the hypocrisy has to stop. Equal justice for all criminals not just those who hit the headlines.


Online Name
Registered user
Embarcadero Oaks/Leland
on Nov 19, 2022 at 11:10 am
Online Name, Embarcadero Oaks/Leland
Registered user
on Nov 19, 2022 at 11:10 am

Bystander raises some excellent points. Too often we've heard DA's and judges excuse serial rapists, stalkers, thieves etc. by saying, "Oh, if only he'd raped and/or stalked more than one woman, stolen more than $950 worth of stuff, etc etc., maybe we could have / would have imposed stiffer sentences."

And then there's my favorite right here in PA when the PAPD responded to REPEATED drunken threats by asking the victim, "Are you afraid for your life right this minute? No? Well, all rightie then. It's only a misdemeanor" and the perp's record was expunged after he "successfully" completed some AA classes.


super chicana
Registered user
Palo Alto High School
on Nov 19, 2022 at 11:24 am
super chicana, Palo Alto High School
Registered user
on Nov 19, 2022 at 11:24 am

Funny on the other string about policing many of the whites and Asians made racist arguments that black people commit more crime. They are dead silent about far more damaging white collar criminals but racist and vocal about petty crimes. This is where our policing dollars should be channeled - white collar criminals. All the tax cheat, corporate price gougers, environmental polluters and Bernie Madoffs of the world should go to jail. Then Holmes would not be the only headline. To focus on just street crime and petty theft is racism. Someone commented that street criminals need harsher punishing not the Elizabeth Holmes of the world who made headlines. Let’s unpack that. The reason she made headlines is because law enforcement does not concentrate its efforts in white collar criminals as often as it should. Let’s go after white collar criminals with force.More white people would be locked up and that would outrage white middle class men - so the system remains racist (and sexist - say Martha Stewart). Look at Jan 6. Those were straight up criminals. If they were black they would all be dead. Learn the role white male privileged has in policing. The biggest criminal of them all is Trump. Name the crime. Yet there are far more comments calling for the lock up of black men (and deportation of Latino ones). Your moral compass is seriously broken. Tax cheats cost us more. Utility companies steal more. Corporatists are far more sociopathic and greedy cutting corners and costing lives. It is more of a crime to own a bank than rob a bank. This comment is lost on those who are void of ethics. I fear the white male Eron-like corporatists in their suits far more than the boogie man in the hoodie. Crime is exactly where you look for it. Now go after the REAL criminals who don’t report their cash transactions, lie on their taxes, cheat workers, price fix/gouge. And pay off porn stars with campaign funds, steal govt documents, and incite riots. Racist hypocrites, all.


III
Registered user
Midtown
on Nov 19, 2022 at 7:40 pm
III, Midtown
Registered user
on Nov 19, 2022 at 7:40 pm

She should have got 25 to life.
THis gal besides being a liar, thief, con artist, was also dangerous.
Her blood samples for her clients purposely being misleading and
creating potential health problems, even death. Was terrible.
She is no innocent babe in the woods. Everything she does is calculated
to increase her piggy bank. 11 years was not enough.
III


JR
Registered user
Palo Verde
on Nov 20, 2022 at 8:12 am
JR, Palo Verde
Registered user
on Nov 20, 2022 at 8:12 am

It should not be illegal to lose investors money, there is risk involved in venture capital. Every startup in the world cuts corners and cuts costs, I know from years of experience here in the Bay Area. Let's go back 20-30 years and see what mistakes Facebook, Google, Twitter and others made in their infancy and see if we can throw their founders in jail, shall we?

Theranos was well on its way to success until a hit piece published by an out of town New York City newspaper spread lies an innuendo about their operations. As for Elisabeth, she is an inspiration to all entrepreneurs here and I have no doubt she will be successful in her next venture. It is an absolute injustice that she was convicted of a crime, yet alone serve prison time because her company was torpedoed by muck rakers. If you claim to be against political prisoners then you have a problem on your hands because Elisabeth's situation absolutely reaches that bar in my opinion. I know for a fact that many are petitioning Joe Biden to end this injustice with a pardon.


resident3
Registered user
Another Palo Alto neighborhood
on Nov 20, 2022 at 8:58 am
resident3, Another Palo Alto neighborhood
Registered user
on Nov 20, 2022 at 8:58 am

@JR

"It should not be illegal to lose investors money, there is risk involved in venture capital."

Fine with me when overly rich people can handle risks, but fraud and lying with products like medical devices affects the rest of us. It could be your mother or your child at risk. IMHO, it would be better if investors could be held liable for being so reckless and stupid.

And let's be grateful for out of town newspapers because the local press doesn't have this type of investigative breadth. It would probably also not go against any established powers like venture capital.


Online Name
Registered user
Embarcadero Oaks/Leland
on Nov 20, 2022 at 9:29 am
Online Name, Embarcadero Oaks/Leland
Registered user
on Nov 20, 2022 at 9:29 am

@JR, the "out of town newspaper" is the Wall Street Journal not a "local" paper owned by a hedge fund that has no fact checkers and can't even count number of city council candidates accurately. The Wall Street Journal DOES have face checkers and the reporting wasn't based on innuendo about it since the writer interviewed employees and patients.

