On Friday, a final decision regarding Elizabeth Holmes’ punishment for her part in Theranos’ demise will be made, bringing to an end a significant chapter in one of the biggest scandals in Silicon Valley history. The 38-year-old former chief executive’s fate for defrauding investors out of millions in the blood-testing start-up now rests with US District Judge Edward Davila, who has presided over the case since 2018. The jury found her guilty ten months ago.
Ms Holmes stands out among white-collar criminals because relatively few of them are women convicted of such serious fraud, legal experts say.
Her sentence could be used to set an example in the start-up world about the consequences of fraudulent behavior. In a twist, the judge may consider the sentence in light of the fact Holmes is expecting her second child.
Balancing all the competing factors to arrive at a sentence is “more art than science,” said Amanda Kramer, a criminal defence lawyer.
“How the judge will weigh the various factors here, and how much weight her current pregnancy and the fact that she has a toddler will be given by the judge, relative for the need to reflect the seriousness of the crime and to deter misconduct, that’s a key question,” she said.
Ms Holmes, convicted of wire fraud and conspiracy, faces a maximum sentence of 20 years in prison, according to sentencing guidelines.
US prosecutors have asked for 15 years of imprisonment, while her lawyers say she should get home confinement, or 18 months in prison at most. She’s likely to appeal against her conviction.
Prosecutors have argued a lengthy prison term is justified given the scope of the fraud and the need to send a deterrence message to the start-up sector where “fake it til you make it” braggadocio has been ubiquitous.
At times, Ms Holmes tried to shift blame to others for her crimes and remains “remorseless,” they say.
Lawyers for Holmes argue she deserves leniency because she’s not the cheat the news media has made her out to be. They are urging Mr Davila to see Theranos not as a house of cards but as a valuable enterprise, driven by its inventive and hard-working chief executive.
Her attorneys also point to a rape Holmes says she suffered as an undergraduate at Stanford University, and the psychological, physical and sexual abuse they say was perpetrated by her former partner and former Theranos President Ramesh “Sunny” Balwani. He has denied the allegation and faces his own sentencing for fraud in December.
For Holmes, the offence level is driven mostly by an investor loss the US Probation Office calculated at more than $550 million. The office, an independent arm of the court which offers recommendations on prison sentences, arrived at a suggested prison term of nine years.
Alan Ellis, a criminal defence lawyer, said Ms Holmes might have hurt her chances at getting a reduced sentence by suggesting no incarceration.
“One thing I’ve learned is, don’t take yourself out of the conversation by coming up with too low of a sentence,” Mr Ellis said.
Ahead of her sentencing, Ms Holmes’s family, friends and other supporters, including Senator Cory Booker and venture capitalist Tim Draper, have submitted more than 130 letters to the judge in a bid for leniency.
Such letters typically don’t sway judges except in rare instances when they reveal that a defendant or a family member faces a major health crisis.
Many of Ms Holmes’s letter writers pointed to her now 16-month-old child and some to her more recent pregnancy, in their pleas for a shorter sentence.
Barry Levine, a criminal defence lawyer and former prosecutor who wrote in support of Holmes, told Mr Davila that those who say she shouldn’t have had a child given her circumstances are “malevolent cynics” who deserve to be ignored.
“The fact that there is now another innocent life complicates the challenge for the court and is a further justification for mercy,” Mr Levine wrote, in an apparent reference to her pregnancy.
Lawyers for Holmes have made only brief mentions of her baby in court filings, and so far have not mentioned her pregnancy, which was plainly visible when she appeared in court in San Jose, California, on October 17 in an unsuccessful bid for a new trial.
Lawyers for Holmes didn’t respond to a request for comment.
Robert Weisberg, a professor at Stanford Law School, said the question of whether motherhood should be a factor at sentencing raises issues of economic equity.
Some convicted mothers argue that even with a second parent, the importance of the maternal relationship with a child demands special consideration, Mr Weisberg said. But poor mothers convicted of crimes are too often not afforded such consideration at sentencing, he added.
Mr Davila may “reduce the sentence somewhat out of concern for the child, but not use it as a basis for giving her very great leniency in the way that a poor person doesn’t get leniency,” Mr Weisberg said.
Some legal experts say Ms Holmes’s decision to have children — her first years after she was indicted, for which Mr Davila agreed to delay her trial, and another more recently after she was convicted — could work against her.
Mark Allenbaugh, a former lawyer for the US Sentencing Commission and a consultant for Mr Ellis’s firm, said he thinks Holmes will get a prison term of seven or eight years. Mr Davila could end up increasing Holmes’s sentence if he concludes her pregnancy was aimed at avoiding prison, he said.
“It’s still a significant sentence, especially for someone who’s going to be giving birth in the near future,” he said. “That’s a long time to be away from your kid.”
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