Elizabeth Holmes, the disgraced founder of blood testing startup Theranos who has become the poster child for Silicon Valley hubris, is set to be sentenced in federal court in California on Friday.
Holmes was found guilty in January of four counts of defrauding investors, following a nearly four-month trial in which allegations of an elaborate cover-up were recounted in great detail.
The sentencing, scheduled for Friday morning, marks the culmination of a saga that has sparked debate over the US tech industry’s “fake it ’til you make it” philosophy and the investment community’s desire to embrace charismatic business founders.
During the trial, jurors learned that Theranos’ centerpiece, the Edison machine, was unable to perform the groundbreaking blood tests that Holmes and company had promised. Prosecutors showed evidence they said proved Holmes tampered with endorsements in order to gain approval from investors and partners, a deception that led Theranos to raise $900 million in funding for a private valuation of $9 billion.
Holmes faces a maximum of 20 years in prison. The Justice Department, calling 38-year-old Holmes ‘blind’ by ambition, asked US Judge Edward Davila to impose a 15-year prison sentence and $804 million in restitution for his defrauded investors. .
“Holmes’ crimes weren’t failing, they were lying – lying in the most serious context, where everyone needed her to tell the truth,” the US prosecutors wrote.
They noted that seeking restitution would “likely reduce Holmes’ ability to pay”, but was necessary to highlight what he said was one of the “largest white-collar offenses that Silicon Valley or any other district has known”.
Holmes’ attorneys said in a sentencing note that 18 months of house arrest, plus community service, was appropriate.
They cast the soon-to-be mother-of-two as a well-meaning entrepreneur with honorable goals and a determined woman with an unwavering belief that she could achieve what Theranos set out to do: create a revolutionary device that could perform a number of tests. sophisticated diagnostics on a single small droplet of blood.
“We recognize that this may seem like a tall order, given the public perception of this case – particularly when Ms Holmes is seen as the caricature, not the person; when the company is seen as a house of cards, and not the ambitious, inventive and indisputably valuable company that it was; and when the media vitriol of Ms. Holmes is taken into account, ”wrote her lawyers.
After securing lucrative contracts with Walgreens and others, the promise of Holmes’ Edison machine soon dawned. The company started using off-the-shelf technology made by Siemens to perform tests instead, and sometimes provided incorrect results.
It wasn’t until Theranos employee-turned-whistleblower Tyler Shultz, the nephew of former US Secretary of State and Theranos director George Shultz, informed The Wall Street Journal that the matter came to light.
Journalist John Carreyrou’s book on Holmes and Theranos, Bad blood, became a New York Times bestseller and inspired a slew of dramatic television reinterpretations, spurred by Holmes’ signature look and mannerisms inspired by Steve Jobs.
Holmes’ defense said the public interest should not be used against her, noting that more than 130 people “who actually know Ms Holmes” had written to the court in support.
Among them was Democratic Senator Cory Booker, who bonded with fellow vegan Holmes over a dinner party where they both shared a packet of almonds. She “carries within her a sincere desire to help others, to render meaningful service, and possesses the ability to redeem herself,” Booker wrote.
In a separate trial, Holmes’ former boyfriend and Theranos COO Ramesh “Sunny” Balwani was found guilty for his part, found guilty of 12 counts of fraud. He is due to be sentenced in early December.
. founder Theranos Elizabeth Holmes will be convicted for fraud