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Thursday, June 1, 2023

Theranos Founder Elizabeth Holmes Loses Bid to Avoid Prison

Theranos Founder Elizabeth Holmes Loses Bid to Avoid Prison – Disgraced Theranos CEO Elizabeth Holmes appears to be on her way to prison after an appeals court on Tuesday denied her request to remain free while she fights her conviction in a blood-testing fraud that gave her brief fame and money.

Another ruling delivered late Tuesday ordered Holmes to pay $452 million in restitution to the victims of her crimes. Holmes is being found jointly accountable for that sum with her former lover and top Theranos lieutenant, Ramesh “Sunny” Balwani, who is already in prison after being convicted in a previous trial on a larger range of offenses.

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The ruling by the Ninth Circuit Court of Appeals on Holmes’ bid to avoid prison comes nearly three weeks after she used a last-minute legal maneuver to postpone the start of her 11-year sentence. Davila, who sentenced her in November, had already ordered her to report to police on April 27. Davila will now set a new date for Holmes, 39, to leave her present San Diego area residence and surrender to prison.

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Holmes will be separated from her current partner, William “Billy” Evans, as well as their 1-year-old son, William, and 3-month-old daughter, Invicta. Holmes’ pregnancy with Invicta — Latin named “invincible,” or “undefeated” — began after a jury convicted her of four charges of fraud and conspiracy in January 2022.

Davila has advised Holmes to serve her term at a women’s prison in Bryan, Texas. It is unknown whether the federal Bureau of Prisons approved Davila’s recommendation or sent Holmes to another facility.

Balwani, 57, began serving a nearly 13-year prison sentence in April after being convicted last July on 12 counts of fraud and conspiracy. Last month, he was imprisoned in a Southern California prison after losing a similar attempt to remain free on bail while appealing his sentence.

The former Silicon Valley star was convicted in January on three counts of wire fraud and one count of conspiracy after a jury determined she defrauded investors with false statements that her company’s blood-testing equipment could diagnose ailments with just a few drops of blood.

She was initially charged with 11 counts, four of which were dropped, and the jury was unable to reach a decision on the other three. Prosecutors had requested for 15 years in prison for Holmes’ misdeeds, calling the case “one of the most substantial white collar offenses Silicon Valley or any other District has seen.”

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Holmes’ defense team begged with the judge for mercy, stating that she is a daughter and a mother who will be able to contribute to society in the future. More than 130 people, including Senator Cory Booker, wrote letters to the judge expressing their support for her character.

The decision came after 46 days of trial testimony and other evidence that shed light on a culture of greed and arrogance that plagued Silicon Valley as technology became a more prevalent impact on society and the economy over the last 20 years.

The most dramatic moments of the trial were when Holmes took the witness stand to testify in her own defense. In addition to detailing how she created Theranos as a teenager after dropping out of Stanford University in 2003, Holmes accused Balwani of emotionally and sexually abusing her.

She also stated that she never lost faith in Theranos’ ability to revolutionize healthcare with technology capable of scanning for hundreds of diseases and other possible problems with just a few drops of blood.

While pursuing that ambitious goal, Holmes gathered roughly $1 billion in funding from a group of wealthy investors that included Oracle co-founder Larry Ellison and media magnate Rupert Murdoch. After a Wall Street Journal investigation and regulatory reviews revealed severe weaknesses in Theranos’ technology, the investors all lost their money.

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Davila found in his restitution finding that Holmes and Balwani should pay Murdoch $125 million — by far the most of the investors listed in his order. The co-conspirators in the Theranos scheme are also required to pay $40 million to Walgreens, which became an investor in the business after agreeing to deliver some of the inaccurate blood tests in its pharmacies in 2013.

Another $14.5 million is owed to Safeway, which committed to become a Theranos business partner before withdrawing. Holmes’ lawyers have been fighting her conviction on the basis of claimed errors and misconduct during her trial.

They have also argued that the errors and abuses that biased the jury were so egregious that she should be allowed to stay out of prison while the appeal unfolds — a request that has now been rebuffed by both Davila and the Ninth Circuit Court of Appeals.

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