Elizabeth Holmes, the founder of Theranos, was given a sentence of more than 11 years in jail for misleading investors in her blood-testing startup, which had a previous valuation of $9 billion (£7.5 billion).
The former Silicon Valley celebrity misrepresented the capabilities of the device, saying it could identify illness with just a few drops of blood.
The 38-year-old Holmes, who is expecting a child, sobbed to the court that the victims of the con had caused her “great grief.”
In January, following a three-month trial, she was found guilty.
Holmes plans to challenge the judgment, which was delivered on Friday in a California court.
She was once heralded as the “next Steve Jobs,” and she was once described as the youngest self-made billionaire in the entire globe.
After leaving Stanford University at age 19, she founded Theranos, and its worth shot up when the business asserted it might revolutionize disease detection.
However, the technology Holmes praised did not function, and the company was shut down in 2018 due to a flood of litigation.
The Edison machine, which Theranos claimed could diagnose cancer, diabetes, and other illnesses using just a few drops of blood, was the company’s main product, according to the prosecution at Holmes’ trial in San Jose, California.
Theranos founder Elizabeth Holmes jailed for fraud https://t.co/5XEtOGt2Py
— BBC News (World) (@BBCWorld) November 18, 2022
Additionally, they claimed that Holmes had greatly exaggerated the company’s performance to its financial backers.
She was subsequently found guilty by the jury on four charges of fraud, each carrying a potential 20-year jail term. However, they dismissed three of the accusations against her and ruled her innocent on the remaining four.
On Friday, Holmes read a speech to the court in which she profusely apologized to investors and patients before Judge Edward Davila handed down his ruling.
“I’m crushed by my shortcomings. I have experienced intense sorrow for the suffering of others because I failed them “She spoke.
She said, “I regret my shortcomings with every fiber of my being.”
Holmes was referred to as a by the judge “talented” businesswoman and informed her that failure was expected. But cheating is not a good way to fail.”
A place where fortunes can be made and lost in Silicon Valley. Large financial losses for investors are not uncommon. Additionally, it’s common for founders to overstate the capabilities of their technology.
Holmes gets 11 years in prison!
The judge: “Failure is normal. But failure by fraud is not OK."https://t.co/leQkOht3zA
— Jamie Bartlett (@JamieJBartlett) November 19, 2022
But in Holmes’ case, the unraveling of Theranos actually resulted in claims of fraud that persisted. White-collar fraud cases are notoriously difficult to successfully prosecute in the US.
Investors frequently choose to write off losses or seek compensation on a private basis. Holmes’ penalty serves as a reminder to Silicon Valley CEOs that deceiving investors have serious repercussions.
This is a serious prison sentence; it’s not merely a warning. On April 27, she must turn herself up to start serving her sentence. In 2018, Holmes and Ramesh “Sunny” Balwani, her former lover and business partner, were accused of conspiring to commit wire fraud and committing wire fraud. This summer, Balwani, who was prosecuted separately, was convicted of fraud. Next month, he will receive a sentence.
She was threatened with 15 years in prison and ordered to pay $800 million in restitution to investors, including a number of well-known people like software tycoon Larry Ellison and former US Secretary of Defense James Mattis, who both testified against her during the trial.
Pictures show Holmes enjoying her freedom after being found guilty in June.
Photos displayed in court depict Holmes as she has been since her conviction in June enjoying her freedom.
However, Holmes’ defense team recommended that she serve 18 months under house arrest because they believed she had good intentions and was just trying to help people.
On Friday, the judge found that she had cost investors, including Rupert Murdoch and the family that owns Walmart, $121 million in losses. At a subsequent court hearing, the sum she will have to repay will be decided.
In a letter to the judge, more than 130 close friends, family members, and former Theranos workers requested clemency.
The group mentioned Holmes’ recent motherhood. She gave birth to a son in July 2021, and she is now expecting a second child.
When she is expected to give birth is unknown. It is anticipated that her attorneys will work to delay her incarceration until after the birth of the child.
In his sentencing memo to the court, her partner Billy Evans expressed his concern for “a future in which my son grows up with a relationship with his mother on the other side of glass armed with guards” to the judge.
Eileen Lepera, a secretary from Silicon Valley who invested in Theranos and lost a significant portion of her life savings, told the BBC that she was “happy” with the verdict.
Given all the circumstances, I believe it is fair, Ms. Lepera said. “She [Holmes] put people’s lives in danger despite knowing it was a fraud.”