21 November 2022

Two weeks to appeal

Theranos founder Elizabeth Holmes received 11 years in prison

maybe_elf, Habr

The federal court in San Jose (California) sentenced the founder of Theranos medical startup Elizabeth Holmes to 135 months in prison (11.2 years). She was also ordered to compensate investors for damages in the amount of $121 million.

A hearing on the form of compensation will be held later. 

Holmes was found guilty of defrauding investors. Initially, she was charged with 11 counts. Holmes was acquitted of four of them, and the jury could not reach a verdict on three of them.

The Theranos founder has 14 days to appeal the verdict; her lawyers will seek to ensure that she does not go to prison until the appeal is considered.

Holmes apologized to Theranos employees and patients in court.

"I gave everything I had to create and save our company. I regret my mistakes with every cell of my body," she said.

Earlier, the US Department of Justice demanded a penalty of 15 years in prison for the head of the startup and payment of $ 800 million in compensation to defrauded investors. Holmes herself sought house arrest and community service, or imprisonment for a term not exceeding 18 months.

Data from the U.S. Sentencing Commission shows that the average prison sentence for criminals who committed economic crimes like Holmes' crimes was 16 years.

Holmes founded Theranos in 2003 at the age of 19. At its peak, the company was worth $9 billion. Holmes became the youngest female billionaire to earn her fortune on her own. In 2014, Forbes estimated it at $4.5 billion.

Holmes stated that her startup's technology would allow for a comprehensive analysis of just one drop of blood from a finger. A few months later, customers began to complain massively about Theranos devices, as the test results had too many errors. Due to errors, the company was forced to conduct parallel analyses in the traditional way. Later it became known that the blood test technology, which Holmes had originally mentioned, was fake. 

Holmes pleaded not guilty and stated that the heads of the firm's laboratories were responsible for the quality of the tests. However, she agreed with accusations that the company illegally used the logos of pharmaceutical companies in documents for Walgreens, the largest pharmacy chain in the United States. Holmes also confirmed that Theranos used third-party equipment for blood testing, passing it off as its own development.

In June, a jury found ex-Theranos president Ramesh Balwani guilty of all charges against him, including two counts of collusion with Holmes, six counts of defrauding investors and four counts of fraud and deceiving patients. He faces up to 20 years in prison.

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