Theranos founder Elizabeth Holmes sentenced to more than 11 years in prison for felony fraud


A judge has sentenced charismatic Theranos founder Elizabeth Holmes to more than 11 years in prison following her conviction for felony fraud in one of the most closely and widely watched trials in Silicon Valley history.

Holmes, 38, who is pregnant and the mother of a 15-month-old son, will not have to surrender to prison authorities until April 27. She is expected to appeal a jury’s January verdict that found she had defrauding investors out of more than $144 million — with total losses pegged by federal authorities at more than $800 million.

Federal prosecutors last week asked Judge Edward Davila, who presided over Holmes’ four-year criminal fraud case and her four-month trial in U.S. District Court in San Jose, to put Holmes away for 15 years, and order her to pay $804 million in restitution to investors. Holmes’s lawyers had asked Davila to forgo prison time, or at most, sentence her to 18 months, which they argued could be served under home confinement.

Holmes’ sentencing memo said she had no money for restitution.

Before issuing his sentence, Davila invoked the spirit of innovation in Silicon Valley’s famed technology industry in addressing Holmes’ lies and fabrications.

“This case is so troubling on so many levels,” Davila said. “The tragedy of this case is Ms. Holmes is brilliant, she had creative ideas. She’s a big thinker. She was moving into an industry that was dominated by, let’s face it, male ego. She got into that world.”

Theranos founder Elizabeth Holmes, center, arrives at the Robert F. Peckham Federal Building and U.S. Courthouse in San Jose, Calif., on Friday, Nov. 18, 2022. (Dai Sugano/Bay Area News Group)
Theranos founder Elizabeth Holmes, center, arrives at the Robert F. Peckham Federal Building and U.S. Courthouse in San Jose, Calif., on Friday, Nov. 18, 2022. (Dai Sugano/Bay Area News Group) 

Shortly before she was sentenced, Holmes addressed Davila, sobbing throughout a five-minute speech.

“I stand before you taking responsibility for Theranos. I loved Theranos,” Holmes said. “It was my life’s work. Our team, advisors, board members and the people who believed in us meant the world to me. They wanted to make a difference in the world and worked tirelessly to give a better future to people who couldn’t afford (blood) testing. I am devastated by my failings.”

“Every day for the past years I have felt deep pain for what people went through because I failed them,” Holmes said. “I gave everything I had to building our company and trying to save our company.”

Davila asked some of the same questions that have fascinated so many about Holmes’ criminal case.

“What was it that caused Ms. Holmes, regrettably, to make those decisions that she did?” he asked. “There was significant evidence about manipulation and untruths that were being used in the negotiation of the business. What is it that caused that? Was it hubris? Was it intoxication with the fame that comes from being a young entrepreneur?”

Holmes, a Stanford University dropout, launched her Palo Alto blood-testing startup in 2003, and built it into a company backed by some of America’s richest people: Oracle co-founder Larry Ellison, media mogul Rupert Murdoch, and the Walton family of Walmart. Theranos was overseen, weakly, by a board seeded with luminaries including former U.S. secretaries of state Henry Kissinger and George Shultz, and former U.S. defense secretaries James Mattis and William Perry.

A series of Wall Street Journal exposés starting in 2015 led to federal investigations and a U.S. Securities and Exchange Commission settlement fining Holmes $500,000 and barring her from serving as an officer or director of a public company for 10 years. In 2018, federal fraud charges were filed.

Just before Holmes addressed Davila, the judge had asked if any victims in the courtroom wished to speak. Alex Shultz, father of Theranos whistleblower Tyler Shultz — whose accounts of his time working for Theranos led to the WSJ stories — stood up. Schultz’s father, the late U.S. Secretary of State George Schultz, was a board member for Theranos.

“Elizabeth hired a private investigator to follow my son and probably my wife and I,” Alex Shultz told the court Friday. “My son slept with a knife under his pillow every night thinking somebody was going to come and murder him.”

Shultz said Holmes, after George Shultz discovered Tyler may have spoken to a reporter about Theranos, arranged for lawyers to come to a family home to discuss the company. “Lawyers came down the stairs and confronted Tyler when he was telling George about what happened with Theranos,” Alex Shultz said. “My family home was desecrated by Elizabeth.”

In the end, Holmes “won” the Shultz family dispute as George’s wife Charlotte called to ask that Tyler be excluded from George’s 95th birthday, Alex Schultz said. “She took advantage of my dad,” he said.

George Shultz died last year at 100. Of Holmes’ sentencing, Alex said, “My wife and I are happy that this has finally come to an end.”

The Holmes case has drawn a brighter line between the optimistic promotion Silicon Valley startup founders use to entice investors and excite consumers, and misrepresentations and lies that can lead to civil and criminal prosecution, Silicon Valley historian Michael S. Malone said.

“There’s a big difference between hype and fraud, between optimistic and lying to yourself and to investors,” Malone said. “If you’re going to change the world you’ve got to take gigantic risks, but you’ve got to be honest about the risks. If you need more time to pull it off, you’ve got to say that.”

Holmes’ four-month trial in U.S. District Court in San Jose attracted media from across the U.S. Reporters began lining up with die-hard onlookers before 3 a.m. to be assured of seating in the main courtroom. News coverage spread globally.

In January, a jury convicted Holmes on four counts of defrauding investors, but she was acquitted of defrauding patients.

Jurors heard that Holmes implied that her blood-testing machines were in battlefield use, that she made false statements and wild projections about Theranos’ finances, and that she gave investors and others internal company reports doctored to include logos from pharmaceutical giants in a fraudulent bid to show those firms had validated the technology.

Toward the end of her trial, Holmes, in a surprise move, took the witness stand, admitted to pilfering the pharma firm’s logos, and claimed her co-accused, former Theranos chief operating officer Sunny Balwani, coerced and abused her. Balwani, convicted separately in July and awaiting sentencing, has denied the accusations.

White-collar defense lawyer Andrew George described Holmes’ sentence as a win for her. “She could easily have gotten 20,” said George of Baker Botts in Washington, D.C. “She will serve at least 9 1/2 years assuming the verdict is upheld on appeal.”

At her sentencing Friday, Holmes pledged to “do good” in the future, “whatever that holds.”


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