Theranos fraud: Holmes to serve 135 months in prison

US District Judge Edward Davila on Friday sentenced Theranos CEO Elizabeth Holmes to 11 years and three months in prison for conspiring to swindle investors and consequently endangering patients with a sham blood-testing business. Prosecutors had asked for a 15-year sentence, while the defense argued for 18 months of home confinement followed by community service.  

Theranos was dashed "by misrepresentations, hubris and just plain lies," the judge said.

"This case is so troubling on so many levels," Davila said. "What was it that caused Ms. Holmes to make the decisions she did? Was there a loss of a moral compass?"

Holmes cried as she apologized, adding that she accepted responsibility for her actions.

"I regret my failings with every cell of my body,'' Holmes said.

In January, a jury found Holmes guilty of defrauding investors or conspiring to defraud them. She was convicted on four of 11 counts, while the jury acquitted her on the charges of defrauding patients.

Prosecutors had accused 38-year-old Holmes of convincing investors that Theranos machines could run various blood tests with smaller samples than standard methods.

The gripping story of how the infamous entrepreneur plummeted from the-next-Steve-Jobs aspirations to a convicted criminal was turned into an HBO documentary and an award-winning Hulu TV show.

US attorney Stephanie Hinds said the 11-year sentence "reflects the audacity of her massive fraud and the staggering damage she caused."

"For almost a decade, Elizabeth Holmes fabricated and spread elaborate falsehoods to draw in a legion of capital investors, both big and small, and her deceit caused the loss of hundreds of millions of dollars," the prosecutor said in a statement.

How did Holmes rise to fame?

Holmes came to the limelight in Silicon Valley in 2003 with the launch of her company, Theranos.

The company offered to revolutionize the entire blood testing industry by presenting a device — with the promising name Edison — that vowed to determine hormone and viral loads, discover anomalies and even detect life-threatening diseases with just a few drops of blood.

From 2010 to 2015, Holmes successfully tricked companies, money managers and billionaires into believing that Edison was efficient and inexpensive.

She managed to raise millions from private investors, including the media magnate Rupert Murdoch. The funds she raised are estimated to be around $1 billion (around €1 billion).

It later turned out that the company had been secretly relying on conventional blood test machines manufactured by Siemens, according to prosecutors.

The former company boss was also charged with misleading patients about how accurate their test results were.

The story came to light after the Wall Street Journal published articles questioning the validity of the Theranos tests. Holmes was subsequently indicted in 2018.

Rounds of appeal

Holmes' Friday verdict was preceded by various appeals for clemency.

Her legal team submitted an 82-page memo requesting that her confinement is limited to 18 months, preferably at home. Her family, friends, and former colleagues supported the call with over 130 letters of praise to Holmes.

Maximizing on the declared sympathies, Holmes' current partner and father of her one-year-old son William "Billy" Evans submitted a 12-page letter to the court, urging for mercy amid Holmes' second pregnancy. He steered clear of disclosing her due date.

Holmes gave birth to her first child shortly before the start of her trial last year.

rmt/sms (AP, Reuters, AFP)