Theranos: Fallen star Elizabeth Holmes faces 15 years in prison

Former Silicon Valley star Elizabeth Holmes, convicted of fraud in January, is set to seal her fate on Friday, November 18, nearly two decades after founding her startup Theranos, which promised a revolution in health diagnostics. The prosecution has requested fifteen years in prison against the 38-year-old former leader and wants her to pay $800 million back to her victims.

“Blinded by ambition” Elizabeth Holmes “swindled hundreds of millions of dollars from dozens of investors” and “put patients at risk,” prosecutor Stephanie Hinds defended herself, blaming her fallen boss for failing to take responsibility. The defense advocated a maximum sentence of one and a half years. Elizabeth Holmes is not a danger to society, she did not derive any financial benefit from this case and therefore does not deserve to spend years in prison for the failure of her “ambitious project”, her lawyers justified. “Mrs. Holmes was punished for her misdeed every day, for many years and for the rest of her life,” they noted in their argument presented to the court on Tuesday, November 15, 2022. And “there is no reason to believe that in the future she will run a public company,” they continued.

“Beautiful story” Theranos

Elizabeth Holmes founded Theranos in 2003 when she was just 19 years old with the idea of ​​making a blood diagnostic tool that was fast, painless and cheaper than traditional labs. With the help of a very thoughtful story and appearance, she managed in a few years to win the trust of the luminaries and raise funds from prestigious investors attracted by the profile of this young woman, a rarity in the male world of California engineers. “I thought this was going to be the next Apple,” Adam Rosendorf, who was once director of the company’s lab, summed up during the trial. The history was beautiful. As a child, she hated injections. So she wanted to invent a machine that could perform hundreds of blood tests on a single drop of blood taken from a fingertip.

Elizabeth Holmes, founder of startup Theranos, in San Jose, USA November 22, 2021 (AFP/Archive – Amy Osborne)

Media mogul Rupert Murdoch, former Secretary of State Henry Kissinger and Jim Mattis, Secretary of Defense Donald Trump were once convinced by the Elizabeth Holmes project. At its peak, the company was valued at nearly $10 billion. But in 2015, a scandal erupted when the Wall Street Journal reported that the machine had never worked.

Arguments for reducing the sentence

Elizabeth Holmes, the boy’s mother and currently pregnant, should try to reschedule her date if she is sentenced to jail on Friday, November 18, 2022. When prosecutors asked for fifteen years in prison, her lawyers compared their client’s situation to that of other people convicted of fraud, such as Jeffrey Skilling, the former CEO of Enron, who “was given a lesser sentence.” Enron was “a publicly traded company whose bankruptcy, one of the largest in history, resulted in the loss of savings and investments of tens of thousands of people, including employees,” they pointed out, and Mr. Skilling raised “at least $42 million (… ) after retiring. “Ms. Holmes never sold her shares to get her money back, although she had the opportunity to do so,” they added.

Judge Edward Davila, who presided over a highly publicized 15-week trial in late 2021, denied his request for a new trial last week. The former boss filed a reconsideration request in September, highlighting in particular the cancellation of a key witness, Adam Rosendorf, who traveled to his home this summer and spoke to his companion William Evans there to express regret. But Mr. Rosendorf’s comments did not dispute the conclusions of the investigation, but only the presentation of the facts in court, and they were very vague, the magistrate argued.

Ramesh “Sunny” Balwani, former partner of Elizabeth Holmes and chief operating officer of Theranos, was tried separately and also found guilty of fraud. His sentencing is due on December 7, 2022.

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