Former Silicon Valley star Elizabeth Holmes was sentenced Friday to more than 11 years in prison for fraud in running her startup Theranos, which promised a revolution in health diagnostics. The accused, pregnant and mother of a little boy, has until April 27 to begin her sentence, said judge Edward Davila.
After a four-month media trial in a court in San Jose, California, he was found guilty in January of lying to investors about his company’s true progress. “I took, before you, my responsibilities for Theranos,” he said at Friday’s hearing, sobbing, before the sentencing. “I was devastated by my failures,” he added. “There hasn’t been a day that has gone by over the years that I haven’t been deeply moved by what people have gone through because of my mistakes.”
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During the announcement of the verdict, the partner and the parents of the former leader, now 38 years old, came to him. The prosecution asked for fifteen years in prison and he wants to return 800 million dollars to his victims. The defense pleaded for a maximum sentence of one and a half years.
His lawyer said Friday that he will appeal.
Manipulation and lies
“The tragedy in this case is that Ms. Holmes was brilliant” and that she found a place for herself in a world “dominated by male egos”, the judge said. But there is also ample evidence of “manipulation and lies used in business”, he added.
The judge explained that he did not consider Elizabeth Holmes’ apparent disregard for potential risks to patients as long as she was acquitted of fraud charges against them. The fact that he did not acknowledge his responsibility by pleading not guilty, on the other hand, worked against him, he said.
The judge also noted that he did not take into account all the losses generated by the collapse of his company, but only part of those collected by ten investors, namely 121 million dollars. The amount it will need to return to investors will be decided at a later date. He will not be fined.
Prosecutor Jeff Schenk argued in court that the sentence should reflect the idea that “the end does not justify the means”. This is not “punishment for Mrs Holmes’ dream” but punishment for “the decision to mislead investors”, he insisted. The girl’s lawyer, Kevin Downey, replied that his client was never motivated by greed: he could have gotten rich but never sold the parts, using the money to develop its technology.
The story is beautiful
Elizabeth Holmes founded Theranos in 2003, aged just 19, with the idea of creating a blood diagnostic tool that was quick, painless and cheaper than traditional labs. With the help of a very good story and appearance, he was able in a few years to win the confidence of luminaries and raise funds from prestigious investors who were attracted by the profile of this young woman, a rarity in the world of male California engineers .
“I thought this was the next Apple,” Adam Rosendorff, who was the company’s former laboratory director, summed up during the trial.
The story is beautiful. When he was young, he hated injections. So he wanted to invent a machine that would perform hundreds of blood tests from a drop of blood, taken from a fingertip. Media magnate Rupert Murdoch, former Secretary of State Henry Kissinger and Jim Mattis, Donald Trump’s defense minister, were once convinced of Elizabeth Holmes’ project. At its peak, the company was worth nearly $10 billion.
But in 2015, the scandal came to light when the Wall Street Journal revealed that the machine never worked as it should. Ramesh “Sunny” Balwani, Elizabeth Holmes’ former partner and chief operating officer of Theranos, was tried separately and also found guilty of fraud. His sentencing is scheduled for December 7.