Read "Bad Blood" and all the other reports on the trial and you'll see that it was PROVEN that her device was total fiction BECAUSE she wasn't using her own invention but commercially available products from other manufacturers. The demonstrations were faked -- just like they often are in the software industry -- but the big difference is that her fakery can harm or kill people who get the wrong medical treatment.

Not only was there no there there, she knowingly endangered people's health.

She was repeatedly told her machines were inaccurate and didn't work. But she didn't care and, worse, harassed, threatened and drove to suicide those who tried to warn her.

When told by a Walgreens employee about the false results which could kill people, Holmes dismissed that saying, "They don't send pretty people like me to jail."

Appalling that you think that type of amoral, irresponsible behavior is defensible.

Her kids are lucky she won't be around to raise them.


Ben Z.
Registered user
Barron Park
on Nov 20, 2022 at 11:58 am
Ben Z., Barron Park
Registered user
on Nov 20, 2022 at 11:58 am

On one hand, street criminals are said to be judged too harshly. While this may be true, white collar criminals are getting away with murder. They have political connections and often skirt legal repercussions.

This often skews crime statistics. Places like Palo Alto are deemed ultra safe. There is no consideration to the fact that the large concentration of wealth makes residents prime targets for criminal activity.

Victims who try to report crimes often face retaliation. The Theranos case is the prime example. [Portion removed.]

This is something that I have personally experienced after making complaints that my kids were being sex trafficked by a prominent attorney. In addition to the aforementioned retaliation, I was also physically assaulted on numerous occasions. I can't get the police to do anything about it because of who is involved.






JR
Registered user
Palo Verde
on Nov 20, 2022 at 1:23 pm
JR, Palo Verde
Registered user
on Nov 20, 2022 at 1:23 pm

"Online Name", the book you mention is a piece of journalistic fiction. It is a hit piece designed to denigrate Thernaos and Ms. Holmes without regard to truth or balance. You should realize that immediately if you skip to the chapter about the poor, innocent, bloodsucking patent troll that got his feelings hurt by big bad Elizabeth Holmes. It really takes something to try and make a patent troll into a sympathetic figure, but that's what the author did, and apparently people like you even fell for it.


resident3
Registered user
Another Palo Alto neighborhood
on Nov 20, 2022 at 1:56 pm
resident3, Another Palo Alto neighborhood
Registered user
on Nov 20, 2022 at 1:56 pm

@JR,

"the book you mention is a piece of journalistic fiction. It is a hit piece designed to denigrate Thernaos and Ms. Holmes without regard to truth or balance."

Does it matter what brought Holmes' crimes to light? She got convicted in court based on evidence presented in court. The idea that she has a cheer squad asking for pardon seems fitting. No surprise there. Unfortunately, that doesn't fix the part about how hidden the stupid part of venture capital is. Please keep burning your money on lies but stop crying about it when you're caught.


Annette
Registered user
College Terrace
on Nov 21, 2022 at 11:57 am
Annette, College Terrace
Registered user
on Nov 21, 2022 at 11:57 am

With regard to the testimonial letters written on Holmes' behalf, the judge made a comment to the effect that the letters would likely have been different had the authors of those letters heard all the testimony. After reading Bad Blood, I think Ms. Holmes came by her skills naturally. She hoodwinked some very smart people and apparently still is. She may not look the part, but she's a con woman. And personally unscrupulous if she did plan pregnancy #2 as a way to dodge accountability. Hopefully her partner and his family can provide a nurturing environment for the two children.


Online Name
Registered user
Embarcadero Oaks/Leland
on Nov 21, 2022 at 12:54 pm
Online Name, Embarcadero Oaks/Leland
Registered user
on Nov 21, 2022 at 12:54 pm

The judge was right that her supporters needed to hear the evidence and testimony before writing those letters.

"And personally unscrupulous if she did plan pregnancy #2 as a way to dodge accountability."

Yup. Pregnancy #1 coincided with her trial and Pregnancy #2 with her sentencing hearing. Check the number of well-timed stories that totally ignore the fact that most women in jail ARE mothers, too.

Funny how the strong brilliant capable CEO and her family and supporters never worried she was being "abused" and "controlled" by Sonny until they were both caught and she needed someone to blame (while ignoring how he tr4eated everyone else for years).

Her PR firm deserves every cent it earned, esp. for the heart-rending story about the death of her "beloved wolf dog" they sat on for a year until the sentencing hearing.

Can't wait to hear how she's too too broke to pay restitution but can keep fund her appeal and ongoing pr campaigns.


Anonymous
Registered user
Duveneck/St. Francis
on Nov 21, 2022 at 1:56 pm
Anonymous, Duveneck/St. Francis
Registered user
on Nov 21, 2022 at 1:56 pm

Apparently, Holmes enjoys an upscale lifestyle gadding about. I’m sure her attorneys will work mightily to delay, appeal.
I believe she deserves prison. The case is unpleasant and complicated, but investors and medical patients were seriously fooled, swindled.
It’s disheartening to know VCs, investors, celebrity know-little board, etc. were charmed by a Stanford student
ooooh! And a woman!
And VCs wrote in to the judge to support her!? Why!? To look good “supporting a woman!?”
Better be more discerning on your judgement in future.
Women can be criminals just the same as men.
Do due diligance, people.
And thank God for the legitimate investigative news media.


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