CNN –
Elizabeth Holmes was sentenced Friday to more than 11 years in prison after her January conviction for defrauding investors while running the failed blood-testing startup Theranos.
Judge Edward Davila imposed a sentence of 11 years and three months in prison, with another three years of supervised release after Holmes is released. The sentence also includes a fine of $400, or $100 for each count of fraud. The refund will be set at a later date. Holmes was remanded in custody until April 27, 2023. He is expected to appeal his conviction.
Holmes, who was found guilty in January of four counts of defrauding investors, faced up to 20 years in prison and a fine of $250,000 plus restitution for each count.
Attorneys for the government asked for a 15-year prison sentence, as well as probation and restitution, while Holmes’ probation officer asked for a nine-year sentence. Holmes’ defense team asked Davila, who presided over her case, to sentence her to up to 18 months in prison followed by probation and community service.
Before the sentence was announced, a tearful Holmes spoke in court in San Jose, California. “I loved Theranos. It was my life’s work,” he said. “The people I tried to get involved with Theranos were the people I loved and respected the most. I am devastated by my failures.”
He also apologized to Theranos employees, investors and patients. “I’m very, very sorry. I gave everything I had to build our company and save our company,” he said. “I regret my mistakes with every cell in my body.”
In sentencing arguments Friday, Kevin Downey, one of Holmes’ lawyers, said that, unlike other defendants in corporate fraud cases, the Theranos founder did not express greed by cashing in stock or spending money in “yachts and planes”. ” Instead, the money was “used to build medical technology.”
Federal prosecutor Jeffrey Schenk noted that Holmes gained fame, admiration and a lifestyle from the fraud, even if he did not make any financial gains. “Those are still benefits he’s getting,” he said.
Friday’s sentencing hearing ends with Holmes’ stunning downfall. Once hailed as a tech industry icon for her company’s promises to test a host of conditions with just a few drops of blood, she is now the rare tech founder who has been convicted and faces prison time for mistakes of your company.
Holmes, now 38, started Theranos in 2003 at age 19 and soon after dropped out of Stanford University to pursue the company full-time. After a decade under the radar, Holmes began courting the press with claims that Theranos had invented technology that could accurately and reliably test for a range of conditions using just a few drops of blood taken from a finger prick.
Theranos raised $945 million from an impressive list of investors, including media mogul Rupert Murdoch, Oracle founder Larry Ellison, Walmart’s Walton family, and the billionaire family of former U.S. Secretary Education Betsy DeVos. At its peak, Theranos was valued at $9 billion, making Holmes a billionaire on paper. She was praised on magazine covers, often wearing a signature black turtleneck that invited comparisons to the late Apple CEO Steve Jobs. (He hasn’t brought this look to the courtroom.)
The company began to unravel after a Wall Street Journal investigation in 2015 found that the company had performed only about a dozen of the hundreds of tests it offered using its proprietary blood-testing device and with a dubious accuracy. Instead, Theranos relied on devices made by third parties from traditional blood testing companies.
In 2016, Theranos voided two years of blood test results. In 2018, Holmes and Theranos settled charges of “massive fraud” with the Securities and Exchange Commission, but did not admit or deny any of the allegations as part of the settlement. Theranos was dissolved soon after.
In her trial, Holmes alleged that she was in the midst of a decade-long abusive relationship with her then-boyfriend and Theranos chief operating officer Ramesh “Sunny” Balwani while running the company. Balwani, she alleged, tried to control almost every aspect of her life, including disciplining her diet, voice and image, and isolating her from others. (Balwani’s lawyers denied his claims.)
In July, Balwani was found guilty of all 12 charges in a separate trial and faces the same potential maximum prison term as her. Balwani is scheduled to be sentenced on December 7.
“The effects of Holmes and Balwani’s fraudulent conduct were far-reaching and severe,” federal prosecutors wrote in a November court filing regarding Holmes’ sentencing. “Dozens of investors lost more than $700 million and numerous patients received unreliable or completely inaccurate medical information from Theranos’ flawed tests, putting the health of these patients at serious risk.”
More than 100 people wrote letters in support of Holmes to Davila, asking for leniency in his sentence. The list includes Holmes partner Billy Evans, many members of the Holmes and Evans families, early Theranos investor Tim Draper and Senator Cory Booker. Booker described meeting her at a dinner party years before she was charged and bonding over the fact that they were both vegan and had nothing to eat but a bag of almonds, which they shared.
“I still believe that she has hope that she can make contributions to the lives of others and that she can, despite her mistakes, make the world a better place,” Booker wrote, noting that he continues to consider her a friend.
Before the hearing, there were also questions about how Holmes’ sentence could be complicated by the evolution of his life after leaving Theranos. Holmes and his partner, Evans, who met in 2017, have a young son. Holmes is also pregnant, as confirmed by recent court filings and her most recent court appearance in mid-October.
Mark MacDougall, a white-collar defense attorney and former federal prosecutor, told CNN Business before the hearing that the fact that Holmes has a young son could affect his sentence.
“I don’t know how it can’t be done, just because judges are human,” he said.
MacDougall also said he doesn’t see what a long prison term entails. “Elizabeth Holmes will never run a big company again,” he said. “She will never be in a position to go through something like this again.”