SAN JOSE, Calif. (KRON) — Former Theranos CEO Elizabeth Holmes promised a federal judge on Friday that she will not attempt to flee the country before she begins serving her 11-year prison sentence next month.
The disgraced Silicon Valley entrepreneur recently gave birth to her second child. Holmes’ defense attorney, Amy Saharia, said Holmes would never abandon her two young children, nor put her parents’ house in jeopardy. The house’s value is being used as Holmes’ bond.
Prosecutors took issue with Holmes’ promise. Prosecutor Kelly Volkar asserted that the 38-year-old Woodside woman is a flight risk. “She has the means and the motive to flee,” Volkar told the judge.
U.S. District Judge Edward Davila was slated to make a ruling Friday over Holmes’ custody status, as well as how much restitution she must pay her victims. Holmes defrauded investors out of hundreds of millions of dollars through her biotech company, Theranos.
Prosecutors are asking for Holmes and her co-conspirator, Ramesh “Sunny” Balwani, to pay nearly $900 million in restitution to victims. The two-hour hearing ended after Davila announced he would not make a ruling on either issue until early April.
Holmes bought a one-way ticket to Mexico that she later canceled after prosecutors became aware of the planned trip. The flight was scheduled to take off just days after a federal jury found Holmes guilty on four counts of conspiracy and fraud in January 2022.
Volkar asserted that the Mexico plane ticket is evidence that Holmes may have planned to flee. “Ms. Holmes is set to go to jail and face a significant sentence,” Volkar told the judge.
Saharia said Holmes and her boyfriend, Billy Evans, planned the Mexico trip before she was convicted because they were hoping to attend a friend’s wedding. They were unsure of when they would return from their Mexican vacation, and that’s why a return ticket was never purchased, Saharia said.
“(Evans) bought a ticket to Mexico hoping she would be acquitted. This is a non-issue. There’s simply no reason for her to flee,” Volkar said Friday.
Judge Davila agreed that the plane ticket raised concerns. “A round-trip ticket shows an intent to come back. A one-way ticket … suggests something that the court should consider in a negative way as to your client’s intent,” Davila said.
A jury found Holmes guilty of weaving a web of lies that convinced sophisticated investors to pump hundreds of millions of dollars into her biotech blood testing company. Holmes was once America’s youngest self-made billionaire and she was admired as a celebrity on the cover of Fortune magazine.
Assistant U.S. Attorney Robert Leach said Holmes should be ordered to pay victims all of the money they invested in Theranos.
Defense attorneys said prosecutors failed to show an accurate dollar amount for how much money investors lost during the dramatic downfall of Theranos. Holmes never “cashed out” from her company and she walked away with nothing, she claims. Balwani said he “never made a dime” while COO of Theranos.
The defense said Evans’ family wealth should not be considered by the judge when deciding how much restitution she will pay. Judge Davila agreed on Friday. Prosecutors alleged that Evans never married Holmes — despite having two children together — to protect his wealthy family’s assets.
The judge named 10 Theranos investors as victims, including media mogul Rupert Murdoch. Prosecutors said many more investors were also victimized, but judge said he only considers 10 investors as official “victims.”
Leach said, “We know at the end of the day, Theranos did not fail because of some extraneous reason, (such as) put its money in Silicon Valley Bank. Theranos failed because the promises it made to its investors were simply not true.”
Leach continued, “These investors … got nothing back. The loss is the amount that they paid (Theranos). Our position is, it’s the total amount of investment, the purchase price of the investment.”
Holmes’ defense attorney said prosecutors failed to prove how much investors lost, and how much Theranos was worth as a company. “There is a real risk that (victims) could be over-compensated,” the defense argued.
“This was not a public company. It’s not like we can look at the trajectory of a share price that drops. Our situation is complex. The government has said it’s the full investment. We know that’s not right,” the defense attorney said.
During Holmes’ sentencing in November, Judge Davila suggested that he is leaning toward a restitution of about $384 million.
Meanwhile, Balwani failed to show up to a federal prison on Thursday to begin serving his 13-year sentence. His attorneys filed a last-minute, Hail-Mary appeal just hours before Balwani’s prison deadline. The appeal triggered a clause that allows him to remain free until the Ninth Circuit Court of Appeal makes a ruling.
Balwani, 57, was convicted by a jury on 12 counts of fraud and conspiracy for his role in the Theranos blood testing scandal. As Theranos executives, Balwani and Holmes were partners in “everything,” including romantic, business, and criminal partnerships, prosecutors said.
U.S. Attorney Stephanie Hinds said, “Balwani, in a desire to become a Silicon Valley titan, valued business success and personal wealth far more than patient safety.”
It’s unclear how much longer Balwani will remain free. Holmes’ is scheduled to report to prison on April 27.