Once on Forbes list, Theranos founder Elizabeth Holmes gets jail for fraud

Blood-testing startup Theranos’s founder Elizabeth Holmes has been sentenced to 11 years and three months in prison for defrauding investors.

Holmes was the world’s youngest female self-made billionaire on the Forbes list in 2014. She was only 30 at that time and her stake in the now-defunct Theranos was worth $4.5 billion.

Theranos Inc, which was once valued at $9 billion, promised to take patients’ diagnoses beyond traditional labs. It envisioned small machines for use in homes, drugstores, and even on the battlefield. A series of Wall Street Journal articles in 2015, questioning the technology, led to Theranos’s downfall.

“Company relied on conventional machines”

On Friday, US District Judge Edward Davila in San Jose, California, sentenced 38-year-old Holmes on three counts of investor fraud and one count of conspiracy. A jury convicted her in January 2022 after a three-month trial. The prosecution had recommended a 15-year prison sentence, while the federal probation office had recommended nine years in prison, according to court papers.

During the trial, prosecution argued that Holmes had misrepresented Theranos’s technology and finances. That included claiming that the miniaturized blood-testing machine could run an array of tests from a few drops of blood. But in reality, the company secretly relied on conventional machines from other companies to run the tests, the prosecutors said.

In her defence, Holmes claimed she had believed her statements to be accurate. She has been convicted on four counts but acquitted on four others.

A celebrated entrepreneur

Before handing down the sentence, judge Davila called the case “troubling on so many levels.” He questioned a “brilliant” entrepreneur like Holmes’s motivation to misrepresent her company to investors.

“This is a fraud case where an exciting venture went forward with great expectations, only to be dashed by untruths, misrepresentations, plain hubris, and lies,” the judge said.

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“I have felt deep shame for what people went through because I failed them,” Holmes said in court. Davila has set the surrender date for Holmes in April.

Actress Amanda Seyfried won an Emmy Award in September for portraying Holmes in the limited series The Dropout.

(With agency inputs)