Elizabeth Holmes, the former CEO of the blood-testing company Theranos, was sentenced to more than 11 years in federal prison on Friday for her part in a scheme to steal hundreds of millions of dollars from investors. A jury in San Francisco found Holmes guilty of her part in the plan.
In a case that U.S. District Judge Edward Davila called “troubling on so many levels,” Holmes, who was once called a “wunderkind” in Silicon Valley, was told to start serving her prison time on April 27, 2023.
As Judge Davila was about to give Holmes her sentence, Holmes stood up and spoke directly to the judge as she sobbed.
Looking back, there are so many things I would do differently if I had the chance. I regret my failings with every cell of my body,
she said, as her voice cracked.
Holmes’s lawyers had hoped for a sentence of home confinement or even a shorter amount of time in prison. Now that the investigation is over, Holmes, who is 38 and expecting her second child, is expected to go to prison in about five months. She will have to follow the terms of a three-year supervision sentence after she gets out of jail.
The tragedy of this case is that Ms. Holmes is brilliant,
Davila said before his pronouncement. But he decided that she was driven by greed and avarice when she told investors that her company could do a lot more than she knew it could. He also thought that her behavior was a good example of everything wrong with Silicon Valley.
The tech industry
finds vectors with financial and personal gain that clouds the good judgement of individuals,
Davila said.
Was there a loss of moral compass here? Was it hubris? Was it intoxication with the fame,
said Davila of Holmes.
When Theranos was at its peak point, Elizabeth Holmes and her boyfriend at the time, Ramesh “Sunny” Balwani, who was also the No. 2 employee at Theranos, lived in a $15 million mansion. They rented a private jet to get there in style. The White House had dining rooms where they ate their meals.
The judge asked Holmes,
What was it then?
One of the most surprising things that happened at the hearing was when Davila asked if there were any victims who wanted to talk about what happened. One man raised his hand in response. Alex Shultz was the son of George Shultz, who had been secretary of state and was on the Theranos Board of Directors.
He stood in front of the judge and, in a speech that seemed to be made up on the spot, said that Holmes “took advantage of my dad” and that she had “figured out his weakness.”
Alex Shultz said that his son Tyler Shultz, who used to work for Theranos and became a key whistleblower, talked to private investigators hired by Holmes to follow Tyler Shultz.
The scary experience stayed with his son for a long time, so much so that he started sleeping with a knife under his pillow.
It was a grueling experience,
he said.
My family home was desecrated by Elizabeth,
he said.
It turns out that the promise of easy blood tests was too good to be true.
In January, a jury found Elizabeth Holmes guilty of four counts of wire fraud related to her role in misleading investors about a supposedly groundbreaking technology that could scan for hundreds of conditions with just a few drops of blood. But Holmes, who had dropped out of Stanford, said she had reached this goal, which is a challenge that lab scientists all over the world have been trying to solve for years.
She got nearly a billion dollars in investments by saying that her unique blood-testing devices would change the way health care is done. During the trial, however, prosecutors said that Holmes changed test results and blatantly lied about what her tests could do. They also said that she tried to hide what she did when whistleblowers and journalists started looking into what was really going on at the company.
She knew that they were investing in Theranos based on a false premise,
prosecutor John Bostic told the judge on Friday.
She was aware of the mismatch between what she was presenting to investors and reality.
After a business fails in Silicon Valley, it is very rare for a company executive to be investigated or prosecuted for a crime. But legal experts said that the Theranos case was different because Holmes’ lies were so bad, because the company lost so much money, and because Holmes worked in the highly regulated healthcare industry.
Even so, Holmes’s prosecution has started a debate in the tech industry about the possibility of sexism. Some people are wondering why men who led tech startups that failed because they didn’t keep their promises have never been charged with a crime.
But it seems like there is more of a focus on checking out successful tech companies in their early stages these days.
It has been said that the US Department of Justice is looking into the now-bankrupt cryptocurrency trading platform FTX. The recent collapse of the company took away $16 billion from the wealth of the company’s former CEO, Sam Bankman Fried. Bloomberg called this “one of the greatest destructions of wealth” in the history of the world.
Federal investigators are looking into how the company went out of business, and different legal authorities are thinking about whether or not criminal charges should be brought.
In the case of Theranos, Balwani will be sentenced on December 7th. He was found guilty in a separate trial of taking part in the same fraud scheme as Holmes.
