Global Courant 2023-05-17 08:25:51
Former Theranos CEO Elizabeth Holmes on November 18, 2022 in San Jose, California.
Justin Sullivan | Getty Images
Disgraced Theranos CEO Elizabeth Holmes appears headed for jail soon after an appeals court on Tuesday rejected her request to remain free as she attempts to overthrow her conviction in a blood test hoax that brought her fleeting fame and fortune.
In another ruling delivered late Tuesday, U.S. District Judge Edward Davila ordered Holmes to pay $452 million in restitution to the victims of her crimes. Holmes is held jointly liable for that amount with her former lover and top Theranos lieutenant, Ramesh “Sunny” Balwani, who is already in prison after being convicted of a wider range of crimes in a separate trial.
Ninth Circuit Court of Appeals decision on Holmes attempt to escape jail comes nearly three weeks later she bet a last-minute legal maneuver to delay the start of her 11-year sentence. She had previously been ordered to surrender to authorities on April 27 by Davila, who sentenced her in November.
Davila will now set a new date for Holmes, 39, to leave her current home in the San Diego area and report to jail.
The sentence will separate Holmes from her current partner, William “Billy” Evans, their 1-year-old son, William, and 3-month-old daughter, Invicta. Holmes’ pregnancy with Invicta – Latin for “invincible” or “undefeated” – began after a jury convicted her in January 2022 of four counts of fraud and conspiracy.
Davila recommended that Holmes serve her sentence at a women’s prison in Bryan, Texas. It has not been disclosed whether the federal Bureau of Prisons accepted Davila’s recommendation or reassigned Holmes to another facility.
Balwani, 57, almost started 13 years in prison in April after his convicted on 12 counts of fraud and conspiracy last July. He was locked up in a Southern California jail last month after losing a similar attempt to stay out on bail while he appealed his conviction.
The verdict against Holmes came after a 46-day trial of testimony and other evidence that shed a spotlight on a culture of greed and hubris that infected Silicon Valley as technology took on a more pervasive impact on society and the economy over the past 20 years.
The most riveting moments of the trial unfolded as Holmes took the witness stand to testify in her own defense.
In addition to telling how she founded Theranos as a teenager after dropping out of Stanford University in 2003, Holmes accused Balwani of molesting her emotionally and sexually. She also claimed that she always believed Theranos would revolutionize healthcare with a technology that she promised could scan hundreds of diseases and other potential problems with just a few drops of blood.
Pursuing that bold ambition, Holmes raised nearly $1 billion from a list of wealthy investors, including Oracle co-founder Larry Ellison and media mogul Rupert Murdoch. Those sophisticated investors all lost their money after an investigation by the Wall Street Journal and regulatory audits revealed dangerous flaws in Theranos’ technology.
In his restitution order, Davila ordered Holmes and Balwani to pay Murdoch $125 million — by far the most of the investors listed in his order. The restitution also requires the co-conspirators in the Theranos scam to pay $40 million to Walgreens, which became an investor in the startup after agreeing to run some of the flawed blood tests at its pharmacies in 2013. Another $14.5 million is owed to Safeway, which also agreed to be a Theranos business partner before backing out.
In separate hearings, Holmes and Balwani’s lawyers tried to convince Davila that their respective clients should pay little or nothing. Prosecutors had been pushing for a restitution fine in the range of $800 million. Both Holmes – whose stake in Theranos was once valued at $4.5 billion – and Balwani – whose holdings were once valued at around $500 million – have indicated that they are nearly broke after racking up millions of dollars in legal bills while pursuing their proclaimed innocence.
Holmes’ attorneys have challenged her conviction on the grounds of alleged wrongdoing and misconduct at her trial. They have also argued that errors and abuses biasing the jury were so egregious that she should be allowed to stay out of jail while the appeals process unfolds — a request that has now been denied by both Davila and the Ninth Circuit Court of Appeals.
