Theranos founder Elizabeth Holmes faces 20 years in prison
Elizabeth Holmes, one of Silicon Valley’s most acclaimed and hated company founders, will be sentenced on Friday for cheating investors out of hundreds of millions of dollars.
Holmes faces up to 20 years in prison, $1 million in fines, and $804 million in reparations for her now-defunct blood-testing company Theranos.
Criminal law experts say Holmes, 38, is unlikely to receive a sentence close to 20 years since the judge has extensive leeway to consider mitigating elements that reduce her sentence.
“So the judge has pretty broad discretion to depart almost entirely from [the guidelines] if he chooses to do so,” Keri Axel, a criminal defence attorney at Waymaker LLP, told Yahoo Finance. Judge Edward Davila can weigh aspects in Holmes’ favour, such as her lack of prior criminal history and that the investors were mostly affluent individuals and businesses, as well as those that work against her, such as patients who received incorrect blood test results.
At its peak, Theranos, which Holmes controlled as CEO, was worth $9 billion, making her the world’s first self-made female billionaire.
Holmes informed investors that Theranos’ blood analyzer could run typical lab tests with a finger stick blood sample, rather than greater amounts taken using regular vein draws.
Holmes told potential investors that the diagnostics company’s technology had been validated by numerous major pharmaceutical companies and that her “Edison” testing gadget was deployed overseas to heal wounded soldiers. Holmes cited Theranos’ profitability.
Holmes’ attorneys and the prosecutors who convicted her argued for various sentences in court documents provided before Friday’s hearing.
The government urged Judge Davila, who would decide Holmes’ fate, to sentence him to 15 years in jail and three years of supervised release. Holmes’ lawyers sought for 18 months house arrest instead of prison time.
Prosecutors want Holmes to reimburse $803,840,309 to her individual investors and Walgreens and Safeway, Theranos’ corporate investors.
Elizabeth Holmes misled scores of investors for years, prosecutors said. She fed investors’ hopes that a youthful, vibrant entrepreneur had altered healthcare.
Prosecutors said Holmes was blinded by her desire and emphasised dishonesty to gain “spectacular fame, admiration, and billions of money”
“She’s remorseless in court.” She’s blameless. She maintains she’s the victim, prosecutors said.
Holmes’ defenders said she should be spared the harsh sentences given to white-collar criminals like former Enron CEO Jeffrey Skilling, who walked away with riches.
The former Theranos founder “advanced health care accessibility; she built a real company with real value; she did not cash in her stock despite opportunities to do so; she acknowledged and sought to address the many errors she and others at the company made; and she has made efforts outside Theranos to help others,” the memo states.
Holmes can speak in court. The judge may also let Holmes and Theranos victims talk about the deception.
Michael Weinstein, Cole Schotz’s defence attorney, said the judge will likely rule then.
Immediately arrest Holmes if Judge Davila condemns her to prison. Her lawyers may request, but not be granted, more time to surrender. The lawyers claimed Holmes, who is pregnant with her second child, could give birth before serving time in prison.
Holmes’ partner and Theranos’ COO, Ramesh “Sunny” Balwani, was convicted on fraud charges related to his involvement at the business. Balwani was convicted of wire fraud and conspiracy by a second jury in July.
Theranos imploded after a 2015 Wall Street Journal story revealed the business wasn’t conducting finger-prick blood tests as Holmes claimed.