A San Jose federal district court judge has considered Theranos founder Elizabeth Holmes’ request to stay out of federal prison. The judge is also considering prosecutors’ request for Holmes to pay back $900 million to Theranos investors.
Holmes, founder of the failed Silicon Valley blood-testing start-up, appeared in court Friday for arguments following trial against a court order ordering her to surrender to incarceration on April 27.
In November, U.S. Federal District Court Judge Edward Davila sentenced Holmes to 11 years and three months in prison for multiple fraud convictions handed down by a jury in January 2022. The incarceration date kept Holmes out of custody for the delivery of her second child.
According to reports from multiple news organizations, Judge Davila said he would rule on the arguments in April.
According to Law360Holmes attorney Amy Saharia told the judge that Holmes should remain free while her case plays out on appeal, especially given that the court previously ruled that Holmes did not pose a flight risk.
State attorneys have reportedly refuted the allegation, saying a one-way plane ticket for Holmes to fly to Mexico, purchased while her trial was pending, shows she may have wanted to evade responsibility for any convictions.
The judge heard other disputes between the parties during Friday’s hearing, including the government’s request for Holmes to repay $878 million to the investors prosecutors say were victims of Holmes’s fraud. The nearly $900 million represents the full extent of the investments made over the course of Theranos’ existence.
Holmes started the company in 2003 at the age of 19, shortly after leaving Stanford University. The company shut down in 2016 under pressure from regulatory authorities and after a Wall Street Journal revelation showed that Theranos’ touted “fingerstick” blood tests failed to produce hundreds of tests as promoted. Investments in Theranos, combined with its valuation, made Holmes the wealthiest self-made female billionaire at one time.
According to Law360U.S. Assistant Attorney Robert Leach argued that every dollar invested in Theranos should be paid back to the investors.
“Just apply common sense. The money people have lost is the money they put in,” argued Leach, Dorthothy Atkins of Law360 wrote in a tweet. Holmes’ attorney, Patrick Looby, instead said that investments in charges for which Holmes was acquitted should not be included in a calculation for restitution.
Attorneys for Holmes have indicated they plan to appeal the district court’s decision to the 9th Circuit Court of Appeals. That court ultimately has jurisdiction to decide whether Holmes should follow Davila’s order and report to jail, or remain free if it considers the merits of her appeal.
Davila had previously ordered Holmes to submit to confinement on April 27. In assigning the date, Davila took into account that Holmes was pregnant at the time. She has now given birth to her second child.
In court documents ahead of Friday’s hearing, Holmes’ attorneys pleaded for her continued freedom, saying she posed no flight risk, posed no risk to public safety, and filed her appeal, not to delay incarceration, but to several substantive questions about whether or not Davila’s decisions leading up to and during her trial were wrong.
Holmes filed 19 motions to trial regarding the admissibility of certain evidence in her case and also requested a retrial following the jury’s verdict, which Daviia denied.
“Basically, the file is rife with appeals issues,” Holmes’ lawyers said in the document, noting that if the 9th Circuit Court of Appeals agrees with any of Holmes’ appeal arguments, a new trial would be called for. must be kept.
Holmes’ continued freedom, her lawyers said, would allow her to continue communicating more effectively with her lawyers in preparation for her appeal, they said.
In January 2022, Holmes was convicted of three counts of criminal wire fraud and one count of conspiracy to commit wire fraud. Her jury unanimously found her guilty of illegally driving investors out of millions of dollars through her Silicon Valley blood testing startup.
In July 2022, a separate Silicon Valley jury closed another chapter in the decades-long Theranos story, convicting former president and chief operating officer, Ramesh “Sunny” Balwani, of criminal fraud. Balwani was also Holmes’ romantic partner during the time the two ran the biotech startup.
Alexis Keenan is a legal reporter for Yahoo Finance. Follow Alexis on Twitter @alexiskweed.
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