She was sentenced to 11.25 years in federal prison for her conviction on four counts of defrauding investors of her failed blood-testing company. The case will be decided at a later hearing.
The sentencing is less than the maximum of 20 years set by federal sentencing guidelines but still more than the nine-year prison sentence recommended by the parole officer.
Federal prosecutors had asked for 15 years of imprisonment and a large sum of money to be paid to cheated investors. Lawyers for the woman asked for just 18 months of house arrest and argued that she wouldn't be able to pay the fine.
The judge for the Northern District of California handed down the prison term in San Jose, California, where reporters began gathering hours before the start of the sentencing. Wall Street Journal reporter John Carreyrou was the first to break the story about the problems at the startup.
The machine was supposed to perform more than 200 medical tests with just a few drops of blood. Large investors, including Safeway and Walgreens, invested in Theranos due to the promise and hype.
The judge who presided over the entire trial concluded that the fraud resulted in a $121 million loss to the company's share value. He noted that the federal recommendations would be between 11 and fourteen years. The hearing began with last-minute arguments and statements from both parties.
She said that she took responsibility for the company. She said she was devastated by the company's collapse and felt deep pain for the years that followed.
The case was "troubling on so many levels," and it was suggested that the fraudulent actions were motivated by "intoxication with fame."
AdvertisementGiven her high-profile rise and dramatic fall, her fate in the trial has drawn a lot of attention. Silicon Valley has made her a poster child. Despite the platform's internal chaos, "ElizabethHolmes" was a popular topic on Friday. She was sentenced as a bellwether for future white-collar fraud.
Federal prosecutors argued that a lengthy prison term would serve as a deterrent to future startup fraud schemes and as a way to rebuild investor trust.
They painted Theranos' founder in a negative light, noting that he flew on private jets, lived in a $15 million mansion, and graced the cover of many glossy magazines. Patients who used her technology got incorrect medical results for things like cancer and HIV testing. The investors lost millions.
Dozens of investors were defrauded of hundreds of millions of dollars. She would choose deception over candor. She used her board's credibility to forge her own endorsements. She gained billions of dollars of wealth through her deception.
They argued that she had not taken responsibility for her actions and that she had downplayed her fraud. She stood before the court without remorse. She doesn't accept responsability. She says she is the victim. Prosecutors wrote that she is not.
It was argued that a tough sentence could deter innovation. The investors of Theranos were painted as careless with their investments. In arguments today, the team emphasized that the woman never used investor funds for luxuries such as yachts.
They wrote that the founder of Theranos built the company for indisputably good reasons, invested resources and effort to correct errors, and didn't cash out. She is a good friend, partner, mother, and citizen who contributes to the good well-being of those around her. The government can't help but suggest despite the overwhelming evidence to the contrary, as Ms.Holmes was not driven by greed.
The woman who is pregnant with her second child has become a rape crisis counselor due to the trial. More than 100 letters of support were filed by her lawyers.
She is expected to appeal her conviction and will be reporting to prison in April.
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