Elizabeth Holmes was sentenced to more than 11 years in prison on Friday following her conviction in January for defrauding investors while running the failed blood testing startup Theranos.
Holmes, who was convicted in January of four counts of defrauding investors, faces up to 20 years in prison as well as a $250,000 fine plus restitution on each count.
Government lawyers asked for a 15-year prison sentence, along with probation and restitution, while Holmes’ probation officer asked for a nine-year sentence. Holmes’ defense team has asked Judge Edward Davila, who is presiding over her case, to sentence her to up to 18 months incarceration followed by probation and community service.
Before the sentencing was announced, a tearful Holmes addressed the court in San Jose, California. “I loved Theranos. It was my life’s work,” she said. “The people I tried to engage with with Theranos were the people I loved and respected the most. I am devastated by my failures.
She also apologized to Theranos employees, investors and patients. “I’m so, so sorry. I gave everything I had to build our business and save our business,” she said. “I regret my failures with every cell in my body.”
During oral arguments before the judge on Friday about his sentence, Kevin Downey, one of Holmes’ lawyers, said that unlike other defendants in corporate fraud cases, the Theranos founder had no expressed greed by cashing in on stocks or spending money on “yachts and planes”. “Instead, the money was “used to develop medical technology.”
Federal prosecutor Jeffrey Schenk pointed out that Holmes gained fame, admiration and a lifestyle through the fraud, even though she did not realize any financial gains. “It’s always perks she gets,” he said.
Friday’s sentencing hearing ends Holmes breathtaking fall. Once hailed as a tech industry icon for her company’s promises to test a range of conditions with just a few drops of blood, she is now the rare tech founder to be convicted and face jail time for the business misstep.
Holmes, now 38, started Theranos in 2003 when he was 19 and soon dropped out of Stanford University to pursue the company full-time. After a decade under the radar, Holmes began courting the press by claiming that Theranos had invented technology that could accurately and reliably test for a range of conditions using just a few drops of blood taken from a finger prick.
Theranos has raised $945 million from an impressive list of investors, including media mogul Rupert Murdoch, Oracle founder Larry Ellison, the Walton family of Walmart, and the billionaire family of the former US Secretary of State. Education Betsy DeVos. At its peak, Theranos was valued at $9 billion, making Holmes a billionaire on paper. She was praised on magazine covers, frequently wearing an iconic black turtleneck that invited comparisons to the late Apple CEO Steve Jobs. (She didn’t wear that look in the courtroom.)
The company began to crumble after a Wall Street Journal investigation in 2015 found the company had only performed about a dozen of the hundreds of tests it offered using its testing device. exclusive blood, and with dubious accuracy. Instead, Theranos relied on third-party devices from traditional blood testing companies.
In 2016, Theranos reversed two years of blood test results. In 2018, Holmes and Theranos settled the “massive fraud” charges with the Securities and Exchange Commission, but did not admit or deny any of the allegations as part of the settlement. Theranos disbanded shortly thereafter.
During her trial, Holmes alleged that she was in the midst of a decade-long abusive relationship with her then-boyfriend and Theranos chief operating officer, Ramesh “Sunny” Balwani, while she ran the company. Balwani, she claimed, attempted to control nearly every aspect of her life, including disciplining her diet, voice and image, and isolating her from others. (Balwani’s lawyers deny his claims.)
In July, Balwani was found guilty of all 12 charges in a separate trial and faces the same potential maximum prison sentence like her. Balwani is expected to be sentenced on December 7.
“The effects of the fraudulent conduct of Holmes and Balwani were substantial and serious,” federal prosecutors wrote in a November court filing regarding Holmes’ conviction. “Dozens of investors have lost over $700 million and many patients have received unreliable or completely inaccurate medical information from Theranos’ faulty tests, putting the health of these patients at risk.”
More than 100 people wrote letters of support for Holmes in Davila, asking for leniency in his sentencing. The list includes Holmes’ partner Billy Evans, numerous family members of Holmes and Evans, early Theranos investor Tim Draper, and sen. Cory Booker. Booker described meeting her at a dinner party years before she was charged and related that they were both vegans with nothing to eat but a bag of almonds, which they shared.
“I still believe that she holds out hope that she can contribute to the lives of others and that she can, despite her mistakes, make the world a better place,” Booker wrote, noting that he continues to view her as a friend.
Ahead of the hearing, there were also questions about how Holmes’ sentencing might be complicated by how his life changed after leaving Theranos. Holmes and his partner, Evans, who met in 2017, have a young son. Holmes is also pregnant, as confirmed by recent court records and her last court appearance in mid-October.
Mark MacDougall, a white-collar defense attorney and former federal prosecutor, told CNN Business ahead of the hearing that the fact that Holmes has a young child could impact how she is sentenced.
“I don’t know how it can’t, just because judges are human,” he said.
MacDougall also said he doesn’t see what a long prison sentence accomplishes. “Elizabeth Holmes will never run a big business again,” he said. “She will never be able to have something like this happen again.”