As Elizabeth Holmes heads to jail for fraud, questions stay about her motives

May 27, 2023 | blog

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SAN JOSE, Calif. (AP) — As Elizabeth Holmes prepares to report back to jail subsequent week, the legal case that laid naked the blood-testing rip-off on the coronary heart of her Theranos startup is coming into its ultimate part.

The 11-year sentence represents a comeuppance for the wide-eyed lady who broke by “tech bro” tradition to change into certainly one of Silicon Valley’s most celebrated entrepreneurs, solely to be uncovered as a fraud. Along the best way, Holmes grew to become an emblem of the shameless hyperbole that always saturates startup tradition.

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But questions nonetheless linger about her true intentions — so many who even the federal decide who presided over her trial appeared mystified. And Holmes’ defenders proceed to ask whether or not the punishment suits the crime.

At 39, she appears most definitely to be remembered as Silicon Valley’s Icarus — a high-flying entrepreneur burning with reckless ambition whose odyssey culminated in convictions for fraud and conspiracy.

Her motives are nonetheless considerably mysterious, and a few supporters say federal prosecutors focused her unfairly of their zeal to carry down one of the crucial distinguished practitioners of fake-it-til-you-make-it — the tech sector’s model of self-promotion that typically veers into exaggeration and blatant lies to lift cash.

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Holmes will start to pay the value for her deceit on May 30 when she is scheduled start the sentence that can separate her from her two youngsters — a son whose July 2021 start delayed the beginning of her trial and a 3-month-old daughter conceived after her conviction.

She is anticipated to be incarcerated in Bryan, Texas, about 100 miles (160 km) northwest of her hometown of Houston. The jail was really useful by the decide who sentenced Holmes, however authorities haven’t publicly disclosed the place she will probably be held.

Her many detractors contend she deserves to be in jail for peddling a expertise that she repeatedly boasted would rapidly scan for tons of of ailments and different well being issues with a couple of drops of blood taken with a finger prick.

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The expertise by no means labored as promised. Instead, Theranos checks produced wildly unreliable outcomes that might have endangered sufferers’ lives — one of the crucial regularly cited the reason why she deserved to be prosecuted.

Before these lies have been uncovered in a collection of explosive articles in The Wall Street Journal starting in October 2015, Holmes raised practically $1 billion from an inventory of savvy traders together with Oracle co-founder Larry Ellison and media mogul Rupert Murdoch. It was the duping of these traders that led to her jail sentence and a $452 million restitution invoice.

Holmes’ stake in Theranos at one level catapulted her paper wealth to $4.5 billion. She by no means bought any of her inventory within the firm, although trial proof left little question she reveled within the trappings of fame and fortune — a lot in order that she and the daddy of her youngsters, William “Billy” Evans, lived on a palatial Silicon Valley property throughout the trial.

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The principle that Holmes was operating an elaborate rip-off was buttressed by trial proof documenting her efforts to forestall the Journal’s investigation from being revealed. That marketing campaign compelled John Carreyrou — the reporter accountable for these bombshell tales — to attend court docket and place himself in Holmes’ line of imaginative and prescient when she took the witness stand.

Holmes additionally signed off on surveillance aimed toward intimidating Theranos workers who helped uncover the failings with the blood-testing expertise. The whistleblowers included Tyler Shultz, the grandson of former Secretary of State George Shultz, whom Holmes befriended and persuaded to hitch the Theranos board.

Tyler Shultz grew to become so unnerved by Holmes’ efforts to close him up that he started sleeping with a knife beneath his pillow, in accordance with a wrenching assertion delivered by his father, Alex, at her sentencing.

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Holmes’ supporters nonetheless contend she at all times had good intentions and was unfairly scapegoated by the Justice Department. They insist she merely deployed the identical over-the-top promotion techniques as many different tech executives, together with Elon Musk, who has repeatedly made deceptive statements concerning the capabilities of Tesla’s self-driving vehicles.

According to these supporters, Holmes was singled out as a result of she was a lady who briefly eclipsed the lads who usually take pleasure in Silicon Valley’s highlight, and the trial turned her right into a latter-day model of Hester Prynne — the protagonist within the 1850 novel “The Scarlet Letter.”

Holmes steadfastly maintained her innocence throughout seven often-riveting days of testimony in her personal protection — a spectacle that prompted individuals to line up shortly after midnight to safe one of many few dozen seats obtainable within the San Jose courtroom.

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On one memorable day, Holmes recounted how she had by no means gotten over the trauma of being raped whereas enrolled at Stanford University. She then described being subjected to a long-running sample of emotional and sexual abuse by her former lover and Theranos conspirator, Ramesh “Sunny” Balwani, and steered his stifling management blurred her considering.

Balwani’s lawyer, Jeffrey Coopersmith, denied these allegations throughout the trial. In Balwani’s subsequent trial, Coopersmith unsuccessfully tried to depict his consumer as Holmes’ pawn.

Balwani, 57, is now serving a virtually 13-year jail sentence for fraud and conspiracy.

When it got here time to condemn the then-pregnant Holmes in November, U.S. District Judge Edward Davila appeared as puzzled as anybody about why she did what she did.

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“This is a fraud case where an exciting venture went forward with great expectations and hope, only to be dashed by untruth, misrepresentations, hubris and plain lies,” Davila lamented whereas Holmes stood earlier than him. “I suppose we step back and we look at this, and we think what is the pathology of fraud?”

The decide additionally hearkened again to the times that Silicon Valley consisted principally of orchards farmed by immigrants. That was earlier than the land was ceded to the tech growth starting in 1939 when William Hewlett and David Packard based an organization bearing their surnames in a one-car storage in Palo Alto — the identical metropolis the place Theranos was based mostly.

“You’ll recall the wonderful innovation of those two individuals in that small garage,” Davila reminded everybody within the rapt courtroom. “No exotic automobiles or lavish lifestyle, just a desire to create for society’s benefit through honest hard work. And that, I would hope, would be the continuing story, the legacy and practice of Silicon Valley.”


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


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