A federal district court judge in San Jose considered Theranos founder Elizabeth Holmes’s bid to stay out of federal prison. The judge also considers prosecutors’ request that Holmes repay $900 million to Theranos investors.
Holmes, founder of the Silicon Valley blood-testing startup, appeared in court on Friday for post-trial arguments against a court order requiring her to attend jail on April 27.
In November, U.S. Federal District Court Judge Edward Davila sentenced Holmes to 11 years and three months in prison for multiple fraud convictions entered by a jury in January 2022. The incarceration date kept Holmes out detention for the delivery of her second child. .
According to reports from several news agencies, Judge Davila said he would rule on the arguments in April.
According Law360Holmes’ lawyer, Amy Saharia, told the judge that Holmes should be allowed to go free while his case proceeds on appeal, especially since the court had previously found that Holmes posed no flight risk.
Government lawyers reportedly hit back at the claim, saying a one-way plane ticket for Holmes to Mexico, purchased while awaiting trial, shows she may have wanted to avoid liability for any condemnation.
The judge heard other disputes between the parties during Friday’s hearing, including the government’s request for Holmes to pay $878 million in restitution to investors who prosecutors say were victims of the fraud. Holmes. The nearly $900 million represents all of the investments made during Theranos’ existence.
Holmes started the company in 2003 at the age of 19, shortly after dropping out of Stanford University. The company shut down in 2016 amid regulatory pressure and after a Wall Street Journal expose showing that the “finger” blood tests touted by Theranos could not produce hundreds of tests as promoted. Investments in Theranos, combined with its valuation, once made Holmes the wealthiest self-made billionaire woman.
According Law360Assistant US Attorney Robert Leach argued that every dollar invested in Theranos should be returned to its investors.
“You just have to apply common sense. The money people lost is the money they put in,” Leach explained, Law360’s Dorthothy Atkins wrote in a tweet. Holmes’ lawyer, Patrick Looby, instead said investments on charges Holmes was acquitted on should not be considered in calculating restitution.
Holmes’ attorneys have indicated that they intend to appeal the district court’s decision to the 9th Circuit Court of Appeals. This court is ultimately empowered to decide whether Holmes should follow Davila’s order and report to jail, or can remain free while he considers the merits of his appeal.
Davila had previously ordered Holmes to submit to committal on April 27. In granting the date, Davila took into account that Holmes was pregnant at the time. She has since given birth to her second child.
In court papers ahead of Friday’s hearing, Holmes’ lawyers pleaded for her continued freedom, saying she posed no flight risk, posed no risk to public safety and filed her appeal, not to delay incarceration, but to present several questions about whether or not Davila’s decisions before and during his trial were made in error.
Holmes filed 19 pretrial motions regarding the admissibility of certain evidence in his case and also requested a new trial following the jury’s verdict, which Daviia denied.
“In summary, the record is replete with appellate issues,” Holmes’ attorneys said in the document, noting that while the 9th Circuit Court of Appeals agreed with any of Holmes’ appellate arguments. , a new trial should take place.
Holmes’ continued freedom, his attorneys said, would allow him to continue to communicate more effectively with his attorneys in preparation for his appeal, they said.
In January 2022, Holmes was convicted of three counts of criminal wire fraud and one count of conspiracy to commit wire fraud. Her jury unanimously found her guilty of illegally stealing millions of dollars from investors through her Silicon Valley blood testing startup.
In July 2022, a separate Silicon Valley jury closed another chapter in Theranos’ decades-long history, convicting its former chairman and chief operating officer, Ramesh “Sunny” Balwani, of criminal fraud. Balwani was also Holmes’ romantic partner during the time the two ran the biotech startup.
Alexis Keenan is a legal reporter for Yahoo Finance. Follow Alexis on Twitter @alexiskweed.
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