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Elizabeth Holmes, CEO of the infamous Theranos, is facing imprisonment after an appeals court rejected her request to remain free while she attempts to overturn her conviction in a blood-testing scandal. Additionally, US District Judge Edward Davila has ordered Holmes to pay $452 million in restitution to the victims of her crimes. However, prosecutors demanded restitution of about $800 million.
Elizabeth Holmes' imprisonment follows her conviction on four counts of fraud and conspiracy in January 2022.
The former billionaire founded the health startup as a teenager after leaving Stanford University. She raised nearly $1 billion from prominent investors, including Larry Ellison and Rupert Murdoch, with the promise to change the face of healthcare through the revolutionary blood-testing technology.
As the truth behind Holmes and her company came to light, Forbes reported that her net worth amounted to zero in 2016, considering her obligations to investors.
Elizabeth Holmes and Ramesh Balwani to pay $125 million to Rupert Murdoch
Holmes, along with her top Theranos executive Ramesh "Sunny" Balwani, who is already in prison for related offenses, is jointly liable for the restitution amount. Meanwhile, their lawyers argued for minimal or no restitution payments, on the grounds that neither Holmes nor Balwani can make any payments given their financial circumstances.
In the restitution ruling, Judge Davila ordered Elizabeth Holmes and Ramesh Balwani to pay the largest portion, $125 million, to media mogul Rupert Murdoch, with additional amounts owed to other investors, including Walgreens and Safeway, as reported by AP.
Meanwhile, Elizabeth Holmes' legal team has been contesting her conviction as they cited alleged misconduct during her trial, as per NY Daily News. They also claimed that jury biases and abuses warranted her remaining out of prison during the appeals process. However, both Judge Davila and the Ninth Circuit Court of Appeals have rejected this request.
The Ninth Circuit Court of Appeals' decision to deny Holmes' attempt to avoid prison comes after she used a last-minute legal maneuver to delay the start of her 11-year sentence.
Previously, Elizabeth Holmes had been ordered to surrender to authorities on April 27 by Judge Davila, who sentenced her in November. The judge will now determine a new date for Holmes, who is 39 years old, to report to prison. This will separate her from her partner, William "Billy" Evans, heir to the hospitality business Evans Hotel Group, and their two young children.
Holmes was worth $4.5 billion in 2015
Born on February 3, 1984, in Washington, D.C., Elizabeth Holmes was a gifted child who excelled academically, launching her own business selling C++ compilers to Chinese schools. Her interest in medicine led her to Stanford University, where she pursued a chemical engineering major. During her time at Stanford, she filed patents and dropped out to start Theranos, a company that dissolved in 2018.
The company is said to have operated in secrecy, providing little information about its technology. In 2013, Theranos partnered with Walgreens to establish blood sample collection centers. At its peak, Theranos was valued at $9 billion.
In 2015, Forbes estimated Holmes' net worth at $4.5 billion, making her the richest self-made woman in America. In the same year, a Wall Street Journal investigative report by John Carreyrou revealed that Theranos' blood-testing technology, Edison, was not capable of accurate results, and traditional machines were used instead.
As the truth was revealed, Elizabeth Holmes and her former boyfriend and business partner, Ramesh Balwani, were indicted by the U.S. Justice Department for their involvement in Theranos. According to reports, the duo allegedly knew that their technology had significant issues, including unreliability and slow performance.
However, Holmes and Balwani continued to dupe investors by claiming the company would generate $1 billion in revenue in 2015. As the fraud allegations emerged, Forbes revised Holmes' net worth to zero in 2016, considering her obligations to investors and the diminished value of Theranos. Elizabeth Holmes subsequently fell off the Forbes 400 list.
For her crime, Elizabeth Holmes went on trial in August 2021 and was found guilty of wire fraud and conspiracy in January 2022. In November 2022, she was sentenced to 11 years and three months in prison, which began on April 27, 2023.
Since her fraudulent activities came to light, Elizabeth Holmes has faced legal challenges, sanctions, and lawsuits from various authorities, investors, and patients.
