SAN FRANCISCO — It looks like Elizabeth Holmes, CEO of disgraced Theranos, will soon go to jail after an appeals court Tuesday denied her bid to remain at large while trying to overturn her conviction in the blood-testing hoax that brought her fleeting fame and fortune.
In another ruling issued late Tuesday, US District Judge Edward Davila ordered Holmes to pay $452 million in restitution to the victims of her crimes. Holmes is jointly responsible for the sum along with her ex-lover and Theranos senior lieutenant Ramesh “Sunny” Balwani, who is already in jail after being convicted of a wider range of felonies in a separate trial.
The Ninth Circuit Court of Appeals’ decision on Holmes’ attempt to avoid jail time comes nearly three weeks after she made a last-minute legal maneuver to delay the start of her 11-year sentence. Davila was previously ordered to turn herself in to authorities on April 27, and sentenced in November.
Davila will now make a new appointment for Holmes, 39, to leave her current home in the San Diego area and report to the jail.
The punishment will separate Holmes from her current partner, William “Billy” Evans, their 1-year-old son William, and their 3-month-old daughter, Invicta. Holmes’ pregnancy with Invicta – Latin for “indomitable” or “undefeated” – began after a jury found her guilty of four counts of fraud and conspiracy in January 2022.
Davila recommended that Holmes serve her sentence in a women’s prison in Bryan, Texas. It was not revealed if the Federal Bureau of Prisons accepted Davila’s recommendation or assigned Holmes to another facility.
Al-Balwani, 57, began a nearly 13-year prison sentence in April after being convicted of 12 counts of fraud and conspiracy last July. He was incarcerated in a Southern California jail last month after losing a similar effort to stay free on bail while appealing his conviction.
The ruling against Holmes came after 46 days of trial testimony and other evidence that highlighted the culture of greed and arrogance that has plagued Silicon Valley as technology has become a more pervasive impact on society and the economy over the past 20 years.
The most dramatic moments of the trial unfold when Holmes takes the witness stand to testify in her own defence.
Besides telling how she founded Theranos as a teenager after dropping out of Stanford University in 2003, Holmes has accused Balwani of emotionally and sexually abusing her. She also asserted that she never stopped believing Theranos would revolutionize healthcare with technology that she promised would be able to scan for hundreds of diseases and other potential problems with just a few drops of blood.
While pursuing this bold ambition, Holmes has amassed nearly $1 billion from a list of wealthy investors including Oracle co-founder Larry Ellison and media mogul Rupert Murdoch. These savvy investors lost their money after a Wall Street Journal investigation and regulatory reviews exposed serious flaws in Theranos technology.
In the restitution ruling, Davila decided that Holmes and Balwani would pay Murdoch $125 million – by far the largest amount among the investors included in his order. The compensation also requires the co-conspirators in the Theranos scam to pay $40 million in Walgreens, which became an investor in the startup after agreeing to provide some faulty blood tests at its pharmacies in 2013. Another $14.5 million is owed to Safeway, which also agreed to Become a business partner of Theranos before retracting.
In separate hearings, attorneys for Holmes and Balwani tried to convince Davila that their clients should be required to pay little, if any. Prosecutors have been pressing for a compensatory penalty in the region of $800 million. Both Holmes — whose stake in Theranos was estimated to be worth $4.5 billion — and Balwani — whose estate was worth about $500 million — have both indicated they were on the verge of bankruptcy after paying millions of dollars in legal bills while declaring their innocence.
Holmes’ lawyers had been fighting to convict her on the basis of alleged errors and misconduct that occurred during her trial. They’ve also claimed that the jury’s biased errors and abuses were so egregious that they should be allowed to remain out of jail while the appeals resume—a request that has now been denied by both Davila and the Ninth Circuit Court of Appeals.
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