A federal judge sentenced Theranos founder and CEO Elizabeth Holmes to 11 years and three months in prison on Friday, citing the need for investors in Silicon Valley startups to be able to take "risks free from fraud."
U.S. District Judge Edward Davila ordered Holmes to surrender to federal custody on April 27, 2023, apparently taking into account the fact that Holmes is pregnant with her second child.
Holmes was convicted of four counts of wire fraud based on false and misleading statements she made to investors in Theranos, the now-defunct blood testing company that was based in Palo Alto.
She was acquitted of four counts of wire fraud related to tests given to actual patients. The jury did not reach a verdict on three remaining counts involving investors.
The sentencing on Friday capped a four-hour hearing during which prosecutors had pushed for a 15-year sentence. Holmes' lawyers requested a sentence of 18 months of home confinement.
The packed courtroom heard an emotional appeal from Alex Shultz, son of the late George Shultz, a former Theranos board member, and father of Tyler Shultz, a Theranos employee who had tried to alert his grandfather to the concealment going on at the company and the defects in its blood-testing technology.
Holmes, Alex Shultz said, had "desecrated his family."
Holmes spoke last, telling the judge that she loved Theranos and that the company was her "life's work."
"I am so, so sorry," Holmes said. "In looking back there are so many things I would do differently if I had the chance."
She told the judge that going forward she just wants to contribute by helping "one person at a time."
Explaining his decision, Davila harkened back to the agricultural days of Silicon Valley, then talked about the change brought about when the area became known for its innovation.
"The world relies on us," Davila said. "This is a fraud case where an exciting venture went forward ... only to be dashed by misrepresentations, hubris and just plain lies."
Davila calculated the prison term using federal sentencing guidelines, which take into account the number of victims of fraud and their overall losses. Holmes' fraud, Davila said, affected at least 10 investors whose losses totaled more than $120 million. He denied a defense request for a variance from the guidelines based on Holmes' acceptance of responsibility, saying that Holmes had not met the requirements for such a deduction.
Once her prison term is served, Holmes will spend three years under supervised release, Davila ordered.
He told the lawyers to agree on a future hearing date at which Holmes' restitution obligation will be determined.
Prosecutors have asked for a restitution order of over $800 million. The defense has asked that Holmes not be required to pay any restitution, arguing that she "essentially has no assets."
The court's probation officer agreed with the conclusion that Holmes has no money.
Holmes' defense team told the judge that they plan to file papers asking that Holmes be allowed to remain free on bail until an appeal of the judgment is decided.