SAN JOSE, Calif. — As Elizabeth Holmes prepares to report to jail next week, the criminal case that laid bare the blood test scam at the heart of her startup Theranos is entering its final stages.
The 11-year sentence represents rewards for the wide-eyed woman who broke through ‘tech bro’ culture to become one of Silicon Valley’s most famous entrepreneurs, only to be exposed as a fraud. Along the way, Holmes has become a symbol of the brazen hyperbole that often saturates startup culture.
But questions still linger about his true intentions — so many that even the federal judge who presided over his trial seemed puzzled. And Holmes’ defenders continue to question whether the punishment fits the crime.
At 39, she will likely be remembered as Silicon Valley’s Icarus – a high-flying entrepreneur burning with reckless ambition whose odyssey has resulted in convictions for fraud and conspiracy.
Her motives are still somewhat of a mystery, and some supporters say federal prosecutors have unfairly targeted her in their zeal to bring down one of the most prominent practitioners of the fake-it-you-make-it brand. self-promotion of the technology sector that sometimes veers into exaggeration and blatant lies to raise funds.
Holmes will begin paying the price for her deception on May 30, when she is due to begin sentencing that will separate her from her two children – a son whose July 2021 birth delayed the start of his trial and a 3-month-old daughter. designed after his conviction.
She is expected to be incarcerated in Bryan, Texas, about 100 miles northwest of her hometown of Houston. The jail was recommended by the judge who sentenced Holmes, but authorities have not publicly disclosed where she will be held.
Her many critics argue she deserves to be in jail for peddling technology she has repeatedly bragged about quickly testing for hundreds of diseases and other health conditions with a few drops of blood taken with a prick. on your finger.
The technology never worked as promised. Instead, Theranos tests produced wildly unreliable results that could have been life-threatening to patients — one of the most frequently cited reasons why she was worth suing.
Before these lies were uncovered in a series of explosive Wall Street Journal articles beginning in October 2015, Holmes raised nearly $1 billion from a list of savvy investors, including the co-founder of Oracle Larry Ellison and media mogul Rupert Murdoch. It was the deception of these investors that led to his prison sentence and a restitution bill of $452 million.
Holmes’ stake in Theranos at one point catapulted his paper wealth to $4.5 billion. She never sold any of her shares in the company, although trial evidence leaves no doubt that she reveled in the trappings of fame and fortune – so much so that she and the father of her children, William “Billy” Evans, lived in a lavish Silicon Estate in the Valley during the trial.
The theory that Holmes was running an elaborate scam was supported by trial evidence documenting his efforts to prevent the Journal’s investigation from being published. This campaign compelled John Carreyrou – the reporter responsible for these explosive stories – to appear in court and position himself in Holmes’ line of sight when she took the witness stand.
Holmes also endorsed surveillance aimed at intimidating Theranos employees who helped uncover flaws in blood testing technology. Among the whistleblowers was Tyler Shultz, the grandson of former Secretary of State George Shultz, whom Holmes befriended and persuaded to join Theranos’ board.
Tyler Shultz became so enraged by Holmes’ efforts to silence him that he started sleeping with a knife under his pillow, according to a heartbreaking statement made by his father, Alex, during his sentencing.
Holmes supporters still argue that she always had good intentions and was unfairly scapegoated by the Justice Department. They insist she simply deployed the same over-the-top promotional tactics as many other tech executives, including Elon Musk, who has repeatedly made misleading claims about the capabilities of Tesla’s self-driving cars.
According to these supporters, Holmes was singled out because she was a woman who briefly eclipsed the men who usually bask in the Silicon Valley spotlight, and the lawsuit turned her into a modern version of Hester Prynne – the protagonist. from the 1850 novel “The Scarlet Letter.”
Holmes steadfastly maintained his innocence for seven often gripping days of testifying in his own defense – a spectacle that had people lining up shortly after midnight for one of the few dozen available seats in the courtroom of San José.
On one memorable day, Holmes shared how she never got over the trauma of being raped while enrolled at Stanford University. She went on to describe being subjected to a long-standing pattern of emotional and sexual abuse by her former lover and Theranos conspirator, Ramesh “Sunny” Balwani, and suggested that his suffocating control was clouding her thinking.
Balwani’s attorney, Jeffrey Coopersmith, denied the allegations at trial. At Balwani’s subsequent trial, Coopersmith unsuccessfully attempted to portray his client as Holmes’ pawn.
Balwani, 57, is currently serving a nearly 13-year prison sentence for fraud and conspiracy.
When it came time to sentence the then-pregnant Holmes in November, U.S. District Judge Edward Davila seemed as perplexed as anyone as to why she did what she did.
“This is a case of fraud where an exciting undertaking unfolded with high expectations and hope, only to be undone by lies, misrepresentations, hubris and outright lies” , Davila lamented as Holmes stood before him. “I guess we step back and look at this, and we think what is the pathology of cheating?”
The judge also recalled the days when Silicon Valley consisted mostly of orchards cultivated by immigrants. That was before the ground gave way to the tech boom beginning in 1939, when William Hewlett and David Packard founded a company bearing their family name in a one-car garage in Palo Alto, the same town where Theranos was based. .
“You will remember the wonderful innovation of those two people in that little garage,” Davila reminded everyone in the elated courtroom. “No exotic automobiles or lavish lifestyles, just a desire to create for the benefit of society through honest, hard work. And that, I hope, would be the continuing story, legacy and Silicon Valley practice.