Where is the crime, Jamie?
BUSINESS NEWS
NOVEMBER 18, 2022 / 03:19 PM
Elizabeth Holmes arrives in court to face sentencing for Theranos fraud
SAN JOSE, Calif. (Reuters) -Theranos founder Elizabeth Holmes arrived on Friday at a federal courthouse in San Jose, Calif., where she is scheduled to be sentenced for defrauding investors in her now-defunct blood testing startup.
U.S. District Judge Edward Davila will sentence Holmes on three counts of investor fraud and one count of conspiracy. A jury convicted Holmes, 38, in January following a trial that spanned three months.
Prosecutors, who are seeking a 15-year prison sentence, called Holmes’ fraud “among the most substantial white collar offenses Silicon Valley or any other district has seen.”
Defendants in other major fraud cases have received sentences ranging from 10 to 25 years, prosecutors said in court papers. Examples included Enron CEO Jeffrey Skilling who was sentenced to more than 13 years in prison for his conviction on charges stemming from the company’s spectacular collapse.
But Holmes’ attorneys have asked that she receive a more lenient sentence of 18 months of home confinement, followed by community service, urging the judge not to make her a “martyr to public passion.”
More than 130 friends, family, investors and former Theranos employees submitted letters to Davila urging leniency.
They included U.S. Senator Cory Booker of New Jersey, who said Holmes “can, despite mistakes, make the world a better place.”
Prosecutors said Holmes misrepresented Theranos’ technology and finances, including by claiming that its miniaturized blood testing machine was able to run an array of tests from a few drops of blood. The company secretly relied on conventional machines from other companies to run patients’ tests, prosecutors said.
Once valued at $9 billion, Theranos Inc promised to revolutionize how patients receive diagnoses by replacing traditional labs with small machines envisioned for use in homes, drugstores and even on the battlefield.
Forbes dubbed Holmes the world’s youngest female self-made billionaire in 2014, when she was 30 and her stake in Theranos was worth $4.5 billion.
But the startup collapsed after a series of articles in the Wall Street Journal in 2015 questioned its technology.
At trial, prosecutors said Holmes engaged in fraud by lying to investors about Theranos’ technology and finances rather than allowing the company to fail.
Holmes testified in her own defense, saying she believed her statements were accurate at the time.
Though she was convicted on three counts, Holmes was acquitted on four other counts alleging she defrauded patients who paid for Theranos tests.
Davila has denied Holmes’ requests to overturn her convictions, saying they were supported by the evidence at trial.
After the sentence has been imposed, Holmes can challenge those rulings and her sentence at the 9th U.S. Circuit Court of Appeals.
Reporting by Jody Godoy in New York and Dan Levine in San Jose;Editing by Noeleen Walder and Diane Craft
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