Elizabeth Holmes sentenced: Everything you need to know about the Theranos founder

Holmes has been sentenced to over 11 years in prison – how did she get here?

Elizabeth Holmes was found guilty of defrauding investors in her former blood-testing startup company, Theranos, concluding a trial that gripped both Silicon Valley and the international media outlets which initially helped propel her to stardom.

An attempt at requesting a new trial faltered — she claimed that one of the key witnesses acknowledged regrets about the proceedings, however, he stood by his testimony.

Holmes was ultimately sentenced on 18 November to 135 months - over 11 years - in prison. Currently heavily pregnant, Holmes is set to begin the sentence in April 2023.

Company once valued at $9bn

Theranos was at one point valued at approximately $9bn, but is now a byword for corporate misconduct, having wowed the tech world before collapsing in a storm over the efficacy of the technology supposedly at its core.

As the founder and former chief executive officer of the disgraced company, Holmes was accused of lying to patients about testing, and to investors about projected revenues — and had faced 11 separate fraud charges.

After a federal trial in San Jose, California, lasting nearly four months and involving some 30 witnesses, jurors in January found her guilty on four counts, including conspiracy against Theranos investors and wire fraud involving Theranos investors.

But she was acquitted on all four counts of fraud and conspiracy against patients who had used Theranos’s blood tests. And — despite 50 hours of deliberations spanning seven days — jurors were unable to reach a unanimous verdict on three other counts.

How did she get into this position? And how did the legal proceedings — described by some as “Silicon Valley’s trial of the century” — unfold?

Dropped out of Stanford’s School of Engineering in 2003 at 19

Having dropped out of Stanford’s School of Engineering in 2003, a 19-year-old Holmes used her tuition money as seed funding for a consumer healthcare technology company based on the idea of performing blood tests using only a small amount of blood – such as a finger prick – rather than drawing blood for testing into vials with needles. She cited her own fear of needles as her inspiration for the technology, which she called Edison.

Taking her idea to her medicine professor at Stanford, Holmes was told that it would not work. Several other experts repeated this warning, but she convinced her dean at the School of Engineering to back the concept and he became the first board member of Theranos (a combination of the words “therapy” and “diagnosis”).

Holmes began raising money for the firm with tech investors and adopted Steve Jobs’ look, frequently appearing in black turtleneck sweaters and speaking in a baritone voice. By the end of 2010, she had raised $92m in capital and was becoming well-known across Silicon Valley.

By 2014 she was on the covers of Fortune, Forbes, Inc, and The New York Times’ Style Magazine. When Theranos was valued at $9bn in 2014, Holmes was placed at number 100 on the Forbes 400 list of the wealthiest people in the US and named as the youngest self-made billionaire.

Investors included Rupert Murdoch and Henry Kissinger

At this point, she had raised more than $400m in venture capital, had her name on 18 US patents and 66 foreign patents, and established business relationships with the Cleveland Clinic, Capital BlueCross, and AmeriHealth Caritas to use the company’s technology for blood testing. Among her investors were Rupert Murdoch, Carlos Slim, Larry Ellison, Henry Kissinger, and George Schultz.

In 2015, then-Vice President Joe Biden visited one of the company’s facilities in Newark, California, and declared it “the laboratory of the future”. Some 800 people were employed by Theranos at its peak.

The company’s fortunes began to turn in October of that year when John Carryrou of The Wall Street Journal wrote an article claiming Theranos had been forced to use conventional blood testing methods in its research because its own Edison technology was providing erratic and inconsistent results. He was tipped off by a medical expert who was suspicious of the technology.

Pursuing the story further, Mr Carryrou discovered that the company’s apparently innovative tech was nowhere near ready for use and had been rushed into development to meet the expectations of its influential investors. The equipment Joe Biden had been shown was allegedly not actually operational.

Problems begin to mount

Holmes denied all claims and strenuously defended herself and the company in media appearances. However, problems with lab facilities, staffing, and procedures saw her banned from owning, operating, or directing a blood-testing service for two years. Pharmacy chain Walgreens ended a relationship with the company at this point.

Problems continued to mount when Mr Carryrou published an interview with whistleblower Tyler Schultz, grandson of board member George Schultz, who alleged that the company cast aside inconvenient Edison test results thereby falsifying the accuracy of the process.

Other revelations came to light including the storage of samples at incorrect temperatures and patients being placed in jeopardy because of false readings from the flawed tests.

As federal investigations into allegations about testing proceeded in 2016, Forbes announced that Holmes’ fortune, which was based on her 50 per cent share in the company had dropped to zero.

Charged with fraud in March 2018

In March 2018, the US Securities and Exchange Commission charged Holmes and Ramesh Balwani, former president of Theranos and chief operating officer, with fraud for taking more than $700m from investors while advertising a false product.

Holmes settled the SEC lawsuit, surrendering voting control of Theranos, a ban on holding an officer position in a public company for a decade, and a $500,000 fine.

On 15 June 2018, following an investigation by the US Attorney’s Office for the Northern District of California in San Francisco that lasted more than two years, a federal grand jury indicted Holmes and Mr Balwani, on nine counts of wire fraud and two counts of conspiracy to commit wire fraud.

Prosecutors alleged that the pair engaged in two criminal schemes, one to defraud investors, the other to defraud doctors and patients. Both pleaded not guilty.

Mr Balwani and Ms Holmes have a long relationship, having met when she was still a teenager and at school. He is 19 years older than her and they were romantically involved from 2003 until the collapse of the company, though the relationship was kept a secret.

