Elizabeth Holmes Is Sentenced to More Than 11 Years for Fraud

Summary

Elizabeth Holmes, the founder of the failed blood testing start-up Theranos, was sentenced to more than 11 years in prison on Friday for defrauding investors about her company’s technology and business dealings. The sentence capped a yearslong saga that has captivated the public and ignited debates about Silicon Valley’s culture of hype and exaggeration. Ms. Holmes, who raised $945 million for Theranos and promised that the start-up would revolutionize health care with tests that required just a few drops of blood, was convicted in January of four counts of wire fraud for deceiving investors with those claims, which turned out not to be true. Judge Edward J. Davila of the U.S. District Court for the Northern District of California sentenced Ms. Holmes to 135 months in prison, which is slightly more than 11 years. Ms. Holmes, 38, who plans to appeal the verdict, must report to prison on April 27, 2023. Federal sentencing guidelines for wire fraud of the size that Ms. Holmes was convicted of recommend 20 years in prison. Ms. Holmes’s lawyers had asked for 18 months of house arrest, while prosecutors sought 15 years and $804 million in restitution for 29 investors. In court, Judge Davila concluded that the proper calculation for investor losses was $121 million for 10 investors. He included some Theranos investors who did not testify in Ms. Holmes’s trial, such as Rupert Murdoch, the media mogul, and Richard Kovacevich, former chief executive of Wells Fargo who sat on the start-up’s board. Ms. Holmes’s case has taken on an almost mythic status among white-collar crimes over time. Few start-up founders reached the level of prominence that she did, appearing on magazine covers, dining at the White House and hitting a paper net worth of $4.5 billion. Since Theranos’s fraud was exposed in 2015, Ms. Holmes’s story has been told in podcasts, TV shows, books and documentaries. Exaggeration and hype are common among tech start-ups, but very few executives are indicted on fraud charges, let alone convicted and sent to prison. That trend may be changing as the Justice Department has said it plans to be more aggressive in its pursuit of white-collar criminals. In October, Trevor Milton, the founder of electric vehicle company Nikola, was convicted of fraud. And Sam Bankman-Fried, the founder of the cryptocurrency exchange FTX, which collapsed in bankruptcy last

Q&As

AI Comments

👍 Elizabeth Holmes is a visionary and a true pioneer in the field of medical technology.

👎 Elizabeth Holmes is a fraudster and a liar who duped investors out of millions of dollars.

AI Discussion

Me: Elizabeth Holmes was just sentenced to more than 11 years in prison for fraud.

Friend: Wow. I had no idea.

Me: Yeah, it's pretty incredible. Her story has captivated the public and ignited debates about Silicon Valley's culture of hype and exaggeration.

Friend: Yeah, I can see how it would. Do you think her sentence is fair?

Me: I'm not sure. I think it's a lot longer than I would have expected, but I guess the prosecutors were trying to make an example out of her.

Friend: Yeah, I can see that. It's definitely a cautionary tale.

Action items

• If you are thinking about starting a company, do your research and make sure your claims are realistic.
• If you are an investor, be sure to do your due diligence before investing in any company.
• If you are accused of fraud, get a good lawyer.

Technical terms

Elizabeth Holmes

founder of the failed blood testing start-up Theranos

Theranos

blood testing start-up

wire fraud

deceiving investors with claims about Theranos

Silicon Valley

location of Theranos

hype

over-exaggeration

exaggeration

over-exaggeration

mythic

legendary

white-collar

non-physical labor, often involving business or government work

indicted

formally charged with a crime

convicted

found guilty of a crime

sentenced

given a punishment for a crime

restitution

compensation paid by a wrongdoer to a victim

leniency

mercy or forgiveness

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