Elizabeth Holmes: Theranos founder sentenced to 11 years for defrauding investors

Former chief executive tells court: 'I am devastated by my failings'

Former Theranos chief executive Elizabeth Holmes outside the courthouse in San Jose, California. AFP
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Elizabeth Holmes was sentenced on Friday to 11 years in prison for defrauding investors with her Theranos start-up, closing a key chapter in one of the biggest scandals in Silicon Valley history.

The sentence imposed by US District Judge Edward Davila in San Jose, California, is far closer to the 15-year term prosecutors had asked for than what Holmes’s lawyers sought — home detention or 18 months in prison.

The sentencing caps a years-long saga that has riveted Silicon Valley, inspiring books, documentaries, podcasts and films about the Stanford University dropout who became a celebrity entrepreneur, only to see her company crash when its technology was exposed as a failure.

Her sentence may be used to set an example in the start-up world about the consequences of fraudulent behaviour.

Before the sentencing decision, she addressed the courtroom in tears, apologising to victims and investors and saying she took full responsibility for Theranos.

“I am devastated by my failings,” Holmes said. “Looking back, there are so many things I’d do differently if I had the chance. I tried to realise my dream too quickly.”

The judge set Holmes's surrender date for April.

Her lawyers are expected to ask the judge to allow her to remain free on bail during her appeal.

Prosecutors argued a lengthy prison term is justified given the scope of the fraud and the need to send a deterrence message to the start-up sector, where “fake it til you make it” braggadocio has been ubiquitous.

At times, Holmes tried to shift blame to others for her crimes and remains “remorseless”, they said.

Lawyers for Holmes argued she deserves leniency because she is not the cheat the news media has made her out to be. They are urging Mr Davila to see Theranos not as a house of cards but as a valuable enterprise, driven by its inventive and hard-working chief executive.

Her lawyers pointed to a rape Holmes says she suffered as an undergraduate at Stanford University, and the psychological, physical and sexual abuse they say was perpetrated by her former partner and former Theranos president Ramesh “Sunny” Balwani.

He has denied the allegation and faces his own sentencing for fraud in December.

Before her sentencing, Holmes’s family, friends and other supporters, including Senator Cory Booker and venture capitalist Tim Draper, submitted more than 130 letters to the judge in a bid for leniency.

Such letters typically do not sway judges except in rare instances when they reveal that a defendant or a family member faces a major health crisis.

Many of Holmes’s letter writers pointed to her now 16-month-old child and others to her more recent pregnancy in their pleas for a shorter sentence.

Lawyers for Holmes have made only brief mentions of her baby in court filings, and did not mentioned her pregnancy, which was plainly visible when she appeared in court in San Jose, California, in an unsuccessful October bid for a new trial.

Bloomberg contributed to this report

Updated: November 19, 2022, 5:10 AM
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