A federal judge was set to decide on Friday whether disgraced Theranos CEO Elizabeth Holmes should serve a lengthy prison sentence for deceiving investors and endangering patients while peddling fake blood-testing technology.
Holmes sentencing in the same San Jose, California courtroom where she was found guilty of four counts of investor fraud and conspiracy January marks another culminating moment in a saga that has been dissected in an HBO documentary and an award-winning Hulu series about his meteoric rise and mortifying fall.
Theranos promised to deliver breakthrough technology that can detect hundreds of diseases and other foods with just a few drops of blood. But it never worked.
U.S. District Judge Edward Davila will take center stage as he weighs the federal government’s recommendation to send 38-year-old Holmes to federal prison for 15 years. That’s less than the maximum sentence of 20 years, but his legal team is asking for a maximum incarceration of 18 months.preferably served in home confinement.
Her lawyers argued that Holmes deserved more lenient treatment as a well-meaning entrepreneur who is now a devoted mother with another child on the way. Their arguments were supported by more than 130 letters submitted by family, friends and former colleagues praising Holmes.
A probation report also submitted to Davila recommended a nine-year prison sentence.
Prosecutors also want Holmes to pay $804 million in restitution. The amount covers the bulk of the nearly $1 billion Holmes has raised from a list of sophisticated investors, including software magnate Larry Ellison, media mogul Rupert Murdoch and the Walton family behind Walmart.
While wooing investors, Holmes leveraged a high-powered Theranos board that included former Defense Secretary James Mattis, who testified against her. during his trial, and two former Secretaries of State, Henry Kissinger and the late George Shultz, whose son submitted a statement blaming Holmes for concocting a scheme that played Shultz “for the fool”.
Davila’s judgment – and Holmes’ filing date for a potential prison stay – could be affected by her second pregnancy in two years. After giving birth to a son shortly before her trial began last year, Holmes became pregnant at some point while out on bail this year.
Although her lawyers did not mention the pregnancy in an 82-page memo submitted to Davila last week, the pregnancy was confirmed in a letter from her current partner, William “Billy” Evans, who urged the judge to be merciful.
In the 12-page letter, which included photos of Holmes adoring their one-year-old son, Evans mentioned that Holmes attended a swimming event at the Golden Gate Bridge earlier this year while pregnant. He also noted that Holmes suffered from a case of COVID-19 in August while pregnant. Evans did not disclose Holmes’ due date in his letter.
If Holmes’ pregnancy plays a role in reducing or qualifying her sentence, the decision could be controversial. A 2019 study found that more than 1,000 pregnant women entered federal or state prisons during a 12-month study period; 753 of them gave birth in detention.
According to a 2016 survey by the Bureau of Justice Statistics, more than half of women entering federal prison — 58% — said they were mothers of minor children..
Duncan Levin, a former federal prosecutor who is now a defense attorney, predicted that Davila’s sentencing decision would not be influenced by the pregnancy. But Levin expects the judge to allow him to go free until the baby is born.
“She will be no more flight risk after sentencing than she was while awaiting sentencing,” Levin said. “We have to temper our sentences with a certain amount of humanity.”
The pregnancy makes it more likely that Davila will be criticized regardless of the sentence he imposes, predicted Amanda Kramer, another former federal prosecutor.
“There’s a pretty healthy debate about what kind of sentence is needed to exercise general deterrence to send a message to others who are considering crossing that line from sharp selling to material misrepresentation,” Kramer said.
Federal prosecutor Robert Leach said Holmes deserved a stiff sentence for masterminding a scam he described as one of the most egregious white-collar crimes ever committed in Silicon Valley. In a scathing 46-page memo, Leach told the judge he had an opportunity to send a message that curbs the hubris and hyperbole unleashed by the tech boom.
Holmes “fed on her investors’ hopes that a young, dynamic entrepreneur had changed health care,” Leach wrote. “And through her deception, she achieved spectacular fame, adoration, and billions of dollars in wealth.”
Even though Holmes was acquitted by a jury on four counts of fraud and conspiracy related to patients who had Theranos blood tests, Leach also asked Davila to consider the health threats posed by the conduct of Holmes.
Holmes’ attorney Kevin Downey portrayed her as a selfless visionary who spent 14 years of her life trying to revolutionize healthcare.
Although evidence submitted at his trial showed that the blood tests produced extremely unreliable results that could have pointed patients toward mistreatment, his lawyers claimed that Holmes never stopped trying to perfect the technology. until Theranos collapsed in 2018.
They also pointed out that Holmes had never sold any of his Theranos shares — a stake valued at $4.5 billion in 2014, when Holmes was hailed as the next Steve Jobs on the covers of business magazines.
Defending against criminal charges has left Holmes with “a substantial debt from which she is unlikely to recover,” Downey wrote, suggesting she is unlikely to pay any compensation Davila might order as part of his pain.
“Holmes is no danger to society,” Downey wrote.
Downey also asked Davila to examine the alleged sexual and emotional abuse suffered by Holmes while involved in a romantic relationship with Ramesh “Sunny” Balwani, who became a Theranos investor, senior executive and ultimately accomplice. of his crimes.
Balwani, 57, is expected to be sentenced on December 21. 7 after being convicted in a trial in July on 12 counts of fraud and conspiracy.