If you’ve been following the scandalous case of Elizabeth Holmes, founder and former president of the sham biotech company Theranos and the subject of much journalism, books, podcasts, and TV series, you may have little sympathy for her and her co-defendant. The courts don’t seem to, either. As the cases appeal, they have recently denied the defendants’ bail.
History of Theranos
A decade ago, the Palo Alto healthcare startup Theranos rose to fame—and shortly after, infamy—for its allegedly cutting-edge medical tests. The company claimed that the rather shrouded technology behind the “Edison machine” it had developed could run over 240 diagnostic tests from a single pinprick of blood. The technology could have brought millions of consumers quicker and cheaper medical data that would have revolutionized the healthcare industry—if only it had not been apocryphal.
As the company had managed to recruit $10 billion from various investors, people were much more than merely upset when they found out that Theranos was a fraud, and a criminal one, at that. Not only did the company soon liquidate and dissolve, rendering hundreds of millions of investor dollars worthless, but Holmes, along with the company’s COO, Ramesh “Sunny” Balwani, were charged on multiple civil and criminal counts of fraud, wire fraud, and conspiracy. Holmes and Balwani had been partners, both business and romantic.
The Trial Against Holmes and Balwani
The indictments against the duo alleged that they “used advertisements and solicitations to encourage and induce doctors and patients to use Theranos’s blood testing laboratory services,” although they knew that their technology could not accommodate what the company promised. It also alleged that they defrauded doctors and patients in a variety of ways, from “making false claims” to omitting information concerning the limits of Theranos technology from records provided to doctors and patients. Included in the indictment were further claims that the two had misrepresented the technology to potential investors. In total, the indictment charged each defendant with two counts of conspiracy to commit wire fraud (18 U.S.C. § 1349) and nine counts of wire fraud (18 U.S.C. § 1343).
At a January 2022 federal trial in the Northern District of California, a jury found Holmes guilty of one count of conspiracy to commit fraud on investors and three counts of committing fraud on individual investors—an amount that totaled more than $140 million.” You can read more about the trial on our blog covering the case from last year. In November 2022, Judge Davila sentenced Holmes to 11 years and three months. In December 2022, Davila sentenced Holme’s co-defendant, Ramesh Balwani, to 12 years and 11 months.
Defendants Try to Bail Out During Appeal
On April 10, Davila refused Holmes’ request to remain free on bail while the 9th U.S. Circuit Court of Appeals reviews her conviction. On April 11, Reuters reported that, “Holmes plans to challenge several of the judge’s rulings, including his allowance of evidence about Theranos’ test accuracy that postdated her statements to investors.” The U.S. District Court judge who was presiding over Balwani’s trial also denied his request to remain free on bail while he appealed his conviction before the same circuit. In both denials, Davila claimed that he did not believe either Holmes or Balwani would be threats to the community or flights risks. At the same time, he claimed not to believe that an appeal would yield a different result than the convictions handed down upon Holmes and Balwani.
Related Resources:
- Everything You Need to Know About Fraud Crimes and Fraud Law (FindLaw’s Learn About the Law)
- Jury Finds Theranos Founder Elizabeth Holmes Guilty on Four of Eleven Criminal Charges (FindLaw’s Practice of Law Blog)
- What to Learn From the Theranos ‘Massive Fraud’ SEC Settlement (FindLaw’s Practice of Law Blog)
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