Elizabeth Holmes faces sentencing for defrauding Theranos investors

Theranos founder and former CEO Elizabeth Holmes and her lawyer pictured in January   (Getty Images)
Theranos founder and former CEO Elizabeth Holmes and her lawyer pictured in January (Getty Images)

A US judge on Friday will decide whether disgraced Theranos founder Elizabeth Holmes should serve a lengthy prison sentence for duping investors and endangering patients while peddling a bogus blood-testing technology.

Holmes’ sentencing in the same San Jose courtroom where she was convicted on four counts of investor fraud and conspiracy in January marks a climactic moment in a saga that has been dissected in an HBO documentary and an award-winning Hulu TV series about her meteoric rise and mortifying downfall.

US District Judge Edward Davila will take centre stage as he weighs the federal government’s recommendation to send Holmes, 38, to federal prison for 15 years. Her lawyers have argued that Holmes deserves more lenient treatment as a well-meaning entrepreneur who is now a devoted mother with another child on the way.

Prosecutors also want Holmes to pay $804 million in restitution. The amount covers most of the nearly $1 billion that Holmes raised from a list of sophisticated investors that included software magnate Larry Ellison, media mogul Rupert Murdoch, and the Walton family behind Walmart.

While wooing investors, Holmes leveraged a high-powered Theranos board that included former US Defence Secretary James Mattis, who testified against her during her trial, and two former US Secretaries of State, Henry Kissinger and the late George Shultz, whose son submitted a statement blasting Holmes for concocting a scheme that played Shultz “for the fool.”

Federal prosecutor Robert Leach declared Holmes deserves a severe punishment for engineering a scam that he described as one of the most egregious white-collar crimes ever committed in Silicon Valley. In a scathing 46-page memo, Mr Leach told the judge he has an opportunity to send a message that curbs the hubris and hyperbole unleashed by the tech boom of the past decade.

Holmes “preyed on hopes of her investors that a young, dynamic entrepreneur had changed healthcare,” Mr Leach wrote. “And through her deceit, she attained spectacular fame, adoration, and billions of dollars of wealth.”

Holmes’ lawyer Kevin Downey painted her as a selfless visionary who spent 14 years of her life trying to revolutionise health care with a technology that was supposed to be able to scan for hundreds of diseases and other aliments with just a few drops of blood.

Although evidence submitted during her trial showed the tests produced wildly unreliable results that could have steered patients in the wrong direction, her lawyers asserted Holmes never stopped trying to perfect the technology until Theranos collapsed in 2018.