« Alabama unable to complete execution becuase of lethal injection difficulties | Main | Federal judge imposes (within guideline) sentence of 135 months on Theranos founder Elizabeth Holmes »

November 18, 2022

Any final thoughts on today's federal sentencing of Elizabeth Holmes?

As I write this post, the federal sentencing of the Theranos founder Elizabeth Holmes is scheduled to begin after she was found guilty of four of 11 charges of fraud at a jury trial this past January. I have to go teach my 1L Crim law class in a few minutes, so I might be slow to report the outcome if the sentencing is quick.  But I can here seek any pre- (or post-)sentencing final thoughts, aided by this New York Times lengthy preview piece (which, as I note below, has some technical errors).  Here are excerpts:

Senator Cory Booker, Democrat of New Jersey, recently praised Elizabeth Holmes’s thoughtful focus and “determination to make a difference.”  The actress Ricki Noel Lander said Ms. Holmes was “a trustworthy friend and a genuinely lovely person.”  And Channing Robertson, who was a professor of chemical engineering at Stanford University, commended Ms. Holmes for her “compassion for others.”

Their comments were part of a cache of more than 100 letters that were filed over the last week to a federal judge in San Jose, Calif., in an effort to reduce the punishment for Ms. Holmes, the founder of the failed blood testing start-up Theranos. In January, she was convicted of four counts of defrauding investors about Theranos’s technology and business dealings. She is scheduled to be sentenced for those crimes on Friday.

Ms. Holmes, 38, faces a maximum of 20 years in prison, according to federal sentencing guidelines for wire fraud. Her lawyers have requested 18 months of house arrest, while prosecutors have asked for 15 years of imprisonment.  The probation officer in Ms. Holmes’s case has recommended a sentence of nine years.

The decision lies with Judge Edward J. Davila of U.S. District Court for the Northern District of California, who oversaw Ms. Holmes’s trial last year. In addition to the letters from her supporters asking for leniency, he is set to take into account lengthy memos filed by her lawyers and prosecutors, and will consider whether Ms. Holmes has accepted responsibility for her actions.

Most notably, Judge Davila must weigh the message that Ms. Holmes’s sentence sends to the world. Her high-profile case came to symbolize the excesses and hubris of Silicon Valley companies that often play fast and loose with the law. Theranos raised $945 million from investors, valuing the company at $9 billion, on the claim that its technology could accurately run many tests on a single drop of blood. But the technology never worked as promised.

Few tech executives are ever found guilty of fraud. So a lighter sentence for Ms. Holmes could send the wrong signal to the industry, legal experts said. “This is a case with more deterrence potential than most,” said Andrew George, a white-collar defense lawyer at Baker Botts. “Judge Davila will be sensitive to any impression that this person of privilege got a slap on the wrist.”...

Since Ms. Holmes was convicted, other high profile start-up founders have also come under scrutiny, prompting further debates over start-up ethics. Trevor Milton, the founder of the electric vehicle start-up Nikola, was convicted last month on charges of lying about his company’s technology. Sam Bankman-Fried, the founder of the cryptocurrency exchange FTX, is under numerous investigations after his company suddenly collapsed into bankruptcy last week....

Prosecutors said in court filings that significant prison time for her would send a message to other entrepreneurs who stretched the truth. A long sentence would not only “deter future start-up fraud schemes” but also “rebuild the trust investors must have when funding innovators,” they wrote.

I am pretty sure that each of Holmes' four fraud convictions carry a 20-year maximum sentence, so technically she faces a maximum of 80 years in prison.  In addition, I believe "according to federal sentencing guidelines" calculations put forward by the prosecution, the guidelines actually call for a life sentence (which is not formally possible, though the 80-year max would be essentially a functional life sentence).  That all said, I am sticking to my 10-year sentence as the betting line over/under, though I am thinking I might be inclined to take the over.

Prior related posts:

November 18, 2022 at 01:24 PM | Permalink


Friday 1L class? Harsh.

Posted by: Chris Miller | Nov 18, 2022 1:28:51 PM

Makes sure I make it worth coming to.... :-)

Posted by: Doug B. | Nov 18, 2022 2:46:04 PM

I couple things stick out - just from your article above -

Senator Cory Booker, Democrat of New Jersey, recently praised Elizabeth Holmes’s thoughtful focus and “determination to make a difference.” - holy crap - isn't everyone doing this - but in her case the sheer determination was based upon lies, untruths, and flat out fraud. Next.

Prosecutors said in court filings that significant prison time for her would send a message to other entrepreneurs who stretched the truth. Stretch the truth - come on - when I ask my kids what they got on their math test and they say 95 when in fact it was 75 - that's stretching the truth - lying to investors and orchestrating a multi-million dollar fraud over a period of years - that's not stretching the truth...

I don't know how much her current pregnancy will come into sentencing either - I've had defendant's who the court has delayed self-surrender so they can have the child before prison, and other Judges who have done the opposite. We'll see...

Posted by: atomicfrog | Nov 18, 2022 3:11:13 PM

pregnancy gets 2 year discount--attractive gets 2 more year discount.

bottom line: 8 years. And, to paraphrase the immortal words of Humphrey Bogart, "Of course I love you but you're taking the fall, and I'll be waiting for you when you get out"

Posted by: machoman throwback | Nov 18, 2022 5:00:44 PM

Ms. Holmes got a slap on the wrist for what she did and didn't do. She'll have better luck repelling gravity than overturning her jury verdict...

Posted by: Dave Allen | Nov 18, 2022 7:55:31 PM

Post a comment

In the body of your email, please indicate if you are a professor, student, prosecutor, defense attorney, etc. so I can gain a sense of who is reading my blog. Thank you, DAB