Theranos founder Elizabeth Holmes was sentenced to 135 months on Friday afternoon after being found guilty of defrauding investors. In addition to the 11+ years sentence, which is set to begin on April 27, 2023, Judge Edward J. Davila of the U.S. District Court for the Northern District of California added on three years of supervised release. Representatives for Holmes have stated that she has already expressed interest in appealing the court's ruling.
According to The New York Times, Holmes burst into tears during sentencing, and delivered a statement saying "I am devastated by my failings. I have felt deep pain for what people went through because I failed them."
On March 14, 2018, The Securities and Exchange Commission issued a release stating that Holmes and former Theranos president Ramesh "Sunny" Balwani were being charged with massive fraud after it was found that they'd raised "$700 million from investors through an elaborate, years-long fraud in which they exaggerated or made false statements about the company's technology, business, and financial performance."
"Investors are entitled to nothing less than complete truth and candor from companies and their executives," said Steven Peikin, Co-Director of the SEC's Enforcement Division in the 2018 release. "The charges against Theranos, Holmes, and Balwani make clear that there is no exemption from the anti-fraud provisions of the federal securities laws simply because a company is non-public, development-stage, or the subject of exuberant media attention."
"The Theranos story is an important lesson for Silicon Valley," Jina Choi, Director of the SEC's San Francisco Regional Office furthered in the SEC's statement. "Innovators who seek to revolutionize and disrupt an industry must tell investors the truth about what their technology can do today, not just what they hope it might do someday."
In a letter written to the court prior to sentencing, Christian Holmes asked for leniency for his daughter saying "Much has been written in the media and addressed in the trial about the company and its failure. Little has been said about the innovation Elizabeth strived for, sacrificed and accomplished in order to help the company continue."
The fraud of Theranos, which was brought to the public's attention in Hulu's 2022 minseries "The Dropout," starring Amanda Seyfried, centered on the invention of a machine that was said to have the capability to diagnose a variety of ailments from only a drop of blood. Knowing that the machines were faulty, causing dangerous misdiagnosis in several instances, Holmes mislead investors to the contrary in an effort to preserve funding.
In July, Holmes' partner Balwani was found guilty of 12 felony counts of fraud in a separate trial and awaits sentencing after being granted a delay in early November.
