Theranos founder Elizabeth Holmes’ months-long battle to extend her freedom is over: A federal court judge on Tuesday denied her bid to delay imprisonment, ruling she must surrender April 27 to serve her sentence for felony fraud at a Texas prison camp.
Judge Edward Davila said he found Holmes was not a flight risk or danger to the community, but he concluded she had not raised any substantial questions of law or fact that would be likely to result in a reversal of the jury’s fraud verdict or a new trial.
The U.S. Marshals Service will determine whether Holmes must show up at the prison’s gates or meet federal marshals elsewhere so she can be taken to prison. Davila has recommended she serve her more than 11-year sentence at a minimum-security facility in Bryan, Texas, but federal prison authorities have the final say on where she will be confined.
For Holmes, whose adoption of a black turtleneck and claims of a revolutionary technology saw her compared to legendary Apple co-founder Steve Jobs, Davila’s decision answers one of the last key questions about her fate that have arisen since the first Wall Street Journal exposé shot cracks through her carefully crafted image in 2015. Would the negative press coverage harm Theranos, after Holmes’ relentless hyping of its blood-testing technology drove it to a $9 billion valuation? Yes, fatally. Would Securities and Exchange Commission charges lead to a criminal indictment? Yes, on multiple counts of felony fraud. Would she be found guilty? Yes, of defrauding investors, but not patients. Would she get prison time? Yes, more than 11 years. And now: When will walk through the prison gates to begin years of incarceration, under Davila’s ruling? In a little over two weeks.
Three big questions remain: Will Holmes appeal Davila’s surrender-date order, like former Theranos president Sunny Balwani, separately tried and convicted of felony fraud before the same judge? If she does appeal that decision, will she succeed, where Balwani on Friday failed? And finally: Will Holmes’ appeal of her conviction and sentence succeed? That’s a real Hail Mary — the federal judiciary says the vast majority of such appeals fail.
A jury convicted Holmes, 39, in U.S. District Court in January 2022 of four counts of defrauding investors in her now-defunct Palo Alto startup through false statements about her company and its purported ability to conduct a full range of tests using just a few drops of blood from a finger-stick. Her four-month trial in U.S. District Court generated world-wide media coverage, with evidence revealing Theranos’ technology fell far short of Holmes’ claims, and that she engaged in substantial deceptions about its capabilities and uses, and about her company’s financial state.
Davila sentenced her in November, but allowed her to stay free until April 27 in a decision legal experts believed was connected to her pregnancy. In December, Holmes appealed her conviction and sentence, noting in a court filing that she was convicted only of defrauding investors, and claiming that the court record “is teeming with issues for appeal.”
Three days after filing her notice of appeal, Holmes asked Davila to delay her incarceration until the appeal is concluded, a process that can take a year or more after an appeal notice is filed. Prosecutors opposed her bid, contending Holmes pose a flight risk and claiming she had tried to flee the country on a one-way ticket to Mexico after her conviction. Her legal team has denied that allegation, citing her two children — one born in the past few months, and a son born in July 2021 as she awaited trial — as among the reasons she would not abscond.
A Stanford University dropout who founded Theranos in 2003, Holmes has been free on bail since federal authorities hit her with fraud charges in 2018. She lives with hotel heir Billy Evans, who described himself in a February court filing as her fiancé.
According to the U.S. Bureau of Prisons, the U.S. Marshals Service tells convicted criminals, once their date to surrender themselves for imprisonment is determined, whether to appear at the designated prison, or surrender to U.S. Marshals. Female federal prisoners are allowed to bring into prison a plain wedding band, earrings without stones worth less than $100, medical or orthopedic devices, legal documents and ID, and warden-approved religious items that do not pose a security threat.
Under federal prison rules, Holmes will have to give up the clothes she surrenders in, which will be shipped to an address she chooses. She will be issued prison clothing that she may supplement with clothes bought at the prison commissary, which are limited in color to pastel green, gray and white.
Davila has yet to issue a decision on whether Holmes must pay restitution for losses from her crimes. Federal prosecutors in a court filing last month asked Davila to order Holmes to repay the full amount of investor losses, which the prosecution tallied at more than $878 million. Davila has pegged investor losses from Holmes’ criminal conduct at $381 million. A jury convicted her on counts relating to investor losses of about $144 million. Holmes in a February court filing said she “continues to work on ideas for patents” but “has essentially no assets of meaningful value.” In an earlier filing, Holmes’ legal team said she “has incurred substantial debt from which she is unlikely to recover.”
