Theranos CEO Elizabeth Holmes ,Theranos CEO Elizabeth Holmes begins 11-year prison sentence
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Raushan Kumar
June 01, 2023
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Theranos CEO Elizabeth Holmes begins 11-year prison sentence
By Bernd Debusmann Jr & James Clayton
Disgraced Theranos founder Elizabeth Holmes has reported to the federal prison where she will serve an 11-year sentence.
Holmes, 39, was convicted early last year on four counts of fraud linked to her failed blood testing start-up.
In mid-May, a court rejected her request to remain free on bail while a challenge to the original conviction was considered.
She will serve her term in a minimum-security prison in Texas.
Holmes reported to the federal facility in Bryan, Texas, which holds between 500 and 700 inmates at any given time, on Tuesday.
It is about 100 miles (160km) north of Houston, her hometown. Her arrival at the facility was confirmed by the Federal Bureau of Prisons, which declined to give any more details about her confinement, citing privacy concerns.
There, the woman once billed as the world's youngest self-made billionaire might work alongside other inmates for between 12 cents (10p) and $1.15 (93p) an hour - much of which will go towards her court-mandated restitution payments.
Earlier this month a US judge ordered Holmes and her former romantic and business partner, ex-Theranos boss Ramesh "Sunny" Balwani, to pay $452m to victims.
Balwani is already serving a 13-year prison sentence in California for his role in the scheme.
IMAGE SOURCE,REUTERS
Together, the pair are accused of duping some of the world's richest and most prominent investors - including media tycoon Rupert Murdoch and former US Treasury Secretary George Shultz - into backing Theranos.
The firm, once valued at $9bn, promised it had technology that could detect conditions such as diabetes with just a few drops of blood. The tech, however, never worked. The company finally collapsed in 2018.
Holmes has gone to jail. Will she pay victims too?
Inside the routine at Elizabeth Holmes' prison
The Texas prison camp where Holmes will serve time is a sprawling 37-acre facility. Most inmates there have been convicted of non-violent crimes, low-level drug dealing or white-collar offences.
According to the facility's handbook, life largely revolves around work and extracurricular activities that include foreign language, computer literacy or business courses.
Holmes had fought to stay out of prison while her legal appeal works its way through the courts. She argued a delay would allow her to raise "substantial questions" about the case that could warrant a new trial.
Her defence team also argued that she should remain free to care for her children, one who is nearly two and the other three months old.
The Wall Street Journal reported the prison has facilities where inmates can host gatherings and where children can play.
Holmes and other mothers are allowed to hold their children in their lap and breastfeed their infants, according to official Bureau of Prison guidelines.
The image of Holmes walking into a federal prison on Tuesday stands as a dire warning to other bosses in Silicon Valley, where observers have long warned of a "fake it until you make it" culture.
Still, it is rare to see tech bosses go to prison on fraud charges.
The US government hopes that Holmes's plight will deter executives from making outlandish claims about what their technology can do while hunting for financial backing.
Eileen Lepera, who lost part of her savings investing in Theranos, told the BBC this week that she is "glad she [Ms Holmes] got 11 years".
"Her hubris is beyond belief," she added. "I don't believe she's still taking any responsibility for what has happened."
In tearful remarks ahead of her sentencing in November, Holmes said she regrets her failings at Theranos "with every cell in my body" but did not admit any criminal wrongdoing.
Theranos founder Elizabeth Holmes arrives at the Federal Prison Camp in Bryan, Texas, U.S. on May 30, 2023 to begin serving her prison sentence for defrauding investors in the failed blood-testing start-up. |
Disgraced Theranos CEO Elizabeth Holmes is in custody at the Texas prison where she will spend the next 11 years serving her sentence for overseeing an infamous blood-testing hoax, according to the Federal Bureau of Prisons.
Holmes, 39, on May 30 entered a federal women’s prison camp located in Bryan, Texas — where the federal judge who sentenced Holmes in November recommended she be incarcerated. The minimum-security facility is about 150 km northwest of Houston, where Holmes grew up aspiring to become a technology visionary along the lines of Apple co-founder Steve Jobs.
As she begins her sentence, Holmes is leaving behind two young children — a son born in July 2021 a few weeks before the start of her trial and a 3-month old daughter who was conceived after a jury convicted her on four felony counts of fraud and conspiracy in January 2022
Ms. Holmes founded Theranos in 2003 at the age of 19.
