The cautionary tale of Elizabeth Holmes is sure to reverberate around Silicon Valley for at least a few months — until founders go back to spewing the bullshit they can often be heard spewing to any investor who'll listen. But the specter of the Theranos collapse could linger on both with the upcoming trial of alleged co-conspirator Sunny Bulwani, and with Holmes's sentencing, which could come in mid-2022.
Though Holmes was found guilty on four counts of wire fraud and conspiracy to commit wire fraud on Monday, all of which carry maximum 20-year sentences, Judge Edward Davila will use his own discretion to determine how long Holmes stays behind bars. While experts have said Holmes's sentences are likely to be concurrent — so the absolute maximum she's likely to face is 20 years, not 80 — some are suggesting that is likely to go away for a decent percentage of that.
"It’s all up to the judge’s discretion, [and] it could be lengthy,” says KPIX legal expert Michele Hagan. "Wire fraud is no joke."
Hagan, a former prosecutor, tells the station, "It’s a wakeup call for Silicon Valley. You better be very careful of what you say [to investors] or what you put in writing or you put on your website so you don’t have any misrepresentations."
The flood of analysts' wrap-ups from the case began almost the minute the verdict came down on Monday — starting with this pre-prepared piece from the Times that appears to have presaged a guilty verdict of some kind.
A separate piece in the Times today looks at how Silicon Valley folk have tried for years to distance themselves from the Theranos disaster, characterizing Holmes as an outsider and characterizing the company as more of a healthcare enterprise than a tech company, per se.
But, as Erin Griffith writes, Holmes was entirely a creature of the Valley, hobnobbing with its elites, buying a home in Atherton, and emulating Steve Jobs. She also "used the start-up playbook of hype, exclusivity and a 'fear of missing out' to win over later investors. She embodied start-up hustle culture by optimizing her life for the maximum amount of work."
So, whatever tech investors and founders want to say about how they saw through the hype all along, and how Holmes wasn't really one of them, she clearly strived to be — and no one can really deny the pattern of aggrandizing the original idea of the company, the rhetoric about saving the world, and the slide into fabulism and outright fraud are not too distinct from many tech-world tales.
Bulwani will now go on trial separately, and the outcome could be even worse in terms of verdicts and punishments, now that prosecutors have a ready playbook to go by.
And we may be waiting as much as six months for Holmes's sentencing — and she's out on bail with an infant to take care of in the meantime.
Analysts had, at one point last year, suggested that Holmes being a new mother might be reflected in a jury's verdict, but that doesn't seem to be the case. It remains to be seen how Judge Davila will weigh it as a factor in the ultimate sentence.
Also, it seems likely that Holmes will be freed pending an appeal, so this could go on for years.
Top image: Theranos founder and former CEO Elizabeth Holmes and her mother Noel Holmes leave the Robert F. Peckham Federal Building on January 3, 2022 in San Jose, California. A jury found Elizabeth Holmes guilty on three counts of wire fraud and one count of conspiracy to defraud investors. (Photo by David Odisho/Getty Images