Why Ethics and Legal Experts Say Convicting Elizabeth Holmes Sends a Clear Message to Silicon Valley

SAN JOSE, Calif. (KGO) — Once the face of promise and potential, Elizabeth Holmes was sentenced on Friday to 11 years and three months in prison. US District Court Judge Edward Davila did not impose the maximum sentence, but it is far from the minimum.

“It was a very disappointing result for the Holmes team,” legal analyst Steven Clark said. “They were hoping to get 18 months, and possibly even house arrest, based on the information about the conviction they provided to the court.”

VIDEO: Elizabeth Holmes, former CEO of Theranos, sentenced to more than 11 years in prison

Holmes was found guilty in January of four counts of defrauding investors while running her failed blood testing startup, Theranos.

Clark weighed in on Friday’s development.

“The only good thing that happened to Ms. Holmes today in this case was that she left the courtroom without handcuffs,” Clark told ABC7 News.

RELATED: Life After Theranos: What 130 Personal Letters to the Sentencing Judge Reveal About Elizabeth Holmes

After his sentencing, witnesses reported seeing Holmes fleeing court hand-in-hand with his partner, Billy Evans.

Dr. Don Heider, executive director of the Markkula Center for Applied Ethics at Santa Clara University, said the judge’s award sent a clear message to Silicon Valley: you can craft the best pitch for your product, “but it it better be true.”

He added, “In that case, I think she’s going to suffer the consequences of a lot of bad decisions.”

Holmes’ sentence includes three years of supervision, after his eventual release from prison. Restitution has yet to be decided, but prosecutors wanted Holmes to pay $804 million. This is an amount that would cover most of the nearly $1 billion raised from investors.

“I think investors would like to believe that this is a once-in-a-lifetime case and it can never happen again. And yet, here’s a pattern,” Dr. Heider said, referring to the FTX founder. , Sam Bankman-Fried, another young tech icon and former billionaire currently under investigation. .

RELATED: Sunny Balwani Found Guilty on All Counts in Theranos Fraud Case

In court on Friday, a pregnant Holmes spoke in tears after hearing testimony. The courtroom sketches depict the moment she described taking “full responsibility” for the company’s failures.

“I think the court took Ms. Holmes’ pregnancy into consideration,” Clark said. “Not so much in the condemnation, but in the fact that he allowed her to stay out to have her child and gave her time to bond with that child.”

Holmes is due in police custody on April 27, 2023. She is expected to appeal.

“His belief was ultimately about the investor,” Dr. Heider said. “But there’s also all the employees, many of whom really weren’t in a position to know that Theranos was a fraud. And they all lost their jobs and probably suffered in their careers. The whistleblowers, that she followed – really with a vengeance – are part of the stakes. Where’s the justice for them in that?”

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