Theranos founder Elizabeth Holmes, pregnant and the mother of a young son, will likely receive a multi-year prison sentence Friday, then try to delay her imprisonment and overturn her guilty verdict, legal experts say.
Holmes was convicted by a jury in January of four counts of felony fraud, for bilking investors in her now-defunct Palo Alto blood-testing startup out of more than $144 million with false claims her technology could conduct a full range of tests using a few drops of blood. She is to appear Friday at 10 a.m. before Judge Edward Davila, who presided over her four-year criminal fraud case and her four-month trial in U.S. District Court in San Jose.
Last week, Holmes argued in a sentencing memo that she never “cashed out” on her Theranos holdings — once valued at $4.5 billion — and that she has already received a life sentence of public scorn. She asked Davila to give her no time in prison, or 18 months of home confinement, or at most, 18 months imprisonment. Federal prosecutors, labeling her a remorseless liar and calling her frauds among the worst white-collar crimes Silicon Valley has seen, asked Davila to put her away for 15 years and make her pay $804 million in restitution, though acknowledging she was “not motivated by a short-term desire for financial gain.” Holmes said in her memo she has no money to pay restitution.
The federal probation office has recommended a nine-year prison sentence, a prosecution filing said.
This week, Holmes’ lawyers filed a response to the prosecution’s argument that Davila should factor into his sentencing $804 million in investor losses, including hundreds of millions she was not convicted on, saying that would be “unfair.” The defense filing also attacked prosecutors’ argument that Davila should consider harm to patients despite Holmes’ acquittal on patient-related charges, saying Holmes had “good intent with respect to patient testing.” Her legal team argued that Holmes undertook “genuine reform” once problems at Theranos became apparent, and when she took the stand in her trial, she “acknowledged mistakes and regrets.”
Experts believe Davila will order Holmes imprisoned, and that she will seek to overturn her conviction by appealing her case.
“The question is, ‘Will she be in or out of custody while that takes place?'” said former Santa Clara County prosecutor Steven Clark.
If Davila decides Friday to put Holmes behind bars, she is expected to ask him to delay the date she surrenders herself for incarceration, said criminal defense lawyer Carrie Cohen, who has been following Holmes’ case from New York.
The judge will ask federal government prosecutors if they believe she should stay at liberty. The prosecution and Holmes’ lawyers may have agreed in advance about when she would surrender, or may argue about it before Davila.
“The government will, I assume, fight to have her start her sentence Day 1 — they want her to go to jail: ‘Hey, time’s up, your day of reckoning has come,'” Clark said. “That will be a difficult call for the court. She’s got another child on the way. She’s not a flight risk. She’s really not a danger to the community.”
If Davila denies Holmes’ expected bid for delay, her legal team is likely tell him she plans to appeal to the San Francisco-based U.S. Court of Appeals for the Ninth Circuit, and ask that she remain free on bail while her appeal is pending. If Davila denies that request, she can make an emergency application to the Ninth Circuit, which could let her out within a couple of days until her appeal is finished, said Cohen, of Morrison Foerster. If Davila allows Holmes to extend her surrender date, she can apply to the Ninth Circuit to remain out of prison past that date until her appeal is concluded.
Davila will go into Friday’s hearing armed with knowledge from the years of Holmes’ legal proceedings, plus the probation office’s pre-sentence report, as well as the sentencing memos filed this month by each side, which included 130 character-witness statements from Holmes’ friends, family and former co-workers, and victim-impact statements from investors. Davila must consider federal sentencing guidelines for fraud cases, but is not bound by them.
On Friday, according to federal court protocol, Davila will allow Holmes’ legal team and the prosecution to argue over the probation office report and its recommendations, Cohen said.
The prosecution will address Davila on Holmes’ sentencing, followed by Holmes’ legal team. Davila may or may not let them respond to each other’s statements, Cohen said.
Holmes, who gave birth to a son in July 2021 weeks before her trial, will have an opportunity to address Davila about her sentencing, and if she does, it will likely be through a “carefully scripted” statement that skirts any admission of guilt because she plans to appeal, Cohen said.
Davila will issue a sentence, and if it includes imprisonment, will hear from both sides about a surrender date or bail pending appeal.
If Davila sentences Holmes to imprisonment, and she is granted freedom pending appeal, that could keep her out of prison for a year, legal experts said.
Davila, on Friday, will probably already have a good idea about whether Holmes will go from court to prison, Cohen said.
“If there are federal marshals in the courtroom,” she said, “that’s one signal that at least the judge thinks it’s possible she goes to jail that day.”
