Elizabeth Holmes Must Report to Prison on May 30 and Pay Restitution
Elizabeth Holmes, the disgraced founder of the failed blood testing start-up Theranos, who was convicted last year on charges that she defrauded investors of more than $100 million, has lost her latest bid to stay out of prison while she appeals her conviction.
Ms. Holmes, whose case casts a harsh light on Silicon Valley’s culture of hubris, must report to prison on May 30, a judge ruled after the US Court of Appeals for the Ninth Circuit rejected her attempt on Tuesday to remain free on bail.
Ms. Holmes and her top lieutenant at Theranos, Ramesh Balwani, who was found guilty of fraud in a separate trial and who began serving his prison sentence last month, were also ordered to pay $452 million in restitution to victims of the company’s fraud.
Of that total, the judge, Edward J. Davila of the US District Court for the Northern District of California, who oversaw both trials, determined that Ms. Holmes and Mr. Balwani should pay $125 million to the media mogul Rupert Murdoch, who invested in Theranos. Walgreens and Safeway, which had entered into business deals with the company, were also identified as victims for the purposes of restitution.
Why It Matters: Ms. Holmes’s conviction was the end of an era.
Theranos raised nearly a billion dollars from investors for technology that the company said could test for a wide range of diseases with just a few drops of a patient’s blood. After those claims turned out to be false, both Ms. Holmes and Mr. Balwani was accused of defrauding investors.
Their convictions and sentencing — 11 years for Ms. Holmes, 13 for Mr. Balwani—has contributed to the feeling in Silicon Valley that the era of the “fake it till you make it” approach may be winding down. Ms. Holmes, who dropped out of Stanford to start the company, hit a paper net worth of $4.5 billion and had celebrity backers. Her precipitous downfall has been documented extensively in television shows, podcasts and documentaries.
Background: A last-minute effort to stay out of prison.
Ms. Holmes is appealing her conviction, a process that delayed her prison start date, which was originally set for April 27. Last month, Judge Davila denied a last-minute request from Ms. Holmes to remain free pending her appeal.
Ms. Holmes was convicted last year on four felony counts of defrauding investors.
Mr. Balwani, who is also known as Sunny, was Ms. Holmes’s close professional associate and one-time romantic partner. He was convicted in a trial last year on 10 counts of wire fraud and two counts of conspiracy to commit wire fraud, a verdict that was more severe than that of Ms. Holmes. His legal team has filed an appeal of his conviction.
What’s Next: Ms. Holmes will head to prison.
Ms. Holmes is to surrender to authorities after the Memorial Day weekend. She had originally been ordered to report to the Federal Prison Camp in Bryan, Texas. She has been living in California with her partner, Billy Evans, and their two young children.