Elizabeth Holmes Has Been Sentenced To More Than 11 Years In Prison For Defrauding Theranos Investors

SAN JOSE, California — Theranos founder Elizabeth Holmes was sentenced to more than 11 years in federal prison Friday for defrauding investors with misleading and false statements about the capabilities of her company’s blood-testing technology.

Holmes, the former Silicon Valley executive who sought to revolutionize healthcare with a device she claimed could make medical diagnoses using just a fingerprick of blood, will now report to prison on April 27, 2023, to begin her 135-month sentence. US District Judge Edward Davila said he would set a future hearing to determine what restitution Holmes should pay.

“The tragedy of this case is it’s, um, Ms. Holmes is brilliant,” Davila said. “She had creative ideas. She’s a big thinker. She was a woman moving into an industry that is dominated, let’s face it, by male ego.”

Holmes, 38, is pregnant, though it’s not clear how far along she is or whether she will give birth before she is forced to surrender to custody. Federal guidelines don’t address what to do in the event a defendant is pregnant or a parent of a young child, former federal prosecutor Diane Birnholz told BuzzFeed News, so it was entirely up to the judge to determine whether and how to weigh the potential impact sending her to prison would have on her children.

“This is a really complicated tricky issue, and there are no easy answers,” Birnholz said. “It’s a terrible situation for the children involved.”

Her long-awaited sentence comes 10 months after a jury found her guilty of four counts of conspiracy to defraud and defrauding investors, including the family of former education secretary Betsy DeVos. Jurors acquitted her on four charges of conspiring to defraud and defrauding paying patients. They did not reach a verdict on three other charges.

Before learning her sentence, Holmes delivered a statement to the court through tears, saying that she accepted responsibility for Theranos, what she described as her “life’s work.”

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“In looking back, there are so many things I would do differently if I had the chance,” said Holmes, dressed in all black as she stood before the judge. “I tried to realize my dream too quickly and did too many things at the same time. I regret my failings with every cell in my body.”

Still, Holmes’s remarks fell short of actually admitting any wrongdoing or taking responsibility for her criminal conduct.

Holmes, whose attempts to get a new trial were recently denied, is expected to appeal her conviction and her sentence.

Her ex-boyfriend Ramesh “Sunny” Balwani, who was Theranos’s president and chief operating officer, was convicted of 12 counts of wire fraud and conspiracy in July. Balwani is due to be sentenced next month.

Federal prosecutors had recommended that Holmes receive a 15-year prison sentence — six more than the nine years suggested by the US Probation Office — arguing that such punishment would “reflect the seriousness” of the offenses, deter her and others in Silicon Valley from engaging in similar criminal conduct, and protect the public from potential future crimes by Holmes.

“Holmes speaks eloquently about her desire to innovate and improve healthcare. She has demonstrated a strong work ethic, charisma, and ambition,” the government’s sentencing memo stated. “But she is blinded by that ambition. Her reality distortion field put, and will continue to put, people in harm’s way.”

In the filing, prosecutors noted that Holmes still has not taken responsibility for her crimes, continues to view herself as a victim, and is apparently working on new patents related to healthcare as they argued that a “sufficiently punitive” sentence was necessary to discourage her “from ever contemplating committing fraud again.” They also raised concerns that Holmes could become the officer of a public company in the future under her 2018 settlement with the Securities and Exchange Commission.

“This Court cannot be confident that Holmes has been deterred from future fraud,” prosecutors wrote.

And even though Holmes was acquitted of the charges involving Theranos patients, prosecutors urged the court to take into account her “lax attitude toward patient safety” and the fact that she forced patients to “unknowingly incur a risk of death or injury” by using her company’s faulty blood testing services.

The government is also seeking more than $800,000 in restitution, despite acknowledging she probably wouldn’t be able to pay it. According to the filing, a presentence report prepared by the probation office determined Holmes has “modest assets,” which are outweighed by $450,000 in loans for the settlement with the SEC and a legal liability for legal fees of more than $30 million.

In Holmes’s response to the government’s memo, her attorneys called the worry about the eventual expiration of the SEC’s 10-year prohibition on her serving as a business executive “silly.” “As a practical matter, there is no reasonable possibility that Ms. Holmes will serve as an officer of a public company in the future,” they wrote.

Her attorneys slammed the government’s recommendation that she spend 15 years behind bars. The former CEO, whose spectacular rise and fall were chronicled in critical news pieces, podcasts, documentaries, and a hit Hulu series, is “punished every day,” they argued, and “has been for years, and will be for the rest of her life.”

The suggestion that Holmes’s interest in pursuing new patents warrants prison time was “extraordinary,” they said.

“Our Nation does not imprison individuals to keep them from inventing and thinking,” the filing stated. “Ms. Holmes has not been convicted of having bad ideas; to the contrary, her ideas had substantial value, are being pursued by others, and, as many of the letters have suggested, had the potential to make health care more accessible.”

Holmes’s attorneys asked for leniency in her sentence, saying that if the court determined confinement was necessary that she should be sentenced to no more than 18 months and that house arrest was “sufficient” punishment.

“Ms. Holmes built Theranos for indisputably good reasons, invested resources and effort to correct errors, and did not cash out,” her attorneys said in her response to the government. “She works every day to be a good friend, partner, mother, and citizen who contributes to the positive well-being of those around her. Ms. Holmes was not driven by greed, as the government apparently cannot help but persist in suggesting despite the overwhelming evidence to the contrary.”

Along with her sentencing memorandum, Holmes submitted letters from more than 130 people, including her partner Billy Evans, friends, business people, and even public figures like Sen. Cory Booker. They described Holmes as a compassionate, selfless, and determined individual who, as Evans put it, was and is willing to “sacrifice herself for the greater good.”

“I have never known her to put herself first in any action over the 5 years we have been together. Never once,” he wrote. “So many have leaned on her during their hardest times, and she gives herself without hesitation to anyone in need.”

During Friday’s hearing, Holmes’s attorney Kevin Downey argued that unlike other defendants convicted in similar fraud cases that Holmes was not motivated by greed. Her motive, Downey said, “was to build medical technology.” To put her in the category of the Enron fraud, for example, is not fair, he argued.

“Along the way [she] had the opportunity … to enrich herself,” he said, “and she never did that, did not take a single penny along those lines.”

Prosecutors did not prepare any victim statements to be read out loud during the hearing, though they did submit letters with the court in advance. However, Alex Shultz — father of Theranos whistleblower Tyler Shultz and son of investor and board member George Shultz — unexpectedly took a few moments to tell Davila how Holmes ruined his family’s life.

Shultz said Holmes hired a private investigator to follow his son after learning he spoke with the Wall Street Journal, which eventually led to her downfall. Tyler, he said, slept with a knife under his pillow “thinking somebody was going to come and murder him in the middle of the night.”

“It was a grueling experience to go through,” Alex Shultz said. “My family home was desecrated by Elizabeth and the lawyers.”

This is a developing story. Check back for updates and follow BuzzFeed News on Twitter.

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