Elizabeth Holmes loses bid to avoid prison and is hit with $452-million restitution bill
SAN FRANCISCO — Disgraced Theranos Chief Executive Elizabeth Holmes appears to be bound for prison soon after an appeals court Tuesday rejected her bid to remain free while she tries to overturn her conviction in a blood-testing hoax that brought her fleeting fame and fortune.
In a ruling issued late Tuesday, U.S. District Judge Edward Davila ordered Holmes to pay $452 million in restitution to the victims of her crimes.
Holmes is being held jointly liable for that amount with her top Theranos lieutenant, Ramesh “Sunny†Balwani, who is in prison after being convicted on a broader range of felonies in a separate trial.
The Ninth Circuit Court of Appeals decision on Holmes’ attempt to avoid prison comes nearly three weeks after she deployed a last-minute legal maneuver to delay the start of her 11-year sentence. She was previously ordered to surrender to authorities on April 27 by Davila, who sentenced her in November.
Davila will set a new date for Holmes, 39, to leave her home in the San Diego area and report to prison.
The punishment will separate Holmes from her partner, William “Billy†Evans, and their 1-year-old son, William, and 3-month-old daughter, Invicta. Holmes became pregnant with Invicta — Latin for “invincible†or “undefeated†— after a jury convicted her on four counts of fraud and conspiracy in January 2022.
Davila has recommended that Holmes serve her sentence at a women’s prison in Bryan, Texas. It hasn’t been disclosed whether the federal Bureau of Prisons accepted Davila’s recommendation or assigned Holmes to another facility.
Balwani, 57, began a nearly 13-year prison sentence in April after being convicted on 12 counts of fraud and conspiracy last July. He was incarcerated in a Southern California prison last month after losing a similar effort to remain free on bail while appealing his conviction.
The verdict against Holmes came after 46 days of trial testimony and other evidence that cast a spotlight on a culture of greed and hubris that infected Silicon Valley as technology became a pervasive influence on society and the economy during the past 20 years.
Elizabeth Holmes was convicted, but lack of regulation for private companies like Theranos remains the problem.
The trial’s most riveting moments unfolded when Holmes took the witness stand to testify in her own defense.
Besides telling how she founded Theranos as a teenager after dropping out of Stanford University in 2003, Holmes accused Balwani of abusing her emotionally and sexually. She also asserted that she never stopped believing Theranos would revolutionize healthcare with a technology that she promised would be able to scan for hundreds of diseases and other potential problems with just a few drops of blood.
While pursuing that audacious ambition, Holmes raised nearly $1 billion from a list of well-heeled investors that included Oracle co-founder Larry Ellison and media mogul Rupert Murdoch. Those sophisticated investors lost their money after a Wall Street Journal investigation and regulatory reviews exposed dangerous flaws in Theranos’ technology.
In his restitution ruling, Davila determined that Holmes and Balwani should pay Murdoch $125 million — by far the most among the investors listed in the order. The restitution also requires the co-conspirators in the Theranos scam to pay $40 million to Walgreens, which became an investor in the startup after agreeing to provide some of the blood tests in its pharmacies in 2013. Another $14.5 million is owed to Safeway, which also agreed to be a Theranos business partner before backing out.
In separate hearings, lawyers for Holmes and Balwani tried to persuade Davila that their clients should be required to pay little, if anything. Prosecutors had been pushing for a restitution penalty in the $800-million range. Both Holmes — whose stake in Theranos was once valued at $4.5 billion — and Balwani — whose holdings were valued around $500 million — have indicated that they are nearly broke after running up millions of dollars in legal bills while proclaiming their innocence.
Holmes’ lawyers have been fighting her conviction on grounds of alleged mistakes and misconduct during her trial. They have contended that errors and abuses that biased the jury were so egregious that she should be allowed to stay out of prison while the appeal unfolds.
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