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Elizabeth Holmes asks for a lenient 18-month sentence at home

Nov. 11, 2022 Updated Sat., Nov. 12, 2022 at 7:24 p.m.

Former Theranos CEO Elizabeth Holmes arrives at federal court on Oct. 17 in San Jose, Calif.  (Getty Images)
Former Theranos CEO Elizabeth Holmes arrives at federal court on Oct. 17 in San Jose, Calif. (Getty Images)
By Joel Rosenblatt Bloomberg News

Convicted Theranos Inc. founder Elizabeth Holmes said she deserves to spend 18 months in home confinement, not prison, asking the judge who will sentence her next week to look beyond the “mocked and vilified” caricature of her as a cheat, and to instead see her as a human being.

Ten months after she was found guilty of defrauding investors who lost hundreds of millions of dollars in her blood-testing startup, the 38-year-old filed a request for leniency late Thursday accompanied by letters from more than 130 friends, relatives, Theranos investors and former company employees who describe what her lawyers called “the real Elizabeth Holmes.”

Criminal defense lawyers have said U.S. District Judge Edward Davila, who has handled her case since she was indicted in 2018, the year Theranos collapsed after once reaching a valuation of $9 billion, will use whatever sentence he imposes to send a message to Silicon Valley and beyond.

The aim is not only to penalize Holmes for the fraud she was convicted of, experts said, but deter it in the technology sector, where the lines between hype and fraud are often blurred. But Holmes’ request subtracts 18 1/2 years from the maximum incarceration term she faces for her crimes – and says that time would be better served at home than in prison.

“We acknowledge that this may seem a tall order given the public perception of this case,” her lawyers said in the filing, urging Davila to see beyond the “media vitriol for Ms. Holmes.”

The judge should not view Theranos as “a house of cards,” but as the “ambitious, inventive, and indisputably valuable enterprise it was,” they wrote. “The court’s difficult task is to look beyond those surface-level views when it fashions its sentence.”

Prosecutors will file their own sentencing recommendation for Davila.

Holmes’ memo to the judge delves into her childhood and her years studying chemical engineering at Stanford University. It also revisits the traumas she testified about at trial, including details of a rape Holmes said she suffered in 2003 that haven’t been previously publicized. It occurred at a fraternity party when she was intoxicated and initially unconscious, according to the filing, which says she was assaulted by a friend and fraternity member.

The filing also revisits the “severe emotional, psychological, and sexual abuse” Holmes has said she endured in a decade-long relationship with Ramesh “Sunny” Balwani, who she made president of Theranos in 2009. The memo reprises Balwani’s allegedly controlling and prescriptive demeanor that Holmes told jurors about a year ago. Balwani has denied the accusations.

In July, Balwani, 57, was convicted of fraud at a separate trial and faces sentencing in December.

In the months since she was convicted, Holmes told the judge, she has become a certified rape crisis counselor, spending hundreds of hours volunteering to support survivors of sexual assault.

In calculating prison terms, judges rely on federal guidelines as a benchmark. For Holmes, the staggering sum of money investors lost in Theranos is likely a driver of her sentence. In one count alone, Holmes was convicted of defrauding the DeVos family of $100 million, which calls for a sentence under the guidelines ranging from nine years to slightly more than 11 years.

Lawyers for Holmes are attempting to sidestep the sentencing recommendations of the federal probation office. While the specifics of those recommendations are redacted in the filing, her attorneys argue they are unreliable.

“Because the circumstances of each investment were different, and because different investors received different information,” Holmes’s team argues, prosecutors can’t prove that the transactions it relied on at trial amount to fraud.

Holmes also objects to the federal probation office’s calculation of how many people were victims of her fraud. Those figures are also blacked out in the filing. Prosecutors issued a public announcement earlier this year encouraging victims to provide information for the judge to use in determining a sentence.

The letters from Holmes’s friends and family make clear that she has acknowledged her errors “with sincere reflection and remorse,” her lawyers told the judge. Incarceration isn’t required because, they said, the court of public opinion continues to weigh heavily on Holmes.

“The incessant drum of media criticism has ensured Ms. Holmes will be punished for the rest of her life,” according to the filing. “Ms. Holmes will never be able to seek another job or meet a new friend without the negative caricature acting as a barrier.”

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