Disgraced An appeals court on Tuesday denied Theranos CEO Elizabeth Holmes’ request to remain free while she appeals her conviction in the blood-testing scam that garnered her temporary fame and money.
U.S. District Judge Edward Davila made another judgment late Tuesday, ordering Holmes to pay US$452 million in restitution to the victims of her crimes.
Ramesh “Sunny” Balwani, Holmes’s ex-lover and a top Theranos lieutenant, is already in prison after being convicted of a broader variety of offenses in a separate trial, and the two of them are being held jointly accountable for that sum.
Nearly three weeks after employing a last-ditch legal maneuver to postpone the start of her 11-year sentence, the Ninth Circuit Court of Appeals has rendered its ruling on Holmes’ quest to avoid prison.
In November, Davila handed down a sentence that required her to turn herself into the police on April 27.
For Holmes, 39, this means that Davila will schedule a new time for her to depart the San Diego region and report to prison.
The penalty will force Holmes to be apart from her current partner, William “Billy” Evans, and their children, William, 1, and Invicta, 3 months.
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In January 2022, Holmes became pregnant with Invicta.
After a jury found Holmes guilty of fraud, conspiracy, and four other crimes in January 2022, she became pregnant with a child she named Invicta (Latin for “invincible” or “undefeated”).
Elizabeth Holmes has been nominated by Davila to do her time at a women’s jail in Bryan, Texas. Davila suggested that Holmes be sent to a different prison, but it is unknown whether or not the Federal Bureau of Prisons followed through.
After being found guilty on 12 counts of fraud and conspiracy in July, 57-year-old Balwani began serving nearly 13 years in jail in April. After failing in a similar effort to remain free on bond pending an appeal of his conviction, he was sent to a prison in Southern California last month.
Holmes was found guilty after a 46-day trial in which testimony and other evidence shed light on a culture of greed and arrogance that plagued Silicon Valley as technology became more widespread in society and the economy over the past 20 years.
When Holmes testified in her own defense, it was one of the most riveting parts of the trial.
After dropping out of Stanford University in 2003, Holmes revealed that she had established Theranos while still a teenager. She also made allegations of emotional and sexual abuse against Balwani.
She also insisted that she had never doubted that the technology she had developed at Theranos, which she claimed could detect hundreds of ailments with a single blood sample, would transform medical diagnostics.
While working towards this lofty goal, Holmes attracted investment from a roster of high-profile figures like Oracle co-founder Larry Ellison and media mogul Rupert Murdoch, who together contributed roughly $1 billion.
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Murdoch received the most reparation from Holmes & Balwani, US$125 M
An investigation by the Wall Street Journal and regulatory reviews revealed serious faults in Theranos’ technology, causing the company to collapse and wiping out the investments of those savvy investors.
Davila awarded Murdoch US$125 million in restitution from Elizabeth Holmes and Balwani, the largest sum of any of the investors named in his order.
Walgreens, which agreed to carry some of Theranos’ defective blood tests in its pharmacies in 2013, became an investor in the company and is now entitled to US$40 million in reparations from the conspirators in the scheme.
Safeway, which had previously committed to be a commercial partner with Theranos before walking out, is owed an additional US$14.5 million.
At separate sessions, Holmes’s and Balwani’s solicitors argued that their clients shouldn’t have to pay much if anything.
The prosecutor’s office had requested a restitution penalty of around $800 million. After spending millions on legal fees despite maintaining their innocence, Holmes, whose Theranos stock was once worth US$4.5 billion, and Balwani, whose holdings were once worth US$500 million, have indicated they are practically penniless.
Holmes’s legal team has been challenging her conviction on the grounds of trial misconduct and procedural errors. Both Davila and the Ninth Circuit Court of Appeals have rejected the defense’s request that she be released from prison while her appeal is pending, despite their claims that the errors and abuses that biassed the jury were so heinous that she should be permitted to stay out of prison while the appeal unfolds.
In 2018, Holmes was removed from her position as CEO of Theranos, and in 2022, she was found guilty of fraud against investors. Holmes, the daughter of a U.S. government aid worker and a congressional committee employee, spent time in China during her high school years. She grew up in Washington, D.C., and Houston, Texas.
Holmes violated the principle of honesty and the standard of integrity by making misleading statements to investors and giving them phoney demonstrations of the medical testing device in order to gain their financial backing for her startup.