Elizabeth Holmes, former CEO of Theranos, made what may be her last court appearance on Friday before starting an 11-year prison sentence for her role in a blood-testing hoax. Unless her lawyers successfully appeal her conviction, Holmes will begin her sentence on April 27. During the 90-minute hearing, Holmes’ lawyers argued that she should remain free, citing missteps in the presentation and omission of evidence during her trial. However, federal prosecutors argued that there was “no likelihood for reversal” of Holmes’ conviction, and that she should pay nearly $900 million in restitution to defrauded investors. The judge will issue his ruling in early April.
Important Details about Elizabeth Holmes returns to court in bid to avoid prison –
– Elizabeth Holmes appeared in court for possibly the last time before beginning her 11-year prison sentence for masterminding a blood-testing hoax.
– Holmes’ lawyers are appealing her conviction and asking the judge to allow her to remain free while the appeal unfolds.
– The judge has not yet made a ruling on whether Holmes will be able to stay out of prison before her appeal or surrender on April 27 as scheduled.
– Holmes’ former lover and convicted Theranos accomplice, Ramesh “Sunny” Balwani, who is facing a nearly 13-year sentence, also tried to avoid prison but has to report to a federal prison in Southern California.
– Prosecutors are calling for Holmes to pay nearly $900 million in restitution to defrauded investors, but her lawyer claims that the amount should only be limited to the handful of investors who testified during her trial.
– Federal prosecutor Kelly Volkar argues that there is “no likelihood for reversal” of Holmes’ conviction and asserts that the trial documented seven different categories of deception that she engaged in while running Theranos.
The Disgraced Theranos CEO Elizabeth Holmes made what might be her final court appearance before beginning an 11-year prison sentence, unless a judge grants her request to remain free while her lawyers appeal her conviction for masterminding a blood-testing hoax. The 90-minute hearing came four months after Holmes’ last court hearing, where U.S. District Judge Edward Davila sentenced her for duping investors in Theranos, a startup she founded 20 years ago, and rode to fleeting fame and fortune on her promises of a revolutionary blood-testing technology.
Before the hearing started, a man in the audience in the San Jose, California, courtroom tried to approach the table where Holmes was sitting, carrying a document in his hand. He was quickly intercepted by security officers who forcibly removed him. Holmes didn’t appear flustered by the disruption.
The proceedings ended without a determination whether Holmes, 39, will be able to stay out of prison while her appeal unfolds or have surrendered to authorities on April 27, as currently scheduled. Davila said he hopes to issue his ruling in early April.
The judge earlier this month rejected a similar bid to avoid prison made by Holmes’ former lover and convicted Theranos accomplice, Ramesh “Sunny” Balwani, who is facing a nearly 13-year sentence after a jury found him guilty of 12 counts of fraud and conspiracy. Balwani, 57, was supposed to report to a federal prison in Southern California Thursday, but his lawyer used a last-minute legal maneuver to gain more time.
Holmes came to her St. Patrick’s Day hearing wearing a black blazer and blue skirt. She recently gave birth to her second child, according to court documents that didn’t disclose the gender or birth date.
One of her lawyers, Amy Saharia, argued that Holmes should be allowed to remain free because of various missteps in the presentation and omission of evidence during her four-month trial that make it likely an appeals court will overturn her conviction on four counts of fraud and conspiracy.
“We think the record is teeming with issues,” Saharia asserted. She specifically cited Davila’s refusal to allow the jury to see a sworn deposition that Balwani gave during a Securities and Exchange Commission investigation into Theranos’ downfall that Holmes’ defense team believes would have helped exonerate her.
Federal prosecutor Kelly Volkar countered there is “no likelihood for reversal” of Holmes’ conviction and asserted that the trial documented seven different categories of deception that she engaged in while running Theranos. Most of the deceit centered on a device dubbed “Edison” that Holmes had boasted would be able to scan for hundreds of diseases and other health problems with just a few drops of blood taken with a finger prick.
But the Edison produced such wildly unreliable results that Theranos began relying on third-party testing equipment already widely used on the market — a switch that Holmes concealed in an effort to keep the company afloat.
“That was shocking to investors,” Volkar reminded Davila.
The two opposing sides also sparred over how much restitution Holmes should pay defrauded investors whose trust briefly boosted her wealth to $4.5 billion based on Theranos’ peak value before its collapse.
Federal prosecutor Robert Leach argued her conviction for engineering a conspiracy justified restitution of nearly $900 million to repay Theranos investors swept up in her lies. “Just to apply common sense, the money these investors lost is the money they put in,” Leach said.
