In a climactic end to a stunning fall from grace for the one-time golden child of Silicon Valley, Elizabeth Holmes has been sentenced to 11.25 years for cheating investors of her blood-testing start-up Theranos.
But for her many advocates and detractors, Friday’s sentence is unlikely to end the debate around whether Holmes was a well-intentioned humanitarian who got in over her head, or a charlatan in a turtleneck sweater who chose “deceit over candour”.
The Department of Justice left no doubt about the 38-year-old’s criminal intent. In a scathing 46-page sentencing memo, assistant US attorney Robert Leach described Theranos’ implosion as one of the most “substantial white collar offences Silicon Valley or any other district has seen”.
Leach wrote that the Theranos founder “preyed on hopes of her investors that a young, dynamic entrepreneur had changed healthcare”.
She “leveraged the credibility of her illustrious board”, Mr Leach said, to attain “spectacular fame, adoration, and billions of dollars of wealth.”
Meanwhile, Holmes’ legal team tried to portray her as a devoted mother, daughter and friend who tried to help countless others through her generosity and faith.
In more than 140 character references submitted to Judge Davila from her family, friends, a US Senator, a former US ambassador to Australia, a retired Navy rear admiral, a professor of medicine, a police sergeant and government officials, Holmes came across as an almost saintly figure who had dedicated her life to the service of others.
Many pointed the finger at the “malignant eye of the media” for unfairly demonising her.
“Now we have a horrifying situation,” billionaire venture capitalist Tim Draper wrote.
“A potentially great entrepreneur with extraordinary vision is being condemned by society for taking that enormous risk, sacrificing everything and failing, by not properly communicating her side of the story to the public.”
Other true believers insisted her patented blood testing technology could still be used to transform healthcare, as Holmes had envisaged.
In January, Holmes was found guilty on four counts of wire fraud and conspiracy for misleading investors in her former blood-testing startup company after a four-month trial in San Jose, California.
She was acquitted on four counts of fraud and conspiracy related to endangering Theranos patients, while jurors were unable to reach a unanimous verdict on three other counts.
Prosecutors have insisted that she had shown no remorse and that through her “reality distortion field” she remained a threat to others.
She and her family and have cast former Theranos COO and her ex-boyfriend Ramesh “Sunny” Balwani, who was convicted of fraud in a separate trial in July, as the true villain.
“At trial, she blamed her (Balwani), her board, her scientists, her business partners, her investors, her marketing firm, her attorneys, the media—everyone, that is, but herself,” prosecutors said.
He has denied accusations of alleged sexual and psychological abuse.
The DOJ had asked for a 15-year jail term and more than $800m in restitution — the same amount she had defrauded investors of. Her lawyers sought an 18 month term of home incarceration.
In 2003, Holmes dropped out of Stanford University at the age of 19 to pursue her dream of transforming the healthcare industry.
She claimed to have developed a patent for a blood analysis method — which she dubbed the Edison machine — that could conduct hundreds of medical tests for everything from diabetes to cancer and heart disease with just a few droplets of blood.
Holmes began raising money in Silicon Valley from tech investors and by the end of 2010, she had raised $92m in capital.
She convinced business titans including Larry Ellison. Rupert Murdoch, the Walton family, and former Education Secretary Betsy DeVos to invest hundreds of millions of dollars in the blood-testing startup.
With the support of former Secretary of State George Schultz, an early board member, Holmes recruited former and future cabinet members including Henry Kissinger, James Mattis and William Perry to the board.
She reinvented herself in the image of her hero Steve Jobs, and began wearing black turtleneck sweaters and speaking in a baritone voice.
By 2014, Holmes had graced the covers of Fortune and The New York Times’ Style Magazine.
The following year Forbes estimated her wealth at $4.2bn.
The company’s drawn-out collapse began in October 2015 after reporting from the Wall Street Journal’s John Carreyrou received a tip-off that the Edison machine was producing erratic and unreliable results.
The supposedly innovative tech was nowhere near ready for testing, and had been rushed into development to meet Holmes’ promises to her influential investors.
Mr Carryrou then published an interview with whistleblower Tyler Schultz, the grandson of board member George Schultz, alleging that the company cast aside inconvenient Edison test results and falsified data.
According to Mr Carryrou, a victim impact statement filed by Schultz’s parents ahead of Friday’s sentencing outlined how Holmes took a “wrecking ball” to their family which left Tyler suicidal.
“The most heartbreaking of all is to hear your son describe that he contemplated suicide because he felt abandoned, isolated, threatened and hopeless,” the statement read.
The Wall Street Journal reported that Holmes’ aunt, Elizabeth Daoust, an early Theranos investor, was among those asking for a stiff sentence.
