With only days to go until Elizabeth Holmes is sentenced for three counts of wire fraud and one count of conspiracy—all linked to what prosecutors described as a scheme to purposefully defraud investors—attorneys for the former Theranos CEO and the U.S. government remain at loggerheads over a suitable punishment.
Holmes faces a maximum sentence of 20 years in prison, as well as fines of $250,000 plus restitution for each of her four charges.
In an 82-page sentencing memorandum filed last Thursday, Holmes’ team petitioned U.S. District Judge Edward Davila to limit her time in prison to 18 months or less—“if a period of confinement is necessary”—followed by an unspecified supervised release period requiring additional community service hours. However, they argued, “the defense believes that home confinement with a requirement that Ms. Holmes continue her current service work is sufficient.”
Federal prosecutors responded to that plea with a filing of their own on Friday. That 46-page document asked for 10 times the prison sentence: 180 months, or 15 years, plus three years of supervised release. They argued that Holmes should also pay the fine for each of her four counts, while also paying full restitution to all Theranos’ investors.
Davila is set to hand down his official ruling on the matter this Friday, Nov. 18.
This week’s sentencing comes after Holmes’ team tried and failed to secure a new trial for the ex-CEO, citing private conversations with Adam Rosendorff, M.D., a former lab director at Theranos, that they claimed contradicted his previous testimony for the prosecution. In a subsequent hearing last month, however, Rosendorff stood by his testimony, and the motion for a new trial was dismissed.
In their filing, Holmes’ lawyers picked up where they left off in her trial, which stretched from last August through early January of this year. They continued to paint Holmes, who started Theranos at age 19, while still a student at Stanford University, as driven, ambitious and compassionate but ultimately naïve.
“When Ms. Holmes started the company that became Theranos, she was a teenager who had four quarters of college and some laboratory research experience under her belt but no business or management experience,” they continued. “At the time she was indicted, two and a half years after significant public controversy about Theranos had arisen, Ms. Holmes was just 34 years old, still a relative newcomer to the business world.”
The attorneys also reiterated their claims from the trial that Holmes had experienced “severe emotional, psychological and sexual abuse” at the hands of Ramesh “Sunny” Balwani, the former president and COO of Theranos and Holmes’ semi-secret boyfriend for about a decade. Not only was Holmes largely under Balwani’s control throughout that time, they argued, but she also allowed him to take charge of much of the company’s day-to-day operations.
Alongside those arguments, her team described the current-day Holmes as a “supportive partner and coparent” to her husband, Billy Evans, with whom she has a one-year-old son. They cited more than 130 letters from friends, family members and even former Theranos investors—including one from New Jersey Sen. Cory Booker—attesting to her “character, remorse and capacity to do good.”
“She founded and built Theranos for indisputably good reasons. She worked tirelessly along with hundreds of brilliant and committed employees to improve access to affordable health information,” Holmes’ attorneys wrote in the memo. “She never cashed out, and she went down with the ship when the company failed. And regardless of the sentence the Court imposes, for the rest of her life, she and her family will be punished. As her partner knows all too well, ‘[t]here is no avoiding the scorn that accompanies Elizabeth Holmes.’”
The prosecution, meanwhile, gave Holmes much more agency in Theranos’ downfall.
“Time and again, she chose deceit over candor. She forged her own endorsements. She preyed on hopes of her investors that a young, dynamic entrepreneur had changed healthcare. She leveraged the credibility of her illustrious board,” they wrote in Friday’s filing. “And, through her deceit, she attained spectacular fame, adoration and billions of dollars of wealth.”
They went on to describe Holmes’ “attacks” on journalists who dared question the viability of Theranos’ blood-testing technology, as well as her determination to bring that technology into clinical practice, despite evidence showing that it didn’t actually work.
With Holmes “blinded by that ambition,” they argued, she actively misrepresented her company’s progress and prospects to potential investors, partners and patients—to the point of returning incorrect test results to patients who’d used Theranos’ testing technology—in stark contrast to the naïve dreamer described by her own team.
“She accepts no responsibility. Quite the opposite, she insists she is the victim. She is not,” the prosecutors wrote. “She repeatedly chose lies, hype and the prospect of billions of dollars over patient safety and fair dealing with investors. Elizabeth Holmes’ crimes were not failing, they were lying—lying in the most serious context, where everyone needed her to tell the truth.”
Those “extraordinarily serious” crimes demand a similarly serious sentence, they concluded, one that will “reflect the seriousness of the offense and promote respect for the law,” while also setting an example for other entrepreneurs who may attempt to follow in Theranos’ billion-dollar footsteps.
For his part, Balwani’s sentencing won’t occur until Dec. 7. He faced the same dozen charges as Holmes in a trial of his own earlier this year but, unlike her, was found guilty of all 12.
Even so, he faces the same maximum prison sentence as his former partner: up to 20 years, along with the $250,000 fines for each of his guilty charges.