But Hollmes’ lawyer Patrick Looby countered that prosecutors were way off-base by pursuing an “all or nothing” restitution amount. He noted that the jury in her trial couldn’t reach a verdict on three counts of investor fraud, prompting the prosecutor to dismiss those charges. At most, Looby contended, Holmes’ restitution penalty should be limited to the handful of investors who testified during her trial.
The Case Against Holmes
Elizabeth Holmes became a media sensation when she founded biotech startup Theranos in 2003 at the age of 19. She promised a revolution in blood testing that would allow for faster, cheaper, and less invasive diagnoses. At the time, Theranos was valued at nearly $10 billion with Holmes being lauded as one of Silicon Valley’s brightest young talents.
But it soon emerged that the technology didn’t work as she claimed it did. In 2015, John Carreyrou, a Wall Street Journal investigative journalist, published a report that revealed that the tests that the company was running on the blood were inaccurate.
Carreyrou discovered that Theranos had been deceiving investors and the public, claiming that their “revolutionary” Edison machine was capable of conducting over 200 tests on a single drop of blood. In reality, only 12 of these tests came from the Edison machine, with the other tests being carried out by third-party machines that were already on the market.
Theranos’ actions resulted in patients receiving incorrect diagnoses that could have led to serious health consequences. Furthermore, Theranos’s inaccurate tests resulted in excessive amounts of money being charged to patients and insurers.
The downfall of Theranos prompted a criminal investigation into the company and, in June 2018, Holmes and her former partner Sunny Balwani were charged with nine counts of wire fraud and two counts of conspiracy to commit wire fraud. Both pleaded not guilty.
At the end of 2018, Theranos was dissolved and entered into civil settlements with the SEC and the Department of Justice. This was made up of around $500,000, a proposed fine of $100,000 and 10% of control of equity. The company did not admit guilt but did return whatever cash it had left to investors.
The Fraud Trial
The fraud trial against Holmes started in September 2020, with prosecutors arguing that she had misled investors and patients by promoting her blood-testing devices while concealing their flaws. Holmes had pleaded not guilty and claimed that she had been misled by Balwani.
As the trial progressed, the court was provided with evidence of the extent of fraud committed by Holmes and Balwani. This evidence included a covertly recorded conversation with a Theranos employee where Holmes admitted that the company’s testing was “a complete fraud” and “doesn’t work.”
At the same time, the trial was plagued by issues relating to witness testimony and evidence, which caused multiple delays and resulted in the judge dismissing several charges against Holmes. Eventually, on March 16, 2021, Holmes was found guilty of four counts of fraud and conspiracy, and she is now waiting to be sentenced.
The Fraud Sentencing
At the time of the case’s sentencing, the prosecutor pushed for a severe punishment to serve as a deterrent against other fraudsters. The prosecutor argued that Holmes was responsible for over $1 billion in losses and that she should receive a significant sentence.
On September 15, 2021, the judge sentenced Holmes to 11 years in prison and fined her $500,000. The judge stated that his reasoning was that “the victims were many and the potential for harm was enormous.”
The judge noted that Holmes had not shown any remorse for her actions and that she had continued to defend herself publicly despite the evidence against her being overwhelming. He stated that he hoped the sentence would send a message to other executives that they could not abuse positions of trust for financial gain.
The Aftermath
The trial against Holmes and Balwani has had a significant impact on the healthcare industry, and regulators have become more skeptical in their approach to new medical technology. The case has highlighted the need for greater scrutiny of medical technology companies and the potential dangers of privately held investments.
The trial has also exposed the extent of gender discrimination in Silicon Valley. Holmes was celebrated as a young, innovative female entrepreneur, but her downfall has also drawn attention to the fact that most high-profile investors in Silicon Valley are male.
Misinformation and the manipulation of data are significant issues in medical research and innovation. The Theranos case serves as a reminder that medical technology companies must prioritize patient safety and develop medical technology that lives up to its promises. Holmes’ sentence serves as a warning to those who prioritize personal gain over the health and well-being of patients.
Elizabeth Holmes was not a victim of a male-dominated industry; she was a victim of her own greed. Her actions were motivated by a desire for fame and fortune, and she ultimately paid the price for her ethical lapses. The trial has exposed the dangers of prioritizing profit over patient safety, and the consequences that can result from such behavior.
The case against Holmes has come to symbolize the potential consequences of recklessness in the healthcare industry. Investors and regulators must ensure that medical technology companies prioritize patient safety, and that they are held accountable for any failures to do so. Only then can we avoid the catastrophic consequences of fraudulent and misleading medical technology.