Elizabeth Holmes sentenced to 11 years in prison for her Theranos fraud

Ramesh Balwani has been sentenced to 155 months, or just under 13 years, in prison, according to The New York Times. Like his former business partner, Theranos founder Elizabeth Holmes, he’s due another three years of supervised release after he gets out. Balwani will have to surrender to custody on March 15th.

In July, Balwani, also known as Sunny, was convicted on 10 counts of wire fraud and two counts of conspiracy to commit wire fraud for his actions while he was president and COO of Theranos. Unlike Holmes, who was found guilty of only defrauding investors, Balwani was found guilty of deceiving both investors and patients.

Elizabeth Holmes has been sentenced to 135 months, or just over 11 years, in prison, according to journalist John Carreyrou. She will have to report to prison on April 27th, 2023, and will have an additional three years of supervised release once she’s out, according to Yahoo Finance’s Alexis Keenan.

Judge Edward Davila, who has overseen the case, declared that the charges she had been found guilty of made her responsible for defrauding 10 victims out of $121 million, according to The New York Times’ Erin Griffith. Davila said that Holmes’ refusal to accept responsibility for the fraud counted against her in his sentencing decision, according to The Wall Street Journal.

After a long trial, former Theranos CEO Elizabeth Holmes has been found guilty of four out of the 11 charges brought against her, including three counts of wire fraud and conspiracy to defraud investors in her now-defunct blood testing company. The verdict caps a journey filled with both promises and disappointments, one that ultimately led to the downfall of what could have been one of the most successful companies, and entrepreneurs, to come out of Silicon Valley in over a decade.

While the verdict is a milestone in holding startup founders accountable for false promises, it actually further complicates the difference between fraud and the “fake it til you make it” mindset of many startups. The Verge’s deputy editor Liz Lopatto breaks down the outcome of the trial and what to expect in the months to come. With Holmes’ business partner, Sunny Balwani, getting ready to stand trial later this month, the story is far from over.

There is no doubt in my mind that former Theranos CEO Elizabeth Holmes will appeal the four charges she was convicted of: conspiracy to defraud investors and wire fraud. She still has the Silicon Valley mindset, after all: reality can be bent to your will. But what have we learned from the Theranos trial? Almost nothing.

Holmes was found guilty on four of 11 counts after about 50 hours of deliberation. Those counts could be grouped, roughly, into defrauding patients and defrauding investors. The jury found her not guilty of defrauding patients or conspiracy to defraud patients.

Elizabeth Holmes deliberately misled investors about the capabilities of the blood testing technology at Theranos and is guilty of three counts of wire fraud, a jury found today. She is also guilty of conspiracy to defraud investors with her co-defendant, Sunny Balwani.

She faces up to 20 years in prison for each of the counts. The jury found her not guilty of two counts of defrauding patients and not guilty of conspiracy to defraud patients. The jury did not return a verdict on three more counts of defrauding investors.

Jurors are still deliberating over the fate of Elizabeth Holmes, the founder of defunct biotech company Theranos. They’re deciding if she intentionally misled investors, patients, and doctors about what her company’s blood testing technology could do. Because despite big promises, the tech the company claimed to have invented... didn’t actually exist.

And the technology might never be a reality — at least not in the way Holmes described it. In this episode of our three-part series on Theranos, we look at what researchers actually think is possible in the field of blood testing and what the future could look like.

From the beginning, Elizabeth Holmes knew how to tell a good story. She launched her blood testing company, Theranos, with a tale of a powerful vision to revolutionize health care and change an old, outdated industry. She presented herself as Steve Jobs, part two. She sketched out a picture of someone in control.

That Holmes, and that story, is what prosecutor John Bostic worked to reset back to during his rebuttal argument, the last word before the case went to the jury on Friday afternoon. It wasn’t reasonable to think the CEO of a company didn’t know exactly what impression she was giving to investors, Bostic said. It was clear she knew about problems with the Theranos tests. Holmes knew that the technology wasn’t working as intended, and that Theranos might not be able to change the world. When that story started to fall apart, she tried anything she could to try and keep it together.

Prosecutor Jeffrey Schenk opened his closing arguments in the case against Elizabeth Holmes by talking about a banker. Holmes knew Theranos, the company she founded, was running out of money, and she was on the phone asking her banker to clear a check early. 

“Holmes had a choice to make,” Schenk said. She could figure out a way to raise funds to keep the company moving, or risk seeing it wither away. And her choice, he said, was to raise the funds through fraud. 

Control and image are important to Elizabeth Holmes. They were important to the PR effort around Theranos when she was portrayed as the second coming of Steve Jobs. They were important when she delegated reprimands to maintain her friendly image. And they are important now — as a jury is about to decide whether she’s guilty of wire fraud and conspiracy to commit wire fraud.

