During the sentencing hearing for Elizabeth Holmes, she was ordered to serve more than 11 years in prison for defrauding investors in her failed medical technology company, Theranos Inc. She was convicted in January on one felony count of conspiracy to commit fraud. The charges stem from her failure to live up to her promises about the company’s blood-testing technology.
The company’s technology was never able to perform the tests it claimed. In fact, a federal regulator found deficiencies at the company’s lab, jeopardizing patient health. Theranos’ value rose dramatically after it was touted as a revolutionary company that would revolutionize the diagnosis of diseases by analyzing blood samples. But in the end, it was a fraud that exploded into a scandal. Holmes was charged with a variety of fraud charges by the Securities and Exchange Commission. She was also barred from owning or operating a medical lab for two years.
Holmes was found guilty of one felony count of conspiracy to commit fraud and three felony counts of wire fraud. She was also found guilty of three misdemeanor counts of tampering with documents. Holmes admitted using modified Siemens analyzers and adding pharma company logos to Theranos reports without their approval. She also apologized to patients and employees of Theranos. She said she was trying to create technology that would help people. Holmes said she was always acting in good faith.
A group of supporters stood quietly before Holmes during the sentencing hearing. She was ordered to serve more than 11 years in prison, though she was allowed to serve three years of supervised release after she completes her sentence. Holmes is expected to report to prison in five months and will be required to pay restitution for her actions. The total amount of restitution will be determined at a separate court hearing.
During the hearing, Holmes’ lawyers asked the judge to consider her behavior at the helm of Theranos. She said she always tried to do good in the world and that she was always acting in good faith. Her lawyers also asked that the judge take into consideration her alleged abuse of former Theranos business partner Sunny Balwani. Balwani was Holmes’ former boyfriend and president of the company. Balwani was also convicted in a separate trial on 12 counts of fraud.
Davila also considered Holmes’ questionable behavior at the helm of the company. He noted that Holmes’ conduct at the company was reminiscent of the “characteristics” of Silicon Valley. He weighed the consequences of the fraud on patients and investors. Davila also considered Holmes’ remorse. He concluded that Holmes was motivated by greed.
Holmes will have to pay restitution to 29 investors. Her lawyers said that they would appeal her sentence and will ask the court to allow Holmes to serve her time on bail during the appeal process. Holmes will also have to pay restitution to the federal government for the losses she caused investors. The total restitution is estimated to be $804 million.