Theranos founder Elizabeth Holmes will not be heading off to prison tomorrow to begin serving an 11-year sentence, as first reported by the WSJ. Though earlier this month U.S. District Court Judge Edward Davila denied her request to remain free while she appeals her conviction, this week she asked the Ninth U.S. Circuit Court of Appeals directly if she could stay out of prison while her case makes its way through the appeals process; the request automatically puts her reporting date on hold while the court considers her request, says the Journal.
It’s just the latest twist in a Silicon Valley story that has captivated the broader business world and even led to an Emmy-award-winning limited series called “The Dropout” on Hulu.
In January 2022, following a nearly four-month trial, Holmes was convicted on four counts of fraud and conspiracy related to Theranos, her failed blood-testing startup. At her sentencing hearing in November of last year, Judge Davila ordered her to “surrender” on April 27, 2023.
In denying Holmes’s earlier request to remain free while she appeals her conviction, Judge Davila wrote that while Holmes presented “clear and convincing evidence that she would not flee,” he did not believe she raised a “substantial question of law or fact” likely to result in “reversal or an order for a new trial of all counts.”
Theranos’ former president and COO Ramesh “Sunny” Balwani — who was also found guilty last year of defrauding the company’s investors and its patients — had similarly asked the Ninth Circuit if he could remain free while he contests his conviction. His bid was rejected three weeks later, but the move enabled him to push his own surrender to a low-security prison facility in San Pedro, California, from mid-March to last Thursday, April 20.
It isn’t clear whether it will have any impact, but on Monday, an association for criminal defense lawyers urged the Ninth Circuit to order a new trial for Holmes, saying prosecutors skirted procedure rules by disclosing the identity of a witness — Kingshuk Das, a former clinical lab director at Theranos — just five weeks before the government’s opening arguments in the trial. They argue the move was a violation of Rule 16 of the Federal Rules of Criminal Procedure, which aims to give defendants sufficient time to prepare their defense.
Holmes has two children under the age of two. Before this latest development, she was set to turn herself over the U.S. Marshal’s Office, and then be transferred to a federal prison facility. The court reportedly recommended the Federal Prison Camp at Bryan, Texas, about 100 miles outside of Houston, where Holmes grew up in part and where she continues to have family.
According to the Houston Chronicle, the minimum-security facility has dormitory housing for its roughly 550 inmates, has a low staff-to-inmate ratio, and is “work- and program-oriented,” per the Federal Bureau of Prisons.
Holmes, who dropped out of Stanford in 2003 to build Theranos, was widely celebrated by the business press for developing a technology that she said could test for hundreds of conditions with just a pinprick of blood. Investors also believed Holmes’s claims, providing more than $400 million of funding to the company and assigning it a valuation of $9 billion.
That narrative began to break apart in 2015, after a series of WSJ articles revealed that its technology did not work as advertised.
In June 2018, Holmes and Balwani were both indicted on criminal fraud charges; soon after, the company announced to shareholders that it would formally dissolve.
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