Elizabeth Holmes was sentenced to just over 11 years in prison for defrauding investors by falsely claiming its technology could detect diseases from a drop of blood.
The former Theranos CEO’s conviction marks the end of the young founder’s Silicon Valley saga, one in which she wooed investors with empty promises and idealism and raked in hundreds of millions in dollars. And it’s a deal that could impact how investors evaluate new startups, experts say. Many founders have used hyperbole to describe their visions and raise money, but criminal charges of fraud are rare.
“She pushed the envelope a little too far,” says Anat Alon-Beck, a law professor at Case Western Reserve University. “You fake it till you make it, but it was too ‘fake.’
But the matter is not entirely over. Holmes’ former boyfriend and business partner, Ramesh “Sunny” Balwani, is scheduled to be sentenced Dec. 7. He was convicted of 12 counts of fraud and conspiracy against Theranos investors and patients. Holmes also accused him of abusing her, but Balwani denied the allegations.
Holmes sought to fund Theranos, which she left Stanford University to launch, claiming that its technology would revolutionize the medical world because it could use just a few drops of blood to detect hundreds of diseases. She transformed the startup into a $9 billion unicorn. But whistleblowers revealed that Holmes had lied about the capabilities of his invention. Instead of saving lives, this puts patients at serious risk of false results.
Holmes faced up to 20 years in prison for his actions. In a memo describing Holmes as a compassionate child who became a naive young business executive, her lawyers asked her to serve 18 months of house arrest, followed by supervised release and community service. Prosecutors requested a 15-year prison sentence and $8 million in restitution.
“I stand before you to take responsibility for Theranos. I loved Theranos. It was my life’s work”, Holmes said before receiving the sentence of 135 months, or 11.25 years. “I regret my failures with every cell in my body.”
In October, Holmes again tried to avoid prison by requesting a new trial. (After her conviction earlier this year, she filed several such motions.) The latest motion was filed after former Theranos lab director Adam Rosendorff, a witness who testified against Holmes, came to her house in an attempt to apologize for the role he played in her conviction. . This led Holmes to object to his testimony being used against her, but a judge denied the motion in early November.
