Justice is finally being served. Theranos founder Elizabeth Holmes has been sentenced to more than 11 years in prison for fraud, ending the three-year case and extraordinary demise of a one-time Silicon Valley darling. US District Judge Edward Davila delivered the verdict in federal court on Friday.
The disgraced founder was found guilty of operating a year-long fraud scheme at her blood-testing tech startup and was found guilty of four out of 11 counts. Because Holmes is currently pregnant with her second child, Judge Davila said she has until April 27, 2023 to come forward. She has 14 days to appeal her conviction.
During the hearing, Judge Davila said Theranos was undone “by misrepresentation, hubris, and outright lies.”
“This case is so disturbing on so many levels,” he said. “What prompted Ms. Holmes to make the decisions she made? Was there a loss of moral compass?”
Prosecutors in the case were asking for a 15-year sentence, three years of supervised release and more than $800 million in damages. But her legal team asked the judge for a lighter sentence of no more than 18 months, preferably to be served under house arrest. She got 11 years instead. During the hearing, Holmes said:
“I’m devastated. I regret my mistakes with every cell in my body.”
We’ve been following the story of Theranos for three years now. Once dubbed the next Steve Jobs, Holmes founded Theranos in 2003. Initially, Silicon Valley-based startup Theranos was touted as a breakthrough technology company with claims of having developed blood tests that required very small amounts of blood and could be performed very quickly with its newly developed blood testing technology.
Then, in March 2018, its founder, then 36-year-old Elizabeth Holmes, was convicted of investor fraud after a series of Wall Street Journal (WSJ) articles revealed that the tests Theranos was allegedly running were actually being performed by traditional machines were bought by other companies.
Holmes dropped out of Stanford University in 2003 to found Theranos. She later used her parents’ education fund to start the company that would later be called Theranos. The company name was derived from a combination of the words “therapy” and “diagnosis”. The company’s original name was Real-Time Cures, which it later changed after deciding that too many people doubted the word “cure.” At its peak, Theranos was valued at $10 billion and made Holmes a Silicon Valley star by the age of 19.
In March 2020, we wrote about Theranos after the Securities and Exchange Commission (SEC) accused Theranos founder Elizabeth Holmes and former Theranos President Ramesh “Sunny” Balwani of swindling investors out of more than $700 million through bogus fraud Cheating on claims about its technology. In a separate report, the SEC also said Elizabeth Holmes overstated the company’s earnings to investors by a factor of 1,000, SEC says.
Holmes and Balwani pleaded not guilty to defrauding investors, doctors and patients by falsely claiming Theranos could revolutionize medical laboratory testing with technology that could enable a wide range of tests with a few drops of blood.
More than two years after the SEC’s announcement, Elizabeth Holmes appeared before the US District Court judge in San Diego. Disgraced Theranos founder Elizabeth Holmes plans to blame mental illness in her trial defense when she defrauded investors out of more than $700 million with her fake blood testing technology in 2018, according to her lawyers, according to court documents and a closed hearing on July 8.
In a decision late Wednesday, Edward Davila, a federal judge in the US District Court in San Diego, ordered Elizabeth Holmes to be examined by US government experts after lawyers defending her against criminal fraud allegations said they had evidence present that they are suffering from a mental illness or defect. Judge Davila also dismissed the defense’s objections to having a government-selected psychologist and psychiatrist examine Holmes, 36, for 14 hours over two days and having the examinations videotaped.
Holmes’ attorneys said they intend to present expert evidence from a clinical psychologist “related to any mental illness or defect or other mental condition of the defendant that relates to the question of guilt.” Holmes faces a slew of charges for defrauding investors out of millions using fake Theranos blood testing technology.