SAN JOSE | Former Silicon Valley star Elizabeth Holmes was sentenced Friday to just over 11 years in prison for fraud in running her startup Theranos, which promised a revolution in health diagnostics.
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The accused, pregnant and mother of a little boy, has until April 27 to begin her sentence, said judge Edward Davila.
After four months of a media trial in court in San Jose, California, she was found guilty in January of lying to investors regarding the real progress of her company.
“I take, before you, my responsibilities for Theranos,” she told the hearing on Friday, sobbing, just before the sentencing.
“I am devastated by my failures,” she added. “Not a day has gone by in the past few years that I haven’t been deeply touched by what people have gone through because of my mistakes.”
When the verdict was announced, the partner and parents of the former leader, 38 today, came to hug her.
The prosecution had requested fifteen years in prison and wanted her to return 800 million dollars to her victims. The defense had pleaded for a maximum sentence of one and a half years.
Her lawyer said Friday that she would appeal.
Manipulation and lies
“The tragedy in this case is that Ms. Holmes is brilliant” and that she managed to find a place for herself in a world “dominated by male egos”, noted the judge.
But there was also enough evidence of “manipulations and lies used to do business”, he added.
The magistrate explained that he did not take into account Elizabeth Holmes’ apparent disregard for the potential risks to patients insofar as she was acquitted of charges of fraud once morest them. The fact that she did not acknowledge her responsibility by pleading not guilty, on the other hand, worked once morest her, he said.
The judge also noted that he had not taken into consideration all the losses generated by the fall of his company, but only part of those collected by ten investors, namely 121 million dollars.
The amount it will have to return to investors will be decided at a later date. She 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”. It is not “a punishment for Mrs Holmes’ dream” but a punishment for “the decision to deceive investors”, he insisted.
The young woman’s lawyer, Kevin Downey, retorted that his client had never been motivated by greed: she might have become rich but never sold shares, using the money to build its technology.
Beautiful story
Elizabeth Holmes founded Theranos in 2003, aged just 19, with the idea of making a blood diagnostic tool that was quick, painless and cheaper than those in traditional labs.
With the help of a very elaborate story and appearance, she had managed in a few years to gain the trust of luminaries and to raise funds from prestigious investors attracted by the profile of this young woman, a rarity in the male world of Californian engineers.
“I thought it would be the next Apple,” summarized during the trial Adam Rosendorff, who was once the director of the company’s laboratory.
The story was beautiful. As a child, she hated injections. So she wanted to invent a machine that would perform hundreds of blood diagnoses from a single 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 by Elizabeth Holmes’ project.
At its peak, the company was valued at 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 was also found guilty of fraud. His sentence is due on December 7.
