Elizabeth Holmes, the disgraced former CEO of Theranos, faces imprisonment as her bid to remain free while appealing her conviction in a blood-testing scandal has been rejected by an appeals court. This development comes alongside a separate ruling by U.S. District Judge Edward Davila, who ordered Holmes to pay $452 million in restitution to the victims of her crimes. She shares joint liability for this amount with her former partner and Theranos executive, Ramesh “Sunny” Balwani, who is already serving time after being convicted on a broader range of felonies in a separate trial.
The Ninth Circuit Court of Appeals’ decision regarding Holmes’ prison avoidance comes three weeks after she attempted a last-minute legal maneuver to delay the commencement of her 11-year sentence. Initially, Holmes had been ordered to surrender to authorities on April 27 by Judge Davila, who handed down her sentence in November.
Moving forward, Judge Davila will determine a new date for Holmes, 39, to leave her current residence in the San Diego area and report to prison.
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This punishment will result in Holmes’ separation from her current partner, William “Billy” Evans, their 1-year-old son, William, and their 3-month-old daughter, Invicta. Holmes became pregnant with Invicta after a jury convicted her on four counts of fraud and conspiracy in January 2022.
Judge Davila has recommended that Holmes serve her sentence at a women’s prison in Bryan, Texas. It remains undisclosed whether the federal Bureau of Prisons has accepted this recommendation or assigned Holmes to another facility.
Balwani, 57, began serving a nearly 13-year prison sentence in April following his conviction on 12 counts of fraud and conspiracy in July of the previous year. Last month, he was incarcerated in a Southern California prison after his attempt to remain free on bail while appealing his conviction was unsuccessful.
The verdict against Elizabeth Holmes was the culmination of a 46-day trial that shed light on a culture of greed and hubris prevalent in Silicon Valley as technology assumed a more pervasive role in society and the economy over the past two decades.
During the trial, some of the most compelling moments unfolded when Holmes took the witness stand to testify in her own defense. She recounted how she founded Theranos as a teenager after dropping out of Stanford University in 2003, while also accusing Balwani of emotional and sexual abuse. Holmes maintained her unwavering belief in Theranos’ potential to revolutionize healthcare through a technology that promised to detect hundreds of diseases and potential health issues with just a few drops of blood.
In pursuit of this audacious vision, Holmes raised nearly $1 billion from a roster of wealthy investors, including Oracle co-founder Larry Ellison and media mogul Rupert Murdoch. However, these sophisticated investors lost their investments when a Wall Street Journal investigation and regulatory scrutiny exposed serious flaws in Theranos’ technology.
Judge Davila’s restitution ruling states that Holmes and Balwani should pay Murdoch $125 million, the highest amount among the listed investors. The restitution also includes a $40 million penalty to be paid to Walgreens, which invested in Theranos and agreed to provide the flawed blood tests in its pharmacies in 2013. Additionally, $14.5 million is owed to Safeway, a former business partner of Theranos that later withdrew its support.
During separate hearings, attorneys for Holmes and Balwani argued that their clients should be required to pay little or no restitution. Prosecutors sought a restitution penalty in the range of $800 million. Both Holmes, whose stake in Theranos was once valued at $4.5 billion, and Balwani, whose holdings were valued at around $500 million, claim near bankruptcy due to extensive legal expenses and their steadfast declarations of innocence.
Elizabeth Holmes‘ legal team has been challenging her conviction on the basis of alleged trial mistakes and misconduct. They have also argued that the jury was subject to severe errors and biases, warranting her release from prison while the appeal is underway. However, both Judge Davila and the Ninth Circuit Court of Appeals have now rejected this request.
