Elizabeth Holmes, the disgraced founder of blood-testing start-up Theranos who became the poster person for Silicon Valley hubris, is set to be sentenced in a federal court in California on Friday.
Holmes was found guilty in January on four counts of defrauding investors, following an almost four-month-long trial, during which allegations of an elaborate cover-up were recounted in painstaking detail.
The sentencing, set for Friday morning, marks the climatic point in a saga that ignited a debate on the US tech sector’s “fake it ‘til you make it” ethos and the investment community’s willingness to embrace charismatic company founders.
During the trial, jurors were told of how the centrepiece of Theranos, the Edison machine, was incapable of performing the groundbreaking blood tests Holmes and her company had promised. Prosecutors showed evidence they said proved Holmes falsified endorsements in order to win investor and partner approval, a deception that led to Theranos raising $900mn in funding at a private valuation of $9bn.
Holmes faces a maximum of 20 years in prison. The Department of Justice, calling the 38-year-old Holmes “blinded” by ambition, has asked US Judge Edward Davila to impose a 15-year prison sentence as well as $804mn in restitution to her defrauded investors.
“Holmes’ crimes were not failing, they were lying — lying in the most serious context, where everyone needed her to tell the truth,” US prosecutors wrote.
They noted the restitution demand would likely “dwarf Holmes’ ability to pay”, but was necessary to underscore what it said was one of the “most substantial white collar offences Silicon Valley or any other district has seen”.
Holmes’s attorneys said in a sentencing memo that 18 months of house arrest, plus community service, was appropriate.
They billed the soon-to-be mother of two a well-intentioned entrepreneur with honourable goals, and a determined woman with an unwavering belief she could achieve what Theranos had set out to do: create a game-changing device that could carry out a number of sophisticated diagnostic tests on only one small droplet of blood.
“We acknowledge that this may seem a tall order, given the public perception of this case — especially when Ms Holmes is viewed as the caricature, not the person; when the company is viewed as a house of cards, not as the ambitious, inventive, and indisputably valuable enterprise it was; and when the media vitriol for Ms Holmes is taken into account,” her defence lawyers wrote.
After securing lucrative contracts with Walgreens and others, the promise of Holmes’s Edison machine quickly unravelled. The company began using off-the-shelf technology made by the likes of Siemens to carry out tests instead, and sometimes delivered incorrect results.
It was not until Theranos employee-turned-whistleblower Tyler Shultz, the nephew of former US secretary of state and Theranos director George Shultz, tipped off The Wall Street Journal that the matter came to light.
Reporter John Carreyrou’s book about Holmes and Theranos, Bad Blood, became a New York Times bestseller and inspired a host of dramatic TV reinterpretations, spurred on by Holmes’s distinctive Steve Jobs-inspired look and mannerisms.
Holmes’s defence said the public interest should not be used against her, noting that more than 130 people “who actually know Ms Holmes” had written to the court in support.
Among them was Democratic senator Cory Booker, who bonded with fellow vegan Holmes over a dinner in which they both shared a packet of almonds. She “has within her a sincere desire to help others, to be of meaningful service, and possesses the capacity to redeem herself”, Booker wrote.
In a separate trial, Holmes’s former boyfriend and Theranos chief operating officer Ramesh “Sunny” Balwani was found guilty for his part, convicted on 12 counts of fraud. He is due to be sentenced in early December.
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