Willie R. Tubbs, FISM News
A federal judge on Friday sentenced Theranos founder Elizabeth Holmes to more than a decade behind bars.
Holmes, who was found guilty on three counts of investor fraud and one count of conspiracy in early January, had captivated the nation’s attention over the previous years for her role in defrauding investors in her now-infamous startup health technology company, Theranos, of billions.
Prosecutors had sought a 15-year sentence, but U.S. District Judge Edward Davila, operating out of a San Jose courtroom, opted to cap the sentence as 11.25 years and level a massive fine of $400 million.
Davila seemed unconvinced that Holmes was sufficiently remorseful.
“I suppose we step back and ask what is the pathology of fraud,” Davila said. “Is it the refusal to accept responsibility or express contrition in any way? Perhaps that is the cautionary tale that will go forward from this case.”
Holmes certainly attempted to convey some level of contrition, for something, when she addressed Davila.
“I stand before you taking responsibility for Theranos,” Holmes said. “I loved Theranos. It was my life’s work. My team meant the world to me. They wanted to make a difference in the world. I am devastated by my failing … Looking back, there are so many things I would do differently. I tried to realize my dream too quickly.”
Few rose or fell as fast as she did in the public eye. In 2013, Holmes and Theranos burst on the scene with claims the company had developed a new, highly sophisticated medical test capable of deducing any number of medical facts with just a small drop of blood.
Holmes, who today is 38, became a billionaire in 2014 and was pegged as a burgeoning megastar in her field. Theranos itself rose to a peak value of $9 billion.
Investors, and the world, eventually learned that the miracle technology did not exist, and the downfall for Holmes since has been profound.
“This is a fraud case where an exciting venture went forward with great expectations only to be dashed by untruths, misrepresentations, plain hubris, and lies,” Davila said.
Holmes submitted numerous letters from venture capitalists, in theory a voice for the principal aggrieved parties in the case, who said losing money through failed businesses was a normal part of their field.
The tactic did not sway Davila, who said the letters did not say anything about, nor did they endorse, “failure by fraud.”
The Holmes case became known as much for its delays and melodrama as for assessing the facts of the case.
Even after having now been sentenced, Holmes will not immediately go to prison. Indeed, she is not due to report until late April of next year, and even that date might get pushed back.
Her attorneys have promised to appeal both Holmes’ conviction and Davila’s ruling, and they will likely request that Holmes remain free on bail until after her appeals are exhausted.