Since September, she’s walked to the courthouse holding hands with someone — usually her mother. I have watched Holmes sit bolt upright at the defense table as her lawyers slowly wilt. She’s dressed in business attire — sheath dresses with structured blazers or skirt suits. Sensible kitten heels. A coterie of expensive blondes and men in fancy loafers have filled her side of the courtroom, especially as she has testified. (Occasionally, there is even a brunette.) Holmes is presenting an image of herself as a former CEO, surrounded by friends and family.

I expected more fireworks from a cross-examination of former Theranos CEO Elizabeth Holmes. Instead, today was a disjointed day of questions without a clear narrative throughline. I don’t know why the government chose to send an assassin who didn’t know when to twist the knife.

The defense presented a strong narrative on its direct examination. Holmes was a young CEO who believed in Theranos’ technology and had some very credentialed advisors who led her to believe it was real. There was real intellectual property. Holmes never sold her shares. And while she hadn’t done anything wrong, she was also being abused by her boyfriend, Theranos’ president Sunny Balwani, and maybe that clouded her judgment. (Balwani is Holmes’ co-defendant, but he is being tried separately.)

No one was more invested in Theranos than CEO and founder Elizabeth Holmes, she testified today. She owned the most stock. She could even fire the entire board of directors — and basically anyone else at the company.

“Is that fair?” Prosecutor Robert Leach asked Holmes in his cross-examination. “The buck stops with you?”

Today, Elizabeth Holmes cried on the stand as she recounted being raped at Stanford. It was part of the reason she dropped out of college, she testified. “I decided I was going to build a life by building this company,” she said on the witness stand today. When she started dating Sunny Balwani, her co-defendant who is being tried separately, “he said I was safe now that I had met him.”

Then, she said, he abused and raped her. 

Who added the Schering-Plough and Pfizer logos to the Theranos-produced lab reports that investors received? Why, none other than Elizabeth Holmes.

“This work was done in partnership with those companies and I was trying to convey that,” she said on the stand today. She added the logos before sending the memos to Walgreens, which Theranos would later partner with. Holmes wasn’t trying to fool anyone, she said. “I wish I’d done it differently.”

So far, Elizabeth Holmes’ defense has been at pains to show us that Theranos had a real device and worked with real pharmaceutical companies. That actually hasn’t been in question, particularly in the time period the defense was asking about. Still, the point seems to be hey, look, some things at Theranos were real.

But today, in her wire fraud trial, we saw a science-y presentation — not actual science, just the marketing version. We saw the guts of Theranos devices. We heard about the company iterating on the device. We saw emails with pharma companies. 

Elizabeth Holmes, her hair down and her makeup muted relative to her Theranos days, spelled her name for the court. After the prosecution rested its case in the morning, the defense called her as their third witness, about an hour before the end of the day. She wore a navy blazer with a white blouse — not one of the famous black turtlenecks has made an appearance in court during the months the case against her has dragged on.

Holmes is facing 11 counts of wire fraud from her time as founder and CEO of Theranos. Though her testimony today is the first time she’s spoken for herself, we’ve heard her voice already — in the recordings of Fortune journalist Roger Parloff. In those recordings, she lies confidently about her device’s capabilities. And the lies Parloff recorded were consistent with the lies her investors testified that she told them.

Lately I have been reflecting on Alan Eisenman, Theranos investor and human cowboy boot. He’s wealthy, the kind of character Matthew McConaughey will play in about 15 years; on the stand, his hair was almost as white as his shirt, which was unbuttoned at the top. (No tie, of course.) He seemed like someone that would be fun to drink a whiskey with, as long as he got to do all the talking.

In court, his sense of grievance was palpable: this man feels he has been done wrong. “I think there was business fraud,” Eisenman said. “I think I was lied to and taken advantage of.”

Here’s the thing about prostate-specific antigen: you do not expect to find it in blood test results for most women, because most women don’t have prostates. So when Theranos’ former lab director, Kingshuk Das, found that Theranos’ devices kept reporting that women had detectable PSA levels, he assumed that meant there was something wrong with the devices.

Theranos CEO Elizabeth Holmes had an “alternative explanation,” he said. It was that these women had a rare kind of breast cancer. That explanation “seemed implausible,” he testified today in US v. Elizabeth Holmes. Das was one of a parade of experts we’ve heard from in this trial, who it seems were hired primarily to be ignored.

Today we learned more about Theranos’ kink for corporate cosplay. The company liked to dress up its own reports in pharmaceutical companies’ logos, to use the present tense when the future tense would be more appropriate, and to reiterate its favorite buzzwords in PowerPoint slide after PowerPoint slide.

Elizabeth Holmes’ lawyers, in defending her against the wire fraud charges that the government has brought, resumed cross-examination of Lisa Peterson, who worked for the DeVos family offices and was involved in approving their investment in the company. (Family offices are a rich people thing — an investment arm for all that sweet, sweet money.) The defense tried to discredit Peterson’s testimony from last week about a key Pfizer memo, which she said was crucial to thinking the company was onto something big.