They have differing accounts of his exit from Theranos with Ms Holmes saying that she fired him, and Mr Balwani claiming he left of his own accord.

Allegations of abuse

Holmes, who testified in her own defence during the trial and argued that the company’s failure did not necessarily mean she committed fraud, also alleged that Mr Balwani had abused her and maintained a powerful influence over her actions, affecting her mental state. He denied the allegations.

In July, Balwani was found guilty on 12 felony counts of fraud, both against investors in Theranos and its patients.

Central to her trial was the question of whether Holmes intentionally misled investors, doctors and patients as she collected impressive investments. She was ultimately found guilty of wire fraud in connection with three wire transfers totalling more than $143m and was found guilty of conspiring to commit wire fraud against investors between 2010 and 2015.

‘That choice was not only callous... it was criminal’

Assistant US Attorney Jeffrey Schenk told the jury that Holmes “chose fraud over business failure”, saying in his arguments: “She chose to be dishonest with her investors and patients. That choice was not only callous... it was criminal.”

Defence lawyer Kevin Downey told the jury that Holmes “believed that she built a technology that could change the world” and “went down with the ship when it went down”.

Holmes’s trial had suffered multiple delays – firstly as a result of the coronavirus pandemic, which saw the court system shut down.

In March 2021, the trial was delayed by a further six weeks to the end of August after Holmes blindsided prosecutors by announcing that she was pregnant and due in July. Holmes married William Evans, the heir to the Evans Hotel Group, in a private ceremony in 2019.

When the trial began in September last year, her son was just weeks old.

A dramatisation of Holmes’ life has turned into a television miniseries by Hulu called The Dropout. It was released this spring. It is based on the podcast of the same name by Rebecca Jarvis and ABC Radio and stars Amanda Seyfried.

Holmes and the Theranos scandal were also the subjects of the HBO documentary The Inventor: Out for Blood in Silicon Valley.

Holmes asks for new trial

Just weeks before her original sentencing date, Holmes asked for a new trial.

In a court filing, Holmes stated that former Theranos lab director Adam Rosendorff, a key witness in her initial trial, visited her home on 8 August and told her partner that prosecutors had twisted his testimony.

“Under any interpretation of his statements, the statements warrant a new trial,” one of Holmes’ lawyers wrote in the filing, noting that the government considered Dr Rosendorff a “star witness”.

The request for a new trial came some eight months after Holmes was found guilty of conspiracy and defrauding Theranos investors. The maximum penalty was up to 20 years in prison and a fine of $250,000 for each count of fraud.

According to the filing, the attempt to have the convictions thrown out rested on Dr Rosendroff telling Holmes’ partner Billy Evans that “he tried to answer the questions honestly at Ms Holmes’ trial, but the government tried to make everyone look bad”.

Dr Rosendroff testified at her trial that he alerted Holmes to issues in the Theranos lab and faced an intense, days-long cross-examination from Holmes’ attorneys who noted that Dr Rosendroff worked in several other labs that had regulatory issues.

Notably, Dr Rosendroff was also a source for the Wall Street Journal article that precipitated Theranos’ demise in October 2015.

Holmes’ lawyers requested that if it is not willing to grant a new trial immediately, the court “should order an evidentiary hearing and permit Ms Holmes to subpoena Dr Rosendorff to testify about his concerns”.

Sentencing delayed

US District Judge Edward Davila delayed sentencing from the originally scheduled date of 17 October to review the claims. Dr Rosendoff stood by his original testimony and sentencing was rescheduled for 18 November.

In an 82-page document filed last week, Holmes’ lawyers tried to persuade Judge Davila that sending Holmes to prison is unnecessary, partly because she has already been stigmatised by intense media coverage that has turned her into a “caricature to be mocked and vilified”.

If he decides to send her to prison, they argued she should be sentenced to no more than 18 months — a fraction of the maximum of 20 years — and would likely be unable to pay any debt.

Federal prosecutors have asked for a sentence of 15 years in prison and payment of $800m, arguing Holmes deserves a lengthy prison term because her massive scheme duped investors out of hundreds of millions of dollars in “one of the most substantial white collar offenses Silicon Valley or any other district has seen”.

They reject any characterisation that Holmes has been unfairly victimised by the media.

Sentence finally handed down

Holmes was finally sentenced to 135 months in prison followed by three years of supervised release on 18 November.

A tearful Holmes, who is heavily pregnant with her second child, hugged her husband Billy Evans after the sentence was read out.

Earlier, she apologised for her role in the collapse of the Silicon Valley firm – the first time she has admitted responsibility.

“I am devastated by my failings. I have felt deep pain for what people went through, because I failed them,” Holmes said.

Prosecutors had asked the judge to sentence the 38-year-old to 15 years in prison and to pay $800m in restitution for defrauding investors.

Her lawyers argued that Holmes deserves more lenient treatment as a well-meaning entrepreneur who is now a devoted mother with another child on the way.

Judge Edward Davila described the case as “so troubling on so many levels”.

“The tragedy of this case is Ms Holmes is brilliant, she had creative ideas. She’s a big thinker.

“She was moving into an industry that was dominated by, let’s face it, male ego,” Judge Davila told the court, according to Mercury News reporter Ethan Baron. “Failure is normal. But failure by fraud is not OK.”

He ordered Holmes to surrender to corrections officials in April — after she has given birth to her second child.