When Elizabeth Holmes goes to jail for fraud, questions remain about her motives

SAN JOSE, California. – As Elizabeth Holmes prepares to appear in jail next week, the criminal case that exposed the blood test scam at the heart of her Theranos startup is entering its final phase.

The 11-year sentence is compensation for the wide-eyed woman who broke the “tech bro” culture and became one of Silicon Valley’s most famous entrepreneurs, only to be exposed as a con artist. Over time, Holmes has come to symbolize the shameless hyperbole that often pervades startup culture.

But questions still linger about her true intentions — so many that even the federal judge presiding over her trial seemed puzzled. And Holmes’ defense attorneys continue to question whether the punishment fits the crime.

At 39, she is best remembered as the Icarus of Silicon Valley – a high-flying entrepreneur filled with reckless ambition whose odyssey culminated in fraud and conspiracy convictions.

Her motives are still somewhat of a mystery, and some proponents say federal prosecutors unfairly targeted her to bring down one of the most prominent supporters of the “fake-it-til-you-make-it” principle – the brand of self-promotion in the technology sector Sometimes he resorts to exaggeration and blatant lies to raise money.

Holmes will begin paying the price for her deception on May 30 when she begins the sentence that will separate her from her two children – a son whose birth in July 2021 delayed the start of her trial and one by three months old daughter who became pregnant after her conviction.

She is expected to be detained in Bryan, Texas, about 100 miles (160 km) northwest of her hometown of Houston. The jail was recommended by the judge who sentenced Holmes, but authorities have not publicly revealed where she is being held.

Her many critics claim she deserves jail time for marketing a technology that she has repeatedly boasted could quickly diagnose hundreds of diseases and other health problems with a few drops of blood drawn with a finger prick.

The technology never worked as promised. Instead, Theranos tests returned wildly unreliable results that could have put patients’ lives at risk — one of the most cited reasons why they deserved criminal prosecution.

Before these lies were exposed 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 Oracle co-founder Larry Ellison and media mogul Rupert Murdoch. It was deceiving these investors that led to their jail time and a $452 million restitution bill.

Holmes’ stake in Theranos once catapulted her paper fortune to $4.5 billion. She never sold any portion of her stake in the company, though court evidence left no doubt that she reveled in the trappings of fame and fortune — so much so that she and her children’s father, William “Billy” Evans, were on a palatial Silicon lived on Valley Estate during the trial.

The theory that Holmes carried out an elaborate scam was supported by court evidence documenting her efforts to prevent publication of the Journal’s investigation. This campaign forced John Carreyrou – the reporter responsible for these bombshell stories – to appear in court and position himself in Holmes’ field of view when she took the stand as a witness.

Holmes also agreed to surveillance aimed at intimidating Theranos employees who helped expose the flaws in blood testing technology. Among the whistleblowers was Tyler Shultz, grandson of former Secretary of State George Shultz, whom Holmes befriended and persuaded to join the Theranos board.

Tyler Shultz was so unsettled by Holmes’ efforts to silence him that he began sleeping with a knife under his pillow, according to a harrowing testimony from his father Alex at the sentencing hearing.

Holmes’ supporters still claim that she was always well-intentioned and was wrongly scapegoated by the Justice Department. They insist she was simply using the same over-the-top publicity 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 proponents, Holmes was singled out because she was a woman who briefly eclipsed the men who typically bask in the Silicon Valley limelight, and the process turned her into a modern-day version of Hester Prynne – the protagonist in the novel The Scarlet letter.”

Holmes steadfastly maintained her innocence in her own defense throughout the often tense seven days of testimony — a spectacle that saw people lining up just after midnight to get one of the few dozen available seats in the San Jose courtroom to secure.

On a memorable day, Holmes shared how she never got over the trauma of being raped while she was a student at Stanford University. She then described being subjected to a long-standing pattern of emotional and sexual abuse at the hands of her former lover and Theranos conspirator, Ramesh “Sunny” Balwani, and suggested that his crushing control blurred her thinking.

Balwani’s attorney, Jeffrey Coopersmith, denied these allegations at trial. In the subsequent trial of Balwani, Coopersmith tried unsuccessfully to portray his client as Holmes’ pawn.

Balwani, 57, is currently serving a nearly 13-year sentence on fraud and conspiracy charges.

When it came time to sentence the then-pregnant Holmes in November, US District Judge Edward Davila seemed as confused as anyone about why she was doing what she was doing.

“This is a fraud in which an exciting endeavor has been pursued with great expectations and hopes, only to be shattered by untruth, misrepresentation, hubris and outright lies,” lamented Davila as Holmes stood before him. “I suppose we take a step back and look at this and consider what the pathology of cheating is?”

The judge also recalled the days when Silicon Valley was mostly orchards farmed by immigrants. That was before the country was left to the technology boom starting in 1939, when William Hewlett and David Packard started a company using their last names in a one-car garage in Palo Alto — the same city where Theranos was based.

“You will remember the wonderful innovation of these two people in this little garage,” Davila reminded everyone in the tense courtroom. “No exotic cars or lavish lifestyle, just a desire to create something for the good of society through honest hard work. And that would, I would hope, be the ongoing history, legacy and practice of Silicon Valley.”


Michael Liedtke has been reporting on Silicon Valley for The Associated Press for 23 years.

Copyright 2023 The Associated Press. All rights reserved. This material may not be published, broadcast, transcribed, or redistributed without permission.

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