Elizabeth Holmes sentenced to 11.25 years in prison for Theranos fraud

Enlarge / Elizabeth Holmes (C), founder and former CEO of blood testing and life sciences company Theranos, walks with her mother Noel Holmes and partner Billy Evans in the federal courthouse for his sentencing hearing on November 18, 2022 in San Jose, California. Getty | Amy Osborne

Elizabeth Holmes was sentenced to 11.25 years in federal prison, plus three years of supervision for her conviction in January on four counts of defrauding investors of her blood testing company in bankruptcy, Theranos. Restitution in the case will be determined at a later hearing, not yet set.

The sentence is less than the 20-year maximum sentence set by federal sentencing guidelines, but still higher than the nine-year prison sentence recommended by the probation officer in the case of Holmes.

Federal prosecutors had asked for 15 years in prison and for Holmes, 38, to pay approximately $804 million in restitution to the defrauded investors. Holmes' lawyers, meanwhile, asked for just 18 months of house arrest and argued that she had "essentially no assets" and could not pay a nine-figure fine.

Judge Edward Davila of the U.S. District Court for the Northern District of California handed down the jail sentence today in San Jose, Calif., where reporters began gathering outside the courtroom ahead of the Sentencing start time 10:00 a.m. PST. Wall Street Journal reporter John Carreyrou was the first in line, who first told the story that there were deadly problems within the booming start-up, including that its famous machines of Edison blood test were not working properly.

Before that, Holmes promised that his innovative machine could perform more than 200 medical tests with just a few drops of blood. Promise and hype, combined with Holmes' ambition and confidence, boosted Theranos' valuation to $9 billion in 2014, attracting major investors including Safeway and Walgreens.

During today's sentencing, Judge Davila, who presided over Holmes' entire trial, found that Holmes' fraud resulted in a total loss of $121 million in the value of the shares of the company, according to reporters at the courthouse. He noted that would put the federal recommendations for Holmes' sentence between about 11 and 14 years. Next, Davila opened the hearing to last-minute arguments and statements from both sides.

Holmes read a pre-written speech in court, saying she had taken responsibility for Theranos. Amid tears, she said she was "devastated by the failures" and had "felt deep pain" in the years since the business collapsed.

Just before handing down sentencing, Davila said the case was "disturbing in many ways" and suggested that Holmes' fraudulent actions were motivated by hubris or "celebrity drunkenness".

Holmes' fate in the trial has drawn media attention and public interest, given his highly publicized rise and dramatic fall. She has become a leading figure in brazen tactics in Silicon Valley. "Elizabeth Holmes" was trending on Twitter on Friday morning, despite the platform's internal chaos. And his conviction can be seen as an indicator of future white-collar fraud.

Two performances

In their court filings, federal prosecutors argued that a lengthy prison sentence "would not only serve to deter future startup fraud schemes," but would also "restore the confidence investors need to have when they fund innovators".

Overall, they painted Holmes in a harsh light, noting that during the short-lived heyday of Theranos, Holmes flew on private jets, lived in a $15 million mansion, and made the cover of many glossy magazines. Meanwhile, patients who used his technology were receiving inaccurate medical results for pregnancy, cancer and HIV...