Former Theranos CEO Elizabeth Holmes set to be sentenced

Former Theranos CEO Elizabeth Holmes awaits sentencing on Friday, 10 months after a the jury found her guilty of defrauding the investors of the bankrupt blood testing company.

The sentencing hearing in San Jose, Calif., began shortly after 10 a.m. PT and continued as the clock neared noon — an unusually long duration for what is usually a fairly lengthy hearing. procedural.

Holmes, 38, founded Theranos in 2003, and it quickly became one of the best-known startups in the world, with a peak valuation of $10 billion. But a series of Wall Street Journal exposures have raised questions about the effectiveness of the company’s technology and business practices, triggering multiple investigations by federal and state officials.

The sentence, which will be imposed by Judge Edward Davila of the Northern District of California, will be seen as a signal of the severity of punishment for wrongdoers in the high-flying world of tech startups when they misrepresent a company’s capabilities.

“Especially in a high-profile case, you want the public to know that if you defraud investors or anyone else, you could face serious jail time,” said Carrie Cohen, global co-president of investigations and prosecution. white collar defense. Morrison Foerster law firm practice group.

“Given the facts that all came to light at trial, I would suspect that she is considering a significant prison sentence, probably closer to what the government has requested,” Cohen said.

In January, Holmes was found guilty of four counts of investor fraud and conspiracy. A jury acquitted her of four other counts of harming patients who used Theranos’ blood-testing device and could not agree on other charges. Investors in Theranos, a group that included media mogul Rupert Murdoch and software billionaire Larry Ellison, lost $144 million when the startup failed.

Federal prosecutors have sought a 15-year sentence and $800 million payout, describing Holmes’ crimes as “among the most significant white-collar offenses Silicon Valley or any other district has ever seen,” according to court documents this week.

Theranos founder Elizabeth Holmes attends court hearing
Elizabeth Holmes, founder of Theranos, right, leaves federal court in San Jose, Calif., Thursday, Sept. 1, 2022.

Bloomberg


Holmes’ lawyers have called for her not to be jailed, arguing that she poses no danger to society, has a debt she is unlikely to be able to repay and has already suffered under cover media “dehumanizing cruelty” of the fall of Theranos. They featured testimonials from 130 people, including friends, family and even Senator Cory Booker, attesting to Holmes’ kind attentions.

Holmes has a one-year-old son and appeared to be pregnant when she was last heard. Both are factors that could influence the judge to be lenient in sentencing, Cohen said.

Holmes testified that she was psychologically traumatized after being raped in college and suffered sexual and emotional abuse at the hands of former Theranos chief operating officer Sunny Balwani, who was 19 years his senior. While the duo ran Theranos, Holmes maintained that Balwani controlled her schedule, diet, and presentation to others, and frequently belittled and castigated her.

Balwani’s lawyers have denied the allegations. He was found guilty of 12 counts of fraud in July and is expected to be sentenced on December 7.

Holmes said she plans to appeal her conviction. If she is sentenced to prison, a point of contention could be when she begins the sentence. The judge could delay the start of her term until Holmes has given birth. She could also post bond to stay out of jail while she appeals her sentence, Cohen said.

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