Judge to rule in April on Elizabeth Holmes’ freedom request
A San Jose federal district court judge has taken under consideration Theranos founder Elizabeth Holmes’ bid to remain out of federal prison. The judge is also mulling prosecutors’ request for Holmes to repay $900 million to Theranos investors.
Holmes, founder of the failed Silicon Valley blood-testing startup, appeared in court on Friday for post-trial arguments against a court order directing 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 afforded Holmes to remain out of custody for the delivery of her second child.
According to reports from multiple news organizations, Judge Davila said he’d rule on the arguments in April.
According to Law360, Holmes attorney Amy Saharia told the judge that Holmes should be permitted to remain free while her case plays out on appeal, especially considering that the court previously found that Holmes presented no flight risk.
Government lawyers reportedly countered the contention, saying that a one-way plane ticket for Holmes to fly to Mexico, purchased during the pendency of her trial, shows she may have wanted to evade accountability for any convictions.
The judge heard other disputes between the parties during Friday’s hearing, including the government’s request for Holmes to pay $878 million in restitution to the investors that prosecutors say were victims of Holmes’ fraud. The nearly $900 million represents the full extent of investments made over the course of Theranos' existence.
Holmes started the company in 2003 at 19 years old, shortly after dropping out of Stanford University. The company shuttered in 2016 amid regulatory pressure and after a Wall Street Journal expose showing that Theranos’ touted ‘finger stick’ blood tests couldn’t produce hundreds of tests as promoted. Investments in Theranos, combined with its valuation, once made Holmes the wealthiest self-made female billionaire.
According to Law360, U.S. Assistant Attorney Robert Leach argued that every dollar invested in Theranos should be repaid to its investors.
“Just apply common sense. The money people lost is the money they put in,” Leach argued, Law360’s Dorothy Atkins wrote in a tweet. Holmes’ lawyer Patrick Looby instead said that investments on charges for which Holmes was acquitted should not be figured into a calculation for restitution.
Attorneys for Holmes have indicated they intend to appeal Holmes' case to the 9th Circuit Court of Appeals. That court is ultimately empowered to decide if Holmes must follow Davila’s order and report to prison, or may remain free as it considers the merits of her appeal.
Davila previously ordered Holmes to submit to incarceration on April 27. In granting the date, Davila took into account that Holmes was pregnant at the time. She has since given birth to her second child.
In court documents prior to Friday’s hearing, Holmes’ lawyers argued for her continued freedom, saying that she didn’t present a flight risk, posed no risk to public safety, and filed her appeal, not to delay incarceration, but to present several substantial questions about whether or not Davila’s decisions leading up to and during her trial were made in error.
Holmes filed 19 pretrial motions concerning the admissibility of certain evidence in her case and also requested a new trial following the jury’s verdict, which Daviia denied.
“In sum, the record is teeming with issues for appeal,” Holmes' lawyers said in the document, noting that if the 9th Circuit Court of Appeals agrees with any of Holmes' appellate arguments, a new trial would need to be held.
Holmes’ continued freedom, her lawyers said, would permit her to continue to communicate more effectively with her attorneys in preparation for her appeal, they said.
In January 2022, Holmes was convicted on three counts of criminal wire fraud and one count of conspiracy to commit wire fraud. Her jury unanimously found her guilty of illegally fleecing 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 its 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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