A federal district court judge in San Jose has weighed in on Theranos founder Elizabeth Holmes’ bid to stay out of federal prison. The judge will also consider prosecutors’ request that Holmes pay back $900 million to Theranos investors.
Holmes, the founder of a failed Silicon Valley blood-testing startup, appeared in court Friday to challenge post-trial arguments against a court order ordering him to surrender to prison on April 27.
In November, U.S. District Court Judge Edward Davila sentenced Holmes to 11 years and three months in prison for multiple counts of fraud, which a jury handed down in January 2022. The prison date allowed Holmes to stay out of prison in order to give birth to her second child. .
According to reports by several news organizations, Judge Davila said he will rule on the arguments in April.
By Act 360Holmes’ attorney, Amy Saharia, told the judge that Holmes should be allowed to remain free while his case is heard on appeal, especially given that the court previously found that Holmes did not pose a flight risk.
Government lawyers reportedly countered the claim, saying that a one-way plane ticket purchased during the trial and taken by Holmes to Mexico shows he may have wanted to avoid responsibility for any convictions.
The judge heard other arguments 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 Holmes’ fraud. The nearly $900 million represents the full amount of investment made during Theranos’ existence.
Holmes founded the company in 2003 at the age of 19, shortly after graduating from Stanford University. The company shut down in 2016 amid regulatory pressure and after a Wall Street Journal exposé showed that Theranos’ touted “fingerstick blood tests” failed to produce hundreds of tests as advertised. Theranos’ investments combined with its valuation made Holmes the richest self-made female billionaire at one time.
By Act 360US Assistant Attorney Robert Leach argued that every dollar invested in Theranos should be paid back to its investors.
“Use common sense. The money people lose is the money they put in,” Leach argued. Law360’s Dorthothy Atkins wrote in a tweet. Holmes’ attorney, Patrick Looby, said instead that investments in the charges Holmes was acquitted of should not be factored into restitution calculations.
Holmes’ lawyers have announced that they plan to appeal the district court’s decision to the 9th Circuit Court of Appeals. The court ultimately has the power to decide whether Holmes must comply with Davila’s order and report to jail or remain free while it considers the merits of his appeal.
Davila previously ordered Holmes to surrender to jail on April 27. In assigning the date, Davila took into account that Holmes was pregnant at the time. She has since given birth to her second child.
In court documents before Friday’s hearing, Holmes’ attorneys argued for his continued freedom, saying he was not a flight risk, did not pose a danger to public safety, and filed his appeal, not to delay incarceration, but to present several significant ones. questions about whether Davila’s decisions before and during his trial were improperly made.
Holmes filed 19 pretrial motions on the admissibility of certain evidence in his case and also asked for a new trial after the jury’s verdict, which Daviia contested.
“In sum, the record is replete with appeals,” Holmes’ attorneys said in the filing, noting that if the 9th Circuit Court of Appeals were to accept any of Holmes’ grounds of appeal, a new trial would be required.
Holmes’ continued freedom, his attorneys said, would allow him to continue to communicate more effectively with his attorneys as they prepare for an appeal, they said.
In January 2022, Holmes was convicted of three counts of felony wire fraud and one count of conspiracy to commit wire fraud. His jury unanimously found him guilty of illegally bilking investors out of millions of dollars by setting up a Silicon Valley blood drive.
In July 2022, a separate Silicon Valley grand jury closed a new chapter in the decades-long Theranos saga, convicting former president and chief operating officer Ramesh “Sunny” Balwan of criminal fraud. Balwani was also Holmes’ romantic partner when the two ran a biotech startup.
Alexis Keenan is a legal editor at Yahoo Finance. Follow Alex on Twitter @alexiskweed.
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