A federal judge will 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, Calif., courtroom where she was found guilty of four counts of investor fraud and conspiracy in January marks a culminating moment in a saga that has been dissected in an HBO documentary and award-winning Hulu TV series about her meteoric rise and mortifying fall.
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U.S. District Judge Edward Davila will take center stage as he weighs the federal government’s recommendation to send Holmes, 38, to federal prison for 15 years. That’s slightly less than the maximum 20-year sentence she could face, but far more than her legal team’s attempt to limit her incarceration to a maximum of 18 months, preferably served at home.
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 for Holmes.
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.
READ MORE: Prosecutors seek 15-year sentence for Theranos CEO Elizabeth Holmes
While wooing investors, Holmes leveraged a very powerful Theranos board that included former U.S. Secretary of Defense James Mattis, who testified against her at her trial, and two former secretaries of state. Americans, Henry Kissinger and the late George Shultz, whose son submitted a statement. lambasting Holmes for concocting a scheme that played Shultz “for the fool”.
Davila’s judgment – and Holmes’ filing date for a potential jail term – could be affected by the former entrepreneur’s 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 in August while pregnant. Evans did not disclose Holmes’ due date in his letter.
Duncan Levin, a former federal prosecutor who is now a defense attorney, predicted that Davila’s sentencing decision will not be influenced by the pregnancy, but expects the judge to allow her to remain free until the birth of the baby.
“She will no longer be a flight risk after being sentenced 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 insisted that 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 of the past decade.
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’ lawyer Kevin Downey portrayed her as a selfless visionary who spent 14 years of her life trying to revolutionize health care with technology said to be able to detect hundreds of diseases and other foods with just a few drops of blood.
Although evidence submitted at his trial showed that the tests produced extremely unreliable results that could have steered patients in the wrong direction, his lawyers claimed that Holmes never stopped trying to perfect the technology until ‘to Theranos collapsing in 2018. They also pointed out that Holmes 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 herself against criminal charges has left Holmes with “a substantial debt from which she is unlikely to recover,” Downey wrote, suggesting she is unlikely ever to pay whatever restitution Davila might order in the part of his sentence.
“Holmes is no danger to society,” Downey wrote.
Downey also asked Davila to examine the alleged sexual and emotional abuse suffered by Holmes while in love with Ramesh “Sunny” Balwani, who became a Theranos investor, senior executive, and ultimately an accomplice to his crimes. Balwani, 57, is due to be sentenced on December 7 after being found guilty at a trial in July of 12 counts of fraud and conspiracy.