Elizabeth Holmes, who parlayed more than $900 million of venture capital funding for her startup Theranos into a business promoting blood-testing machines that didn't work, was sentenced by a federal judge to 11 years and three months in prison on Nov. 18 for defrauding investors.
What You Need to Know
- Theranos founder Elizabeth Homes has been sentenced to 11 years and three months in federal prison.
- Holmes was convicted on four counts of fraud and conspiracy for defrauding Theranos investors.
- The company promoted blood-testing technology that didn't work with backing from high-profile. investors
- The scandal was described in the book Bad Blood and the TV series The Dropout.
"I stand before you taking responsibility for Theranos." a tearful Holmes told U.S. District Judge Edward Davila shortly before he sentenced her, according to media reports from the courthouse. ""I am devastated by my failings. I have felt deep pain for what people went through, because I failed them. To investors, patients, I am sorry." Holmes had maintained a stoic demeanor throughout the trial and much of the sentencing hearing.
A jury convicted Holmes on Jan. 3 of three counts of wire fraud and one of wire fraud conspiracy for bilking investors as Theranos founder and CEO. She was acquitted of four similar charges of defrauding patients. One count of fraud related to a patient was dismissed during trial and a jury couldn't reach a unanimous verdict on three other charges of investor fraud.
Holmes, the mother of a one-year-old child who is pregnant, had sought a sentence of home confinement and community service, and no more than 18 months of prison. Prosecutors requested 15 years of prison and restitution of $804 million. Holmes' probation officer recommended a sentence of nine years. She's due to surrender to authorities on April 27.
The sentencing, which brought a media circus to the steps of the federal courthouse in San Jose, California, shines an unwelcome spotlight on Silicon Valley's venture capitalists just as they're in the news again for backing bankrupt cryptocurrency exchange FTX. Trevor Milton, another company founder backed by respected financial institutions, was convicted in October of three charges of fraud for misleading Nikola Corp. (NKLA) investors shortly after the electric truck developer's initial public offering. Former Theranos Chief Operating Officer Ramesh 'Sunny' Balwani, Holmes' former boyfriend, faces a Dec. 7 sentencing on 10 counts of fraud and two of conspiracy for defrauding investors as well as patients.
Like many startup founders, including Elon Musk and Sam Bankman-Fried, Holmes promoted the image of a trailblazing wunderkind. She was 19 when she founded the company that would become Theranos. As documented in Bad Blood, the bestseller by the Wall Street Journal reporter who uncovered the fraud at Theranos, and in the Hulu series The Dropout, Holmes secured funding from Silicon Valley elite including Oracle Corp. (ORCL) founder Larry Ellison despite lacking the technical skills to deliver the technology she championed.
"The watchword in the industry has been fake it until you make it," NBC News legal analyst Dean Johnson told television viewers.
As CEO, Holmes regularly wore black turtlenecks in imitation of Steve Jobs. During her sentencing hearing, the prosecution noted she once wrote "They don't put attractive people like me in jail." During the trial, lawyers for Holmes argued Balwani abused her and controlled her every move as CEO. Defense lawyers submitted more than 140 letters to the judge ahead of the sentencing from her family and friends, including U.S. Senator Cory Booker.