Elizabeth Holmes faces punishment for her crimes at Theranos

A federal judge was set to decide on Friday whether Elizabeth Holmes, CEO of Theranos, should serve a lengthy prison sentence for deceiving investors and endangering patients while promoting bogus blood test technology.

Holmes ruled in the same courtroom in San Jose, California, where she was convicted on four counts of investor fraud and conspiracy. January marks another climactic moment in an epic dissected in an award-winning HBO documentary and Hulu series about its meteoric rise and agonizing fall.

Theranos promises to deliver a revolutionary technology that can scan for hundreds of illnesses and other ailments with just a few drops of blood. But it never worked.

US District Judge Edward Davila will take center stage when he weighs the federal government’s recommendation to send 38-year-old Holmes to federal prison for 15 years. That’s less than the maximum sentence of 20 years, but her legal team is calling for a prison sentence of no more than 18 months.preferably served in home confinement.

Her lawyers have argued that Holmes deserves more lenient treatment as a bona fide entrepreneur who is now a devoted mother with another child on the way. Their arguments are supported by more than 130 letters submitted by family, friends and former colleagues praising Holmes.

The monitoring report presented to Davila also recommended nine years’ imprisonment.

Prosecutors also want Holmes to pay $804 million in damages. The amount covers most of the nearly $1 billion that Holmes raised from a list of savvy investors that included software mogul Larry Ellison, media mogul Rupert Murdoch and the Walton family behind Wal-Mart.

While courting investors, Holmes benefited from a high-profile Theranos board that included former Secretary of Defense James Mattis, who testified against her. During her trial, two former secretaries of state, Henry Kissinger and the late George Shultz, whose son presented a statement criticizing Holmes for concocting the Schultz-playing scheme “for the fool”.

Davila’s judgment – and the date Holmes reports on a possible prison term – may be affected by her second pregnancy in two years. After giving birth to a son shortly before her trial began last year, Holmes became pregnant at some point while on bail this year.

Although her attorneys did not mention the pregnancy in an 82-page memo filed with Davila last week, the pregnancy was confirmed in a letter from her current partner, William “Billy” Evans, urging the judge to be merciful.

In that 12-page letter, which included photos of Holmes dancing to their 1-year-old son, Evans mentioned that Holmes participated in the Golden Gate Bridge swimming event earlier this year while pregnant. He also noted that Holmes experienced a case of COVID-19 in August while pregnant. Evans did not disclose when Holmes would be due in his letter.

If Holmes’ pregnancy played a role in reducing or qualifying her sentence, the decision could be controversial. A 2019 study found that more than 1,000 pregnant women entered federal or state prisons during a 12-month study period; 753 of them were born on the reservation.

According to a 2016 Bureau of Justice Statistics survey, more than half of the women who entered federal prison — 58% — reported being mothers of minor children..

Duncan Levine, a former federal prosecutor who is now a defense attorney, predicted that Davila’s sentencing decision would not be affected by pregnancy. But Levine expects the judge to allow her to remain free even after the baby is born.

“She will be in no more danger of her flight after being sentenced than she would be while awaiting sentencing,” Levine said. “We have to temper our sentences with a measure of humanity.”

Amanda Kramer, another former federal prosecutor, expected Davila to come under fire for being pregnant, no matter what punishment it entailed.

“There’s a very healthy discussion about the kind of sentence needed to create public deterrence to send a message to others who are considering crossing that line from sharp salesmanship to material misrepresentation,” Kramer said.

Federal Prosecutor Robert Leach announced that Holmes deserves severe punishment for engineering a fraud he described as one of the most egregious white-collar crimes ever committed in Silicon Valley. In a 46-page scathing note, Leach told the judge he had an opportunity to send a message that curbed the arrogance and exaggeration unleashed by the technological boom.

“Holmes seized on the hopes of her investors that a young, dynamic entrepreneur had transformed health care,” Leach wrote. “And through her deception, she got amazing fame, adoration, and a multi-billion dollar fortune.”

Although Holmes was acquitted by the jury of four counts of fraud and conspiracy connected to the patients who underwent blood tests at Theranos, Leach also asked Davila to consider the health threats posed by Holmes’ behavior.

Holmes’ lawyer Kevin Downey portrayed her as a selfless visionary who spent 14 years of her life trying to revolutionize health care.

Although evidence presented during her trial showed that blood tests produced wildly unreliable results that could have steered patients toward the wrong treatments, her lawyers maintained that Holmes never stopped trying to improve the technology until Theranos collapsed in 2018.

They also noted that Holmes never sold any of her shares in Theranos — a stake worth $4.5 billion in 2014, when Holmes was hailed as the next Steve Jobs on the covers of business magazines.

Defending herself against the criminal charges left Holmes “with a substantial debt from which she is unlikely to recover,” Downey wrote, noting that she was unlikely to pay any compensation that Davila might order as part of her sentence.

Downey wrote: “Holmes is not a danger to society.”

Downey also asked Davila to look into Holmes’ alleged sexual and emotional abuse while romantically involved with Ramesh “Sunny” Balwani, who became a Theranos investor, chief executive, and eventually accomplice in her crimes.

Balwani, 57, is due to be sentenced on December 7 after being found guilty in a July trial. On 12 counts of fraud and conspiracy.

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