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Theranos: Silicon Valley holds breath for Elizabeth Holmes sentencing

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Elizabeth Holmes entering court

Elizabeth Holmes entering court

Theranos founder Elizabeth Holmes was found guilty of defrauding investors 10 months ago.

Her company was once valued at $9bn (£7.5bn). It’s now a byword for corporate fraud.

Holmes, 38, claimed the start-up could diagnose hundreds of diseases with just a few drops of blood. That wasn’t true.

In January a jury concluded she had deliberately misled investors. She was convicted of four counts of wire fraud – with a maximum sentence of 20 years.

However, it has taken an eternity to get this point – sentencing.

Her legal team is arguing for 18 months of house arrest.

The prosecution wants her to serve 15 years in prison and to pay back the best part of a billion dollars to investors.

The judge has a big decision to make. Silicon Valley executives will be watching with interest. Founders rarely end up getting convicted of fraud.

What happens to Holmes will be seen as a test case. Does corporate fraud in Silicon Valley end up with a slap on the wrist? Or does it mean serious jail time?

We are about to find out.

A school form

Her lawyers submitted school papers showing Holmes saying she tries “to do right”

Elizabeth Holmes’ long wait for a verdict is unusual. In part it’s because her former business partner, and lover, Sunny Balwani, was tried after her.

The trial was separated after Holmes claimed Balwani had been controlling – and even accused him of sexual assault. Balwani has vehemently denied the accusations.

In the summer, Balwani was also found guilty of fraud. The judge will hand out his punishment in December.

Holmes’ sentencing was supposed to happen last month.

However, in a bizarre twist the defence team claimed a key witness – former Theranos lab director Adam Rosendorff – had visited Holmes’ partner Billie Evans.

Snapshots show Holmes enjoying her freedom since her conviction in June

Snapshots show Holmes enjoying her freedom since her conviction in June

Mr Evans claimed an apparently repentant Rosendorff had said that prosecutors had “tried to make everyone look bad” and felt “he had done something wrong”.

But when questioned in a hastily put-together hearing, Mr Rosendorff told the judge he stood by his original testimony.

A new date for sentencing was given – 18 November.

Snapshots show Holmes enjoying her freedom since her conviction in June

Snapshots show Holmes enjoying her freedom since her conviction in June

Since her conviction, the last months appear to have been filled with family fun – with Holmes embracing her freedom.

Pictures supplied to the court by Mr Evans show trips skiing and to the Grand Canyon. Baby baths and pyjama days.

Dozens of letters have been submitted vouching for Holmes’ character.

Among them is one from Cory Booker, a US Senator for New Jersey, who wrote to the judge.

The Democrat said they’d bonded over vegan food at a dinner six years before she was charged with fraud, and they had remained friends. He appealed for clemency.

The defence has even submitted a school Q&A – in which a young Holmes says she always tries “to do right”.

It’s a theme her legal team comes back to time and time again, that she was trying to help people, that her intentions were good.

The prosecution, though, is calling for a tough sentence for “one of the most substantial white collar offenses Silicon Valley or any other District has seen”.

They say the idea that Holmes has been unfairly victimised is plain wrong.

The prosecution is also asking Holmes to pay $803m in restitution to investors.

“She preyed on hopes of her investors”, Assistant US Attorney Robert Leach said.

One investor was Eileen Lepera. A Silicon Valley secretary, she says her boss told her to invest in Theranos, tipping it as the next Apple. She put a chunk of her life savings in, only to lose everything.

“I think she should do some prison time,” she says.

“A normal person just doesn’t do that to another person. When they know that [fraud] is happening, they stop immediately.”

Sentencing starts at 18:00 GMT.

Follow James Clayton on Twitter

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