Elizabeth Holmes faces doomsday for Theranos’ crimes

SAN JOSE, Calif. (AP) — A federal judge will decide Friday whether disgraced Theranos CEO Elizabeth Holmes should serve a lengthy prison term for defrauding investors and threatening patients while peddling fake blood-testing technology.

Holmes’ sentencing in the same courtroom in San Jose, California, where she was convicted four counts of investor fraud and conspiracy January marks the climax of a saga that has been chronicled in an HBO documentary and an award-winning Hulu TV series about its meteoric rise and terrifying fall.

U.S. District Judge Edward Davila will take center stage during the weigh-in federal government guidelines send Holmes, 38, to federal prison for 15 years. That’s slightly less than the 20-year maximum sentence she faces, but far more than her legal team’s attempt to limit her jail time no more than 18 monthspreferably served under house arrest.

Her lawyers argued that Holmes deserved a more lenient treatment as a well-intentioned businesswoman who is now a devoted mother with another child on the way. Their arguments were bolstered by more than 130 letters sent by family, friends and former colleagues praising Holmes.

A probation report, also presented to Dávila, recommended nine years in prison for Holmes.

Prosecutors are also seeking $804 million in restitution from Holmes. The amount covers most of the nearly $1 billion Holmes raised from a list of savvy investors that included software mogul Larry Ellison, media mogul Rupert Murdoch and the Walton family behind Walmart.

In luring investors, Holmes used Theranos’ powerful board, which included former US Secretary of Defense James Mattis, who testified against her during her trial, as well as two former US secretaries of state, Henry Kissinger and the late George Shultz, whose son filed a statement accusing Holmes of masterminding the scheme that Shultz was a “fool”.

Dávila’s decision – and the date of Holmes’ report on possible jail time – could be affected by the former entrepreneur’s second pregnancy in two years. Having given birth to her son shortly before her trial began last year, Holmes became pregnant at one point while out on bail this year.

Although her lawyers did not mention the pregnancy in the 82-page memo handed over to Davila last week, the pregnancy was confirmed in a letter from her current partner, William “Billy” Evans, who urged the judge to be merciful.

In the 12-page letter, which included photos of Holmes cuddling their 1-year-old son, Evans mentioned that Holmes participated in a Golden Gate Bridge swim earlier this year while pregnant. He also noted that Holmes suffered a case of COVID in August while pregnant. In his letter, Evans did not give Holmes’ date of birth.

Duncan Levin, a former federal prosecutor who is now a defense attorney, predicted that Dávila’s sentencing decision would not depend on the pregnancy, but expected the judge to allow her to remain free until the baby is born.

“She will no longer be a flight risk after she is convicted that she was awaiting sentencing,” Levin said. “We must temper our judgments with a measure of humanity.”

The pregnancy makes it more likely that Dávila will be criticized no matter what sentence he hands down, predicted Amanda Cramer, another former federal prosecutor.

“There’s a pretty healthy debate about what kind of sentence is necessary for overall deterrence to send a message to others who are thinking of crossing that line from pedantry to material misrepresentation,” Cramer said.

Federal prosecutor Robert Leach strongly argued that Holmes deserved severe punishment for masterminding the scam, which he called one of the most egregious white-collar crimes ever committed in Silicon Valley. In a scathing 46-page memo, Leach told the judge he has an opportunity to send a message that curbs the hubris and hyperbole fueled by the technology boom of the past decade.

Holmes “had his investors hoping that a young, dynamic entrepreneur would change the health care system,” Leach wrote. “And thanks to her deception, she achieved impressive fame, adoration and billions of dollars in wealth.”

Although Holmes was acquitted by a jury on four counts of fraud and conspiracy related to patients who gave Theranos blood tests, Leach also asked Dávila to consider the health risks associated with Holmes’ conduct.

Holmes’ attorney, Kevin Downey, portrayed her as a dedicated visionary who spent 14 years of her life trying to revolutionize health care with technology that was supposed to be able to scan for hundreds of diseases and other ailments with just a few drops of blood.

Although evidence presented during her trial showed that the tests produced extremely unreliable results that could have misled patients, her attorneys argued that Holmes never stopped trying to improve the technology until Theranos collapsed in 2018. They also noted that Holmes never sold any of her Theranos stock — a stake valued at $4.5 billion in 2014, when Holmes was hailed as the next Steve Jobs on business magazine covers.

By defending herself against the criminal charges, Holmes left “a significant debt from which she is unlikely to recover,” Downey wrote, suggesting that she is unlikely to ever pay any restitution that Davila might order as part of his sentence.

“Holmes is not a danger to the community,” Downey wrote.

Downey also asked Davila to look into the alleged sexual and emotional abuse Holmes suffered while in a romantic relationship with Ramesh “Sunny” Balwani, who became a Theranos investor, top executive and eventual accomplice to her crimes. 57-year-old Balwani is scheduled to be sentenced on December 7 was convicted at trial in July on 12 counts of fraud and conspiracy.


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