Fallen US biotech star, Elizabeth Holmes is set to report to prison today to begin her 11-year sentence for defrauding investors with her Silicon Valley startup firm Theranos. According toBBC, the entrepreneur was sentenced to over 11 years in prison and also ordered to pay $452m with her former business partner Ramesh Sunny Balwani to dozens of high-profile investors they defrauded.
39-year-old Holmes, the mother of two, is expected to report to the prison camp in Bryan, Texas, an all-female facility about 100 miles outside of Houston, today.
Her ex-boyfriend and former Theranos COO Ramesh Sunny Balwani was also convicted of fraud and reported to prison in California last month to begin serving out his sentence, as per CNN.
Experts told BBC, that she will not be able to just declare bankruptcy and shed her debts that way. Prosecutors have probably already begun to seize her assets, including money in the bank and properties.
The Theranos founder was convicted on four counts in January 2022 for persuading investors over 15 years that she had developed a revolutionary medical device before the company flamed out after an investigation by The Wall Street Journal.
Notably, the company attracted investments from high-profile moguls, including Rupert Murdoch, the Walton family, and former Education Secretary Betsy DeVos. She was even hailed as the next tech visionary on magazine covers and collected mountains of investors' cash, but it all collapsed after Wall Street Journal reporting revealed the machines did not work as promised.
Prosecutors said she lied to investors from 2010 to 2015 by promising Theranos Inc's technology could run many tests on one drop of blood from a finger prick. Theranos ultimately dissolved in September 2018. She has been asked to pay Rupert Murdoch the entire $125m he invested in her failed start-up.
Ms. Holmes had pleaded not guilty to charges that she lied about Theranos and said the firm's lab directors were in charge of test quality. Before her sentencing was announced in November 2022, she apologised to the employees, investors, and patients of Theranos.
''I loved Theranos. It was my life's work. The people I tried to get involved with Theranos were the people I loved and respected the most. I am devastated by my failings. I'm so, so sorry. I gave everything I had to build our company and to save our company. I regret my failings with every cell in my body.''
Ms. Holmes founded Theranos in 2003 at the age of 19. The company was once valued at $9 billion, and Forbes magazine estimated her net worth at $4.5 billion in 2015.
In Short
Elizabeth Holmes begins her decade-long prison sentence today.
Theranos' downfall is a cautionary tale about the dangers of startup culture.
Theranos was a biotech startup that claimed to have developed a revolutionary blood testing technology.
By Sneha Saha: Elizabeth Holmes, who was once hailed as the next Steve Jobs, begins her decade-long prison sentence today. The infamous story of Holmes and her health startup Theranos is known to the world, especially in Silicon Valley. Theranos' downfall is surely a cautionary tale about the dangers of startup culture and the importance of due diligence.
Well, the world knows how Holmes’ biotech startup, which was valued at $10 billion at its peak, was found guilty on four counts of defrauding investors in earlier 2022. After years of delay in starting the prison sentence, Holmes’ 11 years and 3 months begin today.
Elizabeth Holmes, the fraudster behind failed biotech startup Theranos, has entered a Texas prison where she could spend the next 11 years.
"We can confirm Elizabeth Holmes has arrived at the Federal Prison Camp Bryan... and is in the custody of the Federal Bureau of Prisons," officials said in a statement.
Elizabeth Holmes, the fraudster behind failed biotech startup Theranos, has entered a Texas prison where she could spend the next 11 years.
"We can confirm Elizabeth Holmes has arrived at the Federal Prison Camp Bryan... and is in the custody of the Federal Bureau of Prisons," officials said in a statement
Holmes leaves behind two children in the outside world: a son who was born a few weeks before her trial started in 2021, and a 3-month-old daughter who was conceived after a jury convicted her on four felony counts of fraud and conspiracy in January 2022.
Where is Elizabeth Holmes being held?
FPC Bryan is a minimum security prison outside Houston, where Holmes grew up.
According to The Wall Street Journal, most inmates at the facility were convicted of white-collar crimes, low-level drug offenses, or harboring illegal immigrants.
By 2014, Holmes' fortune was valued at $4.5 billion (€4.2 billion).
But the company collapsed after a 2015 Wall Street Journal investigation found that the technology did not exist and that patients may have received inaccurate results.
In 2018, the US Justice Department then charged Holmes and Balwani with a litany of white-collar crimes.
Holmes admitted making mistakes at Theranos, but denied committing any crimes and said she was being controlled by Balwani, who she accused of sexually and emotionally abusing her.
Balwani was convicted on 12 felony counts of fraud and conspiracy in a trial that began two months after Holmes' ended. He is currently serving a nearly 13-year sentence in a Southern California prison.
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