Former Theranos CEO Elizabeth Holmes is awaiting sentencing Friday after 10 months.of defrauding investors in a failed blood-testing company.
The sentencing hearing in San Jose, Calif., began shortly after 10 a.m. Pacific Time and continued as the clock ticked past noon — unusual for what is usually a fairly procedural hearing. It was a long time.
Holmes, 38, founded Theranos in 2003, and it quickly grew into one of the world’s most famous startups, valued at $10 billion. But a series of revelations by the Wall Street Journal raised questions about the effectiveness of the company’s technology and business practices, prompting multiple investigations by federal and state authorities.
The sentence, handed down by Judge Edward Davila of the Northern District of California, will be seen as an indication that the high-flying world of tech startups make serious mistakes when they misrepresent a company’s capabilities. If they do, they can expect punishment.
“Especially in a highly publicized case, you want the public to know that if you defraud investors or anyone else, you face serious prison time,” said Kerry Cohen, director of investigations and White House. Global Co-Head of Caller Defense practice group at the law firm Morrison Foster.
“Given the facts that all came out at trial, I would suspect she’s looking at a significant amount of prison time, probably close to what the government asked for,” Cohen said.
In January, Holmes was indicted on four counts.. A jury acquitted him of four other counts of harming patients using Theranos’ blood testing device, and could not agree on other charges. Investors in Theranos, a group that included media magnate Rupert Murdoch and software billionaire Larry Ellison, lost $144 million when the startup went sour.
Federal prosecutors have sought a 15-year sentence and $800 million in restitution, painting Holmes’ crimes as “some of the most white-collar crimes ever seen in Silicon Valley or any other district.” Court documents this week.
Holmes’ attorneys have requested that she receive no prison time, arguing that she is not a danger to society, has a debt she cannot pay and is already an “unrecognized victim” of Theranos’ downfall. has been the victim of “humanly cruel” media coverage. He received compliments from 130 people, including friends, family and even Sen. Cory Booker, who attest to Holmes’ good looks.
Holmes has a 1-year-old son and appeared pregnant at her recent court hearing. Cohen said both are factors that could lead a judge to leniency in sentencing.
Holmes has testified that she was psychologically traumatized after being raped in college, and that she suffered sexual and emotional abuse at the hands of former Theranos chief operating officer Sunny Balwani, 19 years her senior. . While the pair were running Theranos, Holmes maintained that Balwani controlled her schedule, diet and appearance to others, and often belittled and berated her.
Balwani’s lawyers have denied these claims. He was found guilty.in July and will be sentenced on December 7.
Holmes has said she plans to appeal her conviction. If she is sentenced to prison, a point of contention could be when she begins her sentence. The judge could delay the start of his term until Holmes’ birth. Cohen said she may also post bail to stay out of jail while she appeals her sentence.