As Elizabeth Holmes goes to prison for fraud, questions remain about her motives

SAN JOSE, Calif. (AP) — As Elizabeth Holmes prepares to report to jail next week, the criminal case that exposed the blood test scam that was at the heart of her Theranos startup enters its final stages.

The 11-year prison sentence represents a reward for the wide-eyed woman who broke through the “tech bro” culture to become one of Silicon Valley’s most celebrated entrepreneurs, only to be exposed as a con artist. Over time, Holmes became a symbol of the blatant exaggeration that often permeates startup culture.

But questions still remain about her true intentions — so many that even the federal judge presiding over her trial seemed mystified. And Holmes’s defenders continue to question whether the sentence fits the crime.

At 39, she seems likely 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 still somewhat mysterious, with some supporters saying federal prosecutors unfairly attacked her in their zeal to take down one of the most prominent practitioners of fake-it-til-you-make-it – the brand of self-promotion of the technology sector that sometimes devolves into exaggeration and blatant lies to raise money.

Holmes will begin to pay the price for her deception on May 30, when she begins the sentence that will separate her from her two children – a son whose July 2021 birth delayed the start of her trial and fathered a 3-month-old daughter after her conviction.

She is expected to be incarcerated in Bryan, Texas, about 100 miles northwest of her hometown of Houston. The prison was recommended by the judge who sentenced Holmes, but authorities have not revealed where she will be held.

Her many detractors argue that she deserves to be in prison for peddling a technology she repeatedly boasted could quickly scan hundreds of diseases and other health problems with a few drops of blood taken 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 she deserved to be prosecuted.

Before those lies were uncovered in a series of explosive articles in The Wall Street Journal starting in October 2015, Holmes raised nearly $1 billion from a roster of savvy investors that included Oracle co-founder Larry Ellison and media mogul Rupert Murdoch. It was the brunt of those investors that led to her jail time and a $452 million restitution bill.

Holmes’ stake in Theranos at one point catapulted her paper net worth to $4.5 billion. She never sold any of her shares in the company, though there was no doubt at trial that she enjoyed the trappings of fame and fortune — so much so that she and her children’s father, William “Billy” Evans, lived on a palatial silicon. Valley estate at trial.

The theory that Holmes was running an elaborate scam was supported by trial evidence documenting her efforts to prevent the Journal’s investigation from being published. That campaign forced John Carreyrou—the reporter responsible for those bombshell stories—to attend court and position himself in Holmes’ line of sight as she took the witness stand.

Holmes also signed on for surveillance aimed at intimidating Theranos employees who helped expose the flaws with the blood testing technology. The whistleblowers included Tyler Shultz, the grandson of former Secretary of State George Shultz, whom Holmes befriended and persuaded to join the board of Theranos.

Tyler Shultz became so unnerved by Holmes’ attempts to silence him that he began sleeping with a knife under his pillow, according to a heartbreaking statement from his father, Alex, at her sentencing.

Holmes’s supporters still argue that she was always well-intentioned and was unfairly scapegoated by the Justice Department. They insist she simply employed the same over-the-top promotional tactics as many other tech executives, including Elon Musk, who has repeatedly made misleading statements about the capabilities of Tesla’s self-driving cars.

According to those supporters, Holmes was singled out because she was a woman who briefly eclipsed the men who usually bask in the Silicon Valley spotlight, and the process turned her into a modern-day version of Hester Prynne — the main character in the 1850 novel “The Scarlet Brief.” .”

Holmes steadfastly maintained her innocence during seven often riveting days of testimony in her own defense — a spectacle that had people lining up shortly after midnight to take one of the few dozen available seats in the San Jose courtroom. get hold of.

One memorable day, Holmes shared how she never got over the trauma of being raped while enrolling at Stanford University. She then described being subject to a long-running pattern of emotional and sexual abuse from her former lover and Theranos conspirator, Ramesh “Sunny” Balwani, and suggested that his suffocating control was clouding her thinking.

Balwani’s attorney, Jeffrey Coopersmith, denied those allegations at trial. In Balwani’s subsequent trial, Coopersmith unsuccessfully attempted to portray his client as Holmes’s pawn.

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

When it came time to sentence the then-pregnant Holmes in November, U.S. District Judge Edward Davila seemed as puzzled as anyone about why she did what she did.

“This is a fraud case where an exciting venture was carried on with great expectations and hopes, only to be crushed by untruth, misrepresentation, overconfidence and plain lies,” Davila lamented as Holmes stood before him. “I suppose we step back and look at this, and we think what is the pathology of fraud?

The judge also harkened back to a time when Silicon Valley was mostly orchards farmed by immigrants. That was before the land was ceded to the tech boom that began in 1939 when William Hewlett and David Packard founded a company with their last name in a one-car garage in Palo Alto – the same city where Theranos was located.

“You’ll remember the great innovation of those two people in that little garage,” Davila reminded everyone in the delighted courtroom. “No exotic cars or lavish lifestyle, just a desire to create for the benefit of society through honest hard work. And that would, I hope, be the ongoing story, legacy and practice of Silicon Valley.”


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

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