Elizabeth Holmes sentenced to 11 years in prison for Theranos fraud
Elizabeth Holmes, once seen as a Silicon Valley star at the helm of the blood-testing startup Theranos, was sentenced on Friday to more than 11 years in prison after being convicted of fraud earlier this year.
“Looking back, there are so many things I would do differently if I had the chance. I regret my failings with every cell of my body,” Holmes told U.S. District Judge Edward Davila before he handed down the sentence in a federal courthouse in San Jose, Calif.
Holmes’ defense lawyers had hoped for a short prison sentence, or even home confinement. Now Holmes, 38, who is pregnant with her second child, is expected to report to prison in April. After her release, she is to spend three years under legal supervision.
“The tragedy of this case is that Ms. Holmes is brilliant,” Davila said before his pronouncement. But he concluded that she was motivated by avarice and greed to lead investors into believing that her company could do far more than she knew possible.
Prosecutors had argued for 15 years behind bars, citing the whopping financial loss and the need to deter future fraudulent schemes in the tech industry.
In January, a jury convicted Holmes on four wire fraud-related counts for her role in deceiving investors about a supposedly groundbreaking technology that could scan for hundreds of conditions with just a few drops of blood. It is a feat laboratory scientists around the world for years have tried to accomplish, but Holmes, a Stanford dropout, claimed she had perfected it.
She drummed up nearly $1 billion in investment based on the premise that her proprietary blood-testing devices would revolutionize health care, but prosecutors argued during the trial that Holmes fudged test results, flagrantly lied about the capabilities of her tests and tried to cover it up when whistleblowers and journalists began drew scrutiny to what was really going on at the company.
It is nearly unheard of in Silicon Valley for an executive to face criminal prosecution in the wake of a business collapse. But legal experts said the egregiousness of Holmes’ crimes, and the fact that she was operating in the highly-regulated health care world, made the Theranos case exceptional.
Still, Holmes’ prosecution stirred debate in tech circles about possible sexism, with some wondering why men who led tech startups that failed after unrealized promises have never faced criminal charges.
There appears to be more scrutiny on high-flying tech startups now, however. The Justice Department is reportedly investigating the now-bankrupt FTX, an exchange for trading crypto. Its recent implosion wiped out former CEO Sam Bankman-Fried’s wealth of $16 billion, which Bloomberg called “one of history’s greatest-ever destructions of wealth.”
Federal investigators are probing the unwinding of the company, with the specter of possible criminal charges being discussed among legal experts.