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Theranos founder Elizabeth Holmes jailed for fraud

NEW YORK, NY - SEPTEMBER 29: Elizabeth Holmes speaks on stage during the closing session of the Clinton Global Initiative 2015 on September 29, 2015 in New York City.   JP Yim/Getty Images/AFP
Photo: AFP / 2015 Getty Images

Elizabeth Holmes, a former Silicon Valley tech chief executive, has been sentenced to more than 11 years for fraud.

Her company Theranos was once valued at NZ$14.6bn. She falsely claimed the firm's technology could diagnose disease with just a few drops of blood.

A tearful Holmes, 38, told the court she felt "deep pain" for those who were misled by the start-up.

She was found guilty in January of duping investors and lying about the technology after a three-month trial.

Holmes is expected to appeal against the sentence, which was handed down on Friday (Pacific time) in a California court.

The sentencing has been widely viewed as a test of how seriously the justice system takes corporate fraud in the tech sector.

Once hailed as the "next Steve Jobs", Holmes was at one time said to be the world's youngest self-made billionaire.

She launched Theranos after dropping out of Stanford University at age 19, and its value rose sharply after the company claimed it could bring about a revolution in the diagnosing of disease.

But the technology Holmes touted did not work at all and - awash in lawsuits - the company was dissolved by 2018.

At Holmes' trial in San Jose, California, prosecutors said she knowingly misled doctors and patients about the Theranos flagship product - the Edison machine - which the company claimed could detect cancer, diabetes and other conditions using just a few drops of blood.

They also accused Holmes of vastly exaggerating the firm's performance to its financial backers.

Jurors ultimately found her guilty on four counts of fraud, with a maximum sentence of 20 years in prison. But they found her not guilty on four other charges, and failed to reach a verdict on three more.

Before Judge Edward Davila issued his sentence on Friday, Holmes read a speech to the court in which she tearfully apologised to investors and patients.

"I am devastated by my failings. I have felt deep pain for what people went through, because I failed them," she said.

"I regret my failings with every cell of my body," she continued.

According to reporters in court, the judge referred to Holmes as "brilliant", and told her: "Failure is normal. But failure by fraud is not OK."

He also questioned whether her scheme was influenced by "intoxication with fame". He described her case as a "cautionary tale" for other Silicon Valley executives.

She is required to surrender to begin serving her sentence on 27 April.

SAN JOSE, CALIFORNIA - NOVEMBER 18: Former Theranos CEO Elizabeth Holmes (C) arrives at federal court with her partner Billy Evans (R) and mother Noel Holmes on November 18, 2022 in San Jose, California. Holmes appeared in federal court for sentencing after being convicted of four counts of fraud for allegedly engaging in a multimillion-dollar scheme to defraud investors in her company Theranos, which offered blood testing lab services.   Justin Sullivan/Getty Images/AFP (Photo by JUSTIN SULLIVAN / GETTY IMAGES NORTH AMERICA / Getty Images via AFP)
Former Theranos CEO Elizabeth Holmes at federal court with her partner Billy Evans and mother Noel Holmes on November 18, 2022 in San Jose, California. Photo: AFP / JUSTIN SULLIVAN

Holmes and Ramesh "Sunny" Balwani, her former business partner and lover, were charged in 2018 of wire fraud and conspiracy to commit wire fraud. Balwani, who was tried separately, was found guilty of fraud this summer. He will be sentenced next month.

Prosecutors requested that she face 15 years in prison and pay some $800m in restitution to investors, arguing hers was "one of the most substantial white collar offences Silicon Valley or any other District has seen".

But Holmes' defence team - who claim she was well-intentioned and trying to help people - said she should spend 18 months under house arrest.

Over 130 friends, family, and former Thernaos employees wrote to the judge to appeal for clemency.

Among those pleading for a light sentence was 2020 presidential candidate and New Jersey Democratic Senator Cory Booker, who wrote that Holmes could "despite mistakes, make the world a better place."

The group noted that Holmes is a young mother. She had a son in July 2021 and is currently pregnant with her second child.

source: https://www.rnz.co.nz/news/world/479074/theranos-founder-elizabeth-holmes-sentenced-to-more-than-11-years-in-jail-for-fraud