The sentence imposed Friday by US District Judge Edward Davila in San Jose, California, is far closer to the 15-year term prosecutors asked for than what Holmes’s lawyers sought — home detention or 18 months in prison at most.
The sentencing caps a years-long saga that has riveted Silicon Valley, inspiring books, TV documentaries, podcasts and films about the Stanford University dropout who became a celebrity entrepreneur, only to see her company crash when its technology was exposed as a failure.
Holmes’s lawyers asked Davila to let Holmes remain free on bail while she appeals — which he said he’ll decide at a later date. He ordered Holmes to report to prison in April, though which facility hasn’t been determined yet.
Holmes appeared in court in a black dress and coat, visibly pregnant, and sat upright in her chair beside her lawyers, not touching the back of her seat. Upon hearing her punishment, Holmes’s partner, Billy Evans, embraced her where she had been seated. She then stood up to hug her parents, who along with Evans were sitting in the first row of the courtroom behind her.
Before the sentencing decision, Holmes addressed the courtroom in tears, apologizing to victims and investors and saying she took full responsibility for Theranos — while not admitting to any crimes.
“I am devastated by my failings,” Holmes said. “Looking back there are so many things I’d do differently if I had the chance. I tried to realize my dream too quickly.”
Davila has handled the case since Holmes and Ramesh “Sunny” Balwani, her former partner and the former president of Theranos, were indicted in 2018. On Friday the judge called it “troubling” on many levels.
“The tragedy of this case is Ms. Holmes is brilliant” and succeeded in an industry dominated by men, he said toward the end of a hearing that lasted more than four hours. The judge added that while failure in Silicon Valley is not uncommon, Holmes’s fraud was built on “misrepresentations, hubris and plain lies.”
A jury convicted Holmes in January of four counts of wire fraud and conspiracy after prosecutors presented evidence and witness testimony that she knew the blood-testing devices she pitched as revolutionary to venture capitalists and wealthy investors didn’t actually work. The charges carried a maximum prison term of 20 years.
The judge said he’ll address victim restitution at a future date. The government proposed that Holmes be ordered to pay $800 million to investors who lost money in Theranos, while Davila calculated the losses attributed to Holmes’s fraud at $121 million.
Her lawyers have said she has “essentially no assets.” A pre-sentencing report by the government’s probation office said her “modest assets” are outweighed by $450,000 in loans for her civil settlement with securities regulators and more than $30 million in liabilities for legal fees.
At Friday’s hearing, prosecutors and defense attorneys sparred over whether the judge should enhance or reduce the length of the punishment.
Holmes’s lawyers persuaded the judge not to take into consideration any of the charges she was found not guilty of during her trial, including patient fraud. Prosecutors argued that a longer sentence was warranted because Holmes “exhibited a reckless or conscious disregard to the risk Theranos was posing to patients.”
When the judge asked if any victims wished to speak, just one person volunteered. Alex Shultz is the son of the late George Shultz, the former secretary of state who served on Theranos’s star-studded board, and the father of Tyler Shultz, who briefly worked at Theranos before losing faith in the company’s technology and becoming a whistle-blower.
Alex Shultz reprised in court how his son was intimidated by a private investigator and lawyers hired by Theranos after he turned on Holmes.
“My son slept with a knife under his pillow thinking someone was going to murder him,” he said. “It was a grueling experience. I feel like my family home was desecrated by Elizabeth and her lawyers.”
Prosecutors had argued a lengthy prison term is justified given the scope of the fraud and the need to send a deterrence message to the startup sector where “fake it til you make it” braggadocio has been ubiquitous.
Lawyers for Holmes argued she deserves leniency because she’s not the cheat the news media has made her out to be. They urged Davila to see Theranos not as a house of cards but as a valuable enterprise, driven by its inventive and hardworking CEO.
During her four-month trial, Holmes made the unusual and risky choice to testify in her own defense. She gave a tearful account of being raped while she was an undergraduate at Stanford and claimed she was psychologically, physically and sexually abused by Balwani — allegations he denied.
Balwani, who was convicted in July after a separate trial, faces sentencing in December.