For Theranos founder Elizabeth Holmes, it is judgment day

SAN JOSE, California – Former Silicon Valley star Elizabeth Holmes heads here Friday to a federal courthouse to plead for leniency during her sentencing hearing. Prosecutors are expected to argue that the one-time leader of blood-testing startup Theranos deserves 15 years in prison.

Judgment day for Holmes follows a jury convicting her on three counts of wire fraud and one count of conspiracy for defrauding investors of hundreds of millions of dollars with false and misleading allegations, breaking her supposedly groundbreaking technology with just a few drops blood could cause .

The hearing is likely the final chapter in the long-running Theranos saga. The story of Holmes, an eccentric technology leader who once drew comparisons to Steve Jobs and garnered media attention, is one of the most dramatic downfalls of a corporate leader in recent history.

Federal prosecutors described Holmes’ crimes in court filings ahead of the hearing as “one of the most serious white-collar crimes Silicon Valley or any county has seen,” but Holmes’ defense attorneys counter that she has shown remorse and that she has been punished for nothing other than a startup error.

Defense attorneys are calling for Holmes to stay out of jail and instead serve time in house arrest. But Holmes’ legal team also said in court filings that if detention is deemed necessary, she should not serve more than 18 months. That is in stark contrast to the 15 years prosecutors are pushing for, just short of the 20-year maximum sentence under federal guidelines.

The decision rests solely with US District Judge Ed Davila, who presided over the trial of Holmes and the separate trial of Ramesh “Sunny” Balwani, Theranos CEO #2, who was also convicted of fraud and is due to be sentenced next month.

Back in January, the jury returned a split verdict in Holmes’ case, acquitting her of fraud involving harmed Theranos patients. They convicted her on charges related to duped investors.

However, prosecutors have argued that the patients who received false blood test results due to the company’s flawed technology constitute facts that should be considered “relevant behavior for sentencing purposes,” meaning the patients will still be considered in Davila’s sentencing could.

Letters from her partner, a tech investor and a senator, beg for clemency

Holmes’ legal team submitted 130 letters to the judge from friends, family and other supporters, including New Jersey Senator Cory Booker, who is a longtime friend of Holmes. In his letter, Booker wrote, “Each of us is more than the worst we’ve done,” citing Bryan Stevenson, the attorney and advocate for criminal justice reform.

Billy Evans, Holmes’ partner, wrote to the judge asking for clemency and describing the impact the case had on her family. The filing includes photos of the couple with their 1-year-old son and their dog, Balto, who the family says was killed by mountain lions. Evans wrote that Holmes has already paid handsomely to be part of Theranos.

Photos of Elizabeth Holmes and her partner Billy Evans attached as part of a public court submission to Judge Ed Davila, who will preside over Friday's hearing at Holmes' hearing.

/ United States District Court for the Northern District of California


United States District Court for the Northern District of California

Photos of Elizabeth Holmes and her partner Billy Evans attached as part of a public court submission to Judge Ed Davila, who will preside over Friday’s hearing at Holmes’ hearing.

“If you know Liz, you must know that she is honest, humble, selfless and kind beyond what most people have ever experienced,” Evans wrote. “Please let her be free.”

Holmes, who is 38, was visibly pregnant with their second child when she last appeared in court. If Davila faces jail time, her pregnancy could affect the start of her delivery.

Her attorneys also point out that she volunteered as a counselor for victims of sexual assault. Holmes is a sexual assault survivor herself, which she spoke about while standing in court in her own defense.

Holmes’ defense team has argued that the media scrutiny and trials surrounding the Theranos collapse are punishing enough, a point their attorneys are hammering into the judge, citing a letter to the court from tech investor David Sokol.

“She poses no threat to anyone. She openly admits her business mistakes and despite the opportunity to do so has not benefited materially from them in any way,” Sokol wrote. “Her suffering, including extreme public shame, financial bankruptcy and the terrifying prospect of imprisonment as the mother of a new baby, among other things, provides more than enough deterrence for others.”

In their memorandum to the judge, prosecutors point out that in fraud cases, the amount of money lost outweighs any other factor when it comes to a conviction under federal guidelines.

Theranos raised nearly $1 billion from the likes of media mogul Rupert Murdoch and Oracle CEO Larry Ellison prior to the company’s collapse. The amount of Holmes’ fraud is not even fully captured in the highest damage amount in the guidelines, which totals more than $550 million. In other words, the sheer dollar amount cheated in the case leaves prosecutors with no choice but to send Holmes behind bars for more than a decade.

Prosecutors cite another reason they’re pushing to have Holmes jailed: to send a signal to Silicon Valley.

“A significant prison sentence will not only serve to deter future startup scams,” prosecutors wrote. “But it will also serve to restore investor confidence, which they need when funding innovation.”

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