It was a bad day to be Elizabeth Holmes, as she appeared in a San Jose federal courtroom Friday to learn her fate, six years after the demise of her blood-testing company Theranos, and eleven months after her conviction on four counts of defrauding investors.
U.S. District Judge Edward Davila delivered his sentencing decision, which is 135 months or 11.25 years — lengthy, but four years less lengthy than prosecutors had been pushing for. It's a sentence which has been nearly a year in the making, and several times delayed. And a visibly pregnant Elizabeth Holmes shed her normally wide-eyed and stoic demeanor, crying both before and after the sentence was read. She is expected to report to prison in April, after giving birth to her second child.
"Failure is normal. But failure by fraud is not OK," Davila said before reading the sentence.
Now cue the months/years of appeals?
Today's hearing included testimony from victims, including from Alex Shultz, the son of early Theranos investor and Holmes champion George Shultz (RIP), and father of Tyler Shultz, who was the big whistleblower in the Theranos fraud. After hours in which attorneys for Holmes tried to paint her as sympathetic and interested only in doing good in the world, as NBC News reporter Scott Budman reported from the courtroom, Shultz wanted the record to show that Holmes, "hired a private investigator to follow my son" and sent lawyers to interrogate and intimidate him at his home when he had no lawyer of his own present.
Holmes herself got up to speak on her own behalf, tearfully telling the court, "I am devastated by my failings," and "I regret my failings with every cell of my body." She also read from a Rumi poem.
Judge Davila, who presided over the lengthy prosecution of Holmes's case last fall and has had to sit through multiple hearings since her conviction with her lawyers attempting an end-run for a new trial, and voicing other objections, sounded less than sympathetic to the defense's pleas for leniency. Also, as the lawyers went back and forth in court on Friday, he at one point made clear, "this case has already been litigated."
Holmes will also be ordered to pay restitution to investors, but Judge Davila said he will rule on that amount at a later date. He said the total loss to 10 investors was was $384 million — less than half of the $804 million the prosecution had pressed for — and that a "reasonable" total loss figure was $121 million, per NY Times reporter Erin Griffith.
Elizabeth Holmes arrived in court Friday morning just before 10 a.m., flanked by her mother and husband, and reportedly sat stoically through much of the proceeding. Journalist John Carreyrou, who broke the big story in the Wall Street Journal in 2016 that harkened Theranos' demise, was reportedly on hand outside the court signing copies of his book Bad Blood.
#Breaking: Elizabeth Holmes has arrived at the courthouse for her sentencing. pic.twitter.com/spRxCTtlHQ— scott budman (@scottbudman) November 18, 2022
Holmes's attorneys had, in this latter stage, been trying to cast Holmes both as a sympathetic mother of a toddler and soon-t0-be mother of two, and as a careless capitalist who may have maybe sorta hoodwinked a few sophisticated investors with no great harm done. Those investors of course don't see it that way, and prosecutors pointed out again in court Friday that just because Holmes was acquitted on charges of defrauding patients, does not mean that no harm was committed.
"When Holmes' defense team brings up the fact that she was found not guilty of patient fraud, the prosecutor says that she knew the technology was faulty, and still put testing machines into Walgreen's stores," reported NBC's Budman.
Prosecutors have earlier pointed to stories like a patient who received a false-positive HIV diagnosis, and others who received false tests for cancer and pregnancy. As prosecutors said in their sentencing memo this week, Holmes "repeatedly chose lies, hype, and the prospect of billions of dollars over patient safety and fair dealing with investors."
Prosecutors also argued that Holmes has never shown any remorse or regret for her actions, toward investors, patients, or anyone.
Holmes's defense team filed a final, last-minute plea for leniency, describing the "terrifying" prospect of her being separated from her sixteen-month-old son, and adding tug-on-heartstrings details like how she and husband Billy Evans "dance in the kitchen and give him 'doubles' — kisses on both sides of the cheek," per the Mercury News. They were arguing for an 18-month sentence consisting of home detention.
Oddly, also gunning for leniency for Holmes in not-sot-subtle terms was Senator Cory Booker, who for some reason penned a letter to Judge Davila this week asking for a "just" sentence after discussing his advocacy for lowering sentencing guidelines for non-violent crimes.
An unexpected use of @CoryBooker’s political capital — advocating for a “just” (that is lenient) sentence for Elizabeth Holmes. pic.twitter.com/JCrYIAw7D7— Michael Barbaro (@mikiebarb) November 17, 2022
Though Judge Davila may have had his mind pretty well made up before final debate occurred Friday between the defense and prosecution, both sides nonetheless argued about whether Holmes showed "a conscious disregard" or "recklessness" in her actions, and whether or not there should be an "enhancement for being the organizer of a criminal enterprise," as Budman reported.
#Update: Attorney for Elizabeth Holmes: "Are these investors really victims of fraud?"— scott budman (@scottbudman) November 18, 2022
Judge: "Let me stop you there..."#Theranos
Just prior to announcing his ruling, Judge Davila made mention of former Theranos COO Sunny Balwani, saying that while Holmes may have led the company during the execution of the fraud, she did not necessarily lead the fraud scheme herself — opening the door for harsher sentencing when Balwani's turn comes up. As the Associated Press reports, Balwani will face sentencing on December 7.
Also prior to the sentence being read, Assistant U.S. Attorney John Bostic spoke for the prosecution saying, "When the court gives its sentence, it does the work of repairing the trust between innovators and customers. That trust was damaged by Elizabeth Holmes."
Previously: In Dueling Sentencing Memos, Prosecutors Push For Elizabeth Holmes to Get 15 Years, While Defense Brings Up Recently Deceased Dog
Top image: Elizabeth Holmes goes through a security checkpoint as she arrives at federal court on November 18, 2022 in San Jose, California. (Photo by Justin Sullivan/Getty Images)