In March 2018, the US Securities and Exchange Commission charged Holmes and Ramesh “Sunny” Balwani, former president of Theranos and Holmes’ long-term romantic partner, with defrauding investors of more than $700m.
Holmes paid a $500,000 fine to settle the suit, while also relinquishing control of Theranos and being banned from running a public company for 10 years.
In June 2018, Holmes and Balwani were indicted for defrauding patients and investors by making false claims about “Theranos’s ability to provide accurate, fast, reliable, and cheap blood tests and test results”.
‘Her capacity to change the world is limitless’
The most glowing pre-trial testimonial came from Holmes’ husband Billy Evans.
In a letter stretching 12 pages punctuated by headings such as “dreams, possibilities, lessons” and “our greatest fears”, Mr Evans writes of falling instantly in love with “Liz” after they met at a charity event in 2017.
“Her capacity to change the world is limitless,” Evans wrote, including a pastiche of dozens of photos of the happy couple.
Evans told how his wife of three years had competed in a Golden Gate Bridge ocean swim event in 2021 while pregnant with their first son.
“There were fifty reasons I thought it was a bad idea, the sharks, the tides, her complete inexperience swimming post age 14,” he wrote.
She eventually made the cut for the race and took part. “You would think by now I would learn to not discount her perseverance,” Evans wrote.
In one passage titled “the price we will always pay”, Evans tells a story about Holmes searching for 16 hours “in brambles and poison oak” after her husky Balto was apparently carried away by a mountain lion from their front porch.
“It was only once she saw his lifeless body that she could come to realise that he was gone,” Evans writes.
“But that's Liz for you, she's constantly hoping and working towards the best outcome, even if it is unlikely.”
Balto memorably appeared in a 2019 Vanity Fair article charting Holmes’ downfall where it was revealed that he “frequently urinated and defecated at will throughout Theranos headquarters”.
“While Holmes held board meetings, Balto could be found in the corner of the room relieving himself while a frenzied assistant was left to clean up the mess.”
Elsewhere in the Holmes homage it was revealed that she would routinely volunteer to be buried in rubble while attempting to train Balto to become a certified search and rescue dog.
“This is a physically uncomfortable and for many a mentally challenging process as it requires entering small, dark and unstable areas that often create claustrophobia,” Tim Houweling, a canine search specialist with the Sacramento Fire Department, wrote.
Ultimately, Balto didn’t pass canine rescue school, but Houweling said that he and Holmes became friends.
New Jersey Democratic Senator Cory Booker was among the 140 allies to write to Judge Davila seeking leniency.
‘Those are the things that are still in her nightmares’
Holmes’ father Christian noted in a letter to Judge Davila that she had loved to go fishing as young child growing up in Washington DC, living near a canal just off the Potomac River.
“You learn a lot about a person, even a very little person, from fishing,” Christian Holmes, who worked on international disaster relief and refugee assistance for the State Department, wrote in a character reference.
“Elizabeth was endlessly patient and determined to catch a fish in the canal.”
At the age of 10, she showed her parents a design for a time machine.
“She was attempting to understand and combine the concepts of time and space,” he wrote.
Eight years later at Stanford, Holmes combined those concepts in her work on sensors and diagnostics, , which was the genesis of her fouding of Theranos.
The family later moved to Houston when Christian Holmes took a job at the energy giant Enron.
In her senior year in high school in 2001, the family lost everything they owned when the company collapsed amid widespread corruption, the largest corporate bankruptcy in US history at the time.
Christian Holmes wrote that he tried to instil in his children a sense of placing others’ interests above their own.
He said this had a profound effect on Elizabeth, learned about millions of people who were not having their blood tested because of cost, lack of access to testing or a fear of needles.
“She knew that people suffered and died due to a lack of affordable blood testing which could detect disease early and help prevent death. Elizabeth felt that was not right. She developed a deep-seated conviction to do something about that.”
Mr Holmes said that his daughter’s life changed “profoundly” when she was raped by a Stanford student at a party in 2003.
He said that the trauma Elizabeth endured and her stoic approach to life “led to her enduring the terrible abuse of Sunny Balwani”.
“Elizabeth’s relationship with Mr Balwani was not one of conspiracy as the media contended. The relationship was one of fear, control, and submission. Those are the things that are still in her nightmares.”
Elizabeth’s mother Noel wrote that, like many of her supporters, she believed ultimately her daughter’s dream of more equitable healthcare would be realised.
“Theranos’ trade secrets and patents are out there in the world, and someone will finish doing it and make Elizabeth’s vision come true.”
Balwani, 57, is scheduled to be sentenced on 7 December after being convicted on 12 counts of fraud and conspiracy.