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Elizabeth Holmes sentenced to more than 11 years in prison for Theranos fraud

Economy Nov 18, 2022 06:21PM ET
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© Reuters. FILE PHOTO: Theranos founder Elizabeth Holmes and her family leave the federal courthouse after attending her fraud trial in San Jose, California, U.S. January 3, 2022. REUTERS/Brittany Hosea-Small/File Photo

By Jody Godoy and Dan Levine

SAN JOSE, Calif. (Reuters) -A California judge sentenced Theranos founder Elizabeth Holmes to 11 years and three months in prison for defrauding investors in her now-defunct blood testing startup that was once valued at $9 billion.

U.S. District Judge Edward Davila in San Jose, Calif., sentenced Holmes on three counts of investor fraud and one count of conspiracy. A jury convicted Holmes, 38, in January following a trial that spanned three months.

Holmes, dressed in a dark blouse and black skirt, hugged her parents and her partner after the sentence was handed down.

During the hearing, Holmes cried as she said she was "devastated" by her failures and would have done many things differently if she had the chance.

"I have felt deep shame for what people went through because I failed them," she said.

Before handing down the sentence, Davila called the case "troubling on so many levels," questioning what motivated Holmes, a "brilliant" entrepreneur, to misrepresent her company to investors.

"This is a fraud case where an exciting venture went forward with great expectations only to be dashed by untruths, misrepresentations, plain hubris and lies," he said.

The judge set Holmes' surrender date for April. Her lawyers are expected to ask the judge to allow her to remain free on bail during her appeal.

Assistant U.S. Attorney Jeff Schenk told the judge before he handed down the sentence that a 15-year sentence would be "making a statement that the ends don't justify the means."

Holmes' attorney Kevin Downey sought home confinement for Holmes, saying leniency was justified because unlike someone who committed a "great crime" she was not motivated by greed.

The federal probation office had recommended a 9-year prison sentence, according to court papers.

Prosecutors and an attorney for Holmes declined to comment as they left court.

Prosecutors said at trial that Holmes misrepresented Theranos' technology and finances, including by claiming that its miniaturized blood testing machine was able to run an array of tests from a few drops of blood. The company secretly relied on conventional machines from other companies to run patients' tests, prosecutors said.

Holmes testified in her own defense, saying she believed her statements were accurate at the time.

Though she was convicted on four counts, Holmes was acquitted on four other counts alleging she defrauded patients who paid for Theranos tests.

Once valued at $9 billion, Theranos Inc promised to revolutionize how patients receive diagnoses by replacing traditional labs with small machines envisioned for use in homes, drugstores and even on the battlefield.

Forbes dubbed Holmes the world's youngest female self-made billionaire in 2014, when she was 30 and her stake in Theranos was worth $4.5 billion.

But the startup collapsed after a series of articles in the Wall Street Journal in 2015 questioned its technology.

Holmes is expected to challenge her sentence and Davila's rulings upholding her convictions at the 9th U.S. Circuit Court of Appeals.

Before handing down the sentence, Davila asked if any victims of Holmes' fraud were in court.

Alex Shultz, whose son Tyler Shultz worked at Theranos and whose father, former U.S. Secretary of State George Shultz, invested in the company, told the judge how a family member once heard Holmes describe her supposedly revolutionary technology.

"What's the hitch?'" the family member asked Holmes,

according to Shultz.

"There is no hitch," Holmes responded.

Elizabeth Holmes sentenced to more than 11 years in prison for Theranos fraud
 

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Comments (9)
Dorothy Sally
Dorothy Sally Nov 19, 2022 5:19PM ET
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God bless Dr zack balo
JIM VETTER
JIM VETTER Nov 19, 2022 10:17AM ET
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Speaking of fraud and lies, how about all these bots on Investing. com? Maybe Investing. com is liable for allowing these frauds to continue posting.
Denzel Heden
Denzel Heden Nov 19, 2022 6:27AM ET
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Welcome to Jail
Abdelmaksoud Khalifa
Abdelmaksoud Khalifa Nov 18, 2022 10:27PM ET
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how many forbes star turn to be crook. end on jail or runway? can someone make the list
John Laurens
John Laurens Nov 18, 2022 10:05PM ET
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Good! Should have been double that!
Dennis Chuck
Dennis Chuck Nov 18, 2022 9:43PM ET
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Can i sc rew her first before she goes to jail, she needs it
John Laurens
John Laurens Nov 18, 2022 9:43PM ET
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right after me...
Brad Albright
Brad Albright Nov 18, 2022 9:43PM ET
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What's the matter? Did your cow run away?
Dennis Chuck
Dennis Chuck Nov 18, 2022 9:42PM ET
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Can i screw her first before she goes to jail, she needs it
ZS Beck
ZS Beck Nov 18, 2022 9:13PM ET
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What comes around will go around.She fully deserves it and anybody who rips off other people.
Fat Nugget
FatNugget3 Nov 18, 2022 7:43PM ET
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the spam here is ironic
 
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