Theranos Founder Elizabeth Holmes Denied Bail Pending Appeal
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. As the case has proceeded into appeal, a California federal judge also seems to lack sympathy, and has 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. The company soon liquidated and dissolved, rendering hundreds of millions of investor dollars worthless. Around the same time, both Holmes and Ramesh "Sunny" Balwani, the company's COO, were charged with multiple crimes and civil violations, from fraud to wire fraud to conspiracy. Holmes and Balwani had been partners—both in business and in romance.
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. The indictments 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. Also included were further claims that the two had misrepresented the technology to potential investors. In total, Holmes and Balwani were each charged 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. It was determined that Holmes' conduct "involved wire transfers totaling more than $140 million." You can read more about the trial on our blog covering the case from last year. In November 2022, the federal judge overseeing the case, United States District Judge Edward J. Davila, sentenced Holmes to 11 years and three months. In December 2022, Davila sentenced 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.
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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