SAN JOSE, Calif. (KRON) — Disgraced Silicon Valley entrepreneur Elizabeth Holmes is facing a big day in court Friday in San Jose.
A federal judge is slated to make a ruling over how much restitution she must pay her victims. Holmes, 38, of Woodside, defrauded sophisticated investors out of hundreds of millions of dollars through Theranos. She founded Theranos, a blood testing company, at age 19 after dropping out of Stanford University.
The dramatic downfall of Theranos threw a bright light on Silicon Valley’s dark side, exposing how its culture of hype and ambition could veer into lies.
U.S. District Judge Edward Davila sentenced Holmes to serve 11 years in prison and she is scheduled to report to prison next month. Her co-conspirator and ex-boyfriend, Sunny Balwani, was sentenced to nearly 13 years and he was supposed to begin serving his prison sentence on Thursday.
The judge, however, has not yet decided how much Holmes and Balwani must pay to Theranos victims through restitution.
Prosecutors are asking for the former Theranos executives to pay nearly $900 million in restitution.
Friday will mark Holmes’ first court appearance as a mother of two. She recently gave birth to her second child. The baby’s father is Holmes’ current boyfriend, millionaire Billy Evans, who accompanies her for every court appearance.
In court documents filed recently by her attorneys, Holmes cited her newborn baby as a reason why she should be allowed to delay when she reports to prison. Holmes argues that she deserves to remain free while appealing her conviction, a legal process that could take years to complete.
The judge is also expected to decide Friday whether he will uphold Holmes’ April deadline for going to prison.
Prosecutors say Holmes is a flight risk. She had a one-way plane ticket to Mexico booked for Jan. 26, 2022, federal prosecutors wrote on court documents. Holmes booked the 2022 flight without a scheduled return trip and only canceled it after prosecutors contacted Holmes’ attorneys about the “unauthorized flight,” prosecutors said.
Defense attorneys said Holmes had booked the plane ticket before the jury’s guilty verdict to attend a wedding in Mexico. “Given the verdict, she does not plan to take the trip and therefore did not provide notice, seek permission, or request access to her passport (which the government has) for the trip,” wrote Lance Wade, one of Holmes’ attorneys.
Balwani never showed up to prison Thursday
Balwani, 57, was convicted by a jury on 12 counts of fraud and conspiracy for his role in the Theranos blood testing scandal. U.S. Attorney Stephanie Hinds said, “Balwani, in a desire to become a Silicon Valley titan, valued business success and personal wealth far more than patient safety.”
Judge Davila ordered Holmes’ business partner to begin serving his sentence on Thursday. But as of Thursday night, the federal inmate locator confirmed that he remained out of custody on bail.
His attorneys filed a last-minute, Hail-Mary appeal just hours before Balwani’s prison deadline. The appeal triggered a clause that allows him to remain free until the Ninth Circuit Court of Appeal makes a ruling.
It’s unclear how much longer Balwani will remain free. Court documents show he is slated to serve his sentence in Terminal Island, a federal prison in San Pedro, California.
What does the judge think of Holmes?
U.S. District Judge Edward Davila listened to three months of testimony from 29 witnesses for Holmes’ high-profile criminal trial. Star witnesses included many ex-Theranos employees who testified against their famous ex-boss. A jury found her guilty on four counts of fraud and conspiracy.
Judge Davila finally revealed his opinions about the case during Holmes’ sentencing in November of 2022. Davila sentenced Holmes to serve 135 months in prison.
Judge Davila said at the sentencing hearing, “This case is so troubling on so many, so many levels. People gravitated towards her idea. What was it that caused Ms. Holmes, regrettably, to make those decisions that she did? Was there a loss of a moral compass here? The tragedy of this case is that Ms. Holmes is brilliant. She had creative ideas. She is a big thinker. She was a woman moving into an industry that was dominated by, and let’s face it, male ego. She got into that world.”
Davila continued, “There was significant evidence about manipulation and untruths that were being used in the negotiation of the business. And what is it that caused that? Was it intoxication with the fame that comes with being a young entrepreneur?”
Davila said, “Investors, sophisticated investors, (say) it’s all right to invest and lose money, that’s the expectation. But … they should take those risks free from lies and misrepresentation. That’s the foundation of innovation and investment, honesty in the market. The texts between Ms. Holmes and Mr. Balwani supported the jury’s finding of the conspiracy.”
Davila said, “This is a fraud case where an exciting venture went forward with great expectations and hope only to be dashed by untruth, misrepresentations, hubris, and plain lies. I suppose we step back and we look at this, and we think what is the pathology of fraud? Is it the inability or the refusal to accept responsibility or express contrition in any way? Now, perhaps that is the cautionary tale that will go forward from this case.”
The Associated Press contributed to this report.