Elizabeth Holmes and Ramesh “Sunny Balwani” of Theranos fame, or infamy, were sentenced after receiving convictions earlier this year.
Holmes, founder and ex-chief executive officer (CEO) of Theranos, the now defunct biotechnology company that was believed to have created a revolutionary blood testing device that could analyze blood with a few drops from the prick of a finger, was at one time touted as the “next Steve Jobs.” In 2015, Forbes named Holmes the youngest and wealthiest self-made female billionaire in America based on a $9-billion valuation of her company. That same year, Pulitzer-prize-winning journalist John Carreyrou broke the story in The Wall Street Journal that Holmes purportedly was deceiving board members, investors and the government and that patients had been sent incorrect blood test results that could potentially be fatal.
Three years later, in 2018, The U.S. Securities and Exchange Commission (SEC) charged Theranos and Holmes with defrauding investors of more than $700 million. To settle, Holmes agreed to pay $500,000 in penalties, and was barred from serving as an officer or director of a public company for 10 years, and relinquish her voting control of Theranos.
In June 2018, Holmes and Sunny Balwani, Holmes ex-romantic partner and former president and chief operating officer (COO) of Theranos, were indicted by a federal grand jury on criminal charges of fraud.
Holmes was convicted in January 2022 on four out of eleven charges: one count of conspiracy to commit wire fraud and three counts of wire fraud. The jury was unable to reach a unanimous verdict in her trial with respect to three investor fraud-related counts. She was acquitted of charges of defrauding patients.
Sunny Balwani, her partner in fraud, was convicted on July 7th of this year, and found guilty on all twelve counts of wire fraud and conspiracy to commit wire fraud.
On November 18, 2022, Holmes was sentenced to serve 11 years and three months in prison by Northern California U.S. District Judge Edward Davila, who oversaw her trial last year. Holmes, who is pregnant with her second child, will not have to report to prison until July of 2023. A future date will be set by Davila for Holmes’ restitution hearing.
On December 7, 2022, Balwani was sentenced to twelve years and eleven months, plus three years of probation. Balwani has filed a notice of appeal.
Holmes and Balwani are a strong warning to companies on the importance of ethics in business, due diligence investigations on executives by unbiased third-party experts, and the consequences of wrong doing.