Theranos founder Elizabeth Holmes jailed for 11 years for bogus blood tests scandal

Elizabeth Holmes, one of the key players in the Theranos bogus blood test scandal that defrauded investors of millions, has been jailed for more than 11 years.

Holmes duped investors and endangered patients while peddling a bogus blood-testing technology from her company.

She was convicted of four counts of investor fraud and conspiracy in California in January.

Judge Edward Davila told the heavily pregnant former Theranos boss: "Failure is normal. But failure by fraud is not ok."

Holmes's legal team asked the judge for no more than 18 months, preferably served in home confinement.

Her lawyers argued that Holmes deserved more lenient treatment as a well-meaning entrepreneur who is now a devoted mother with another child on the way.

Their arguments were supported by more than 130 letters submitted by family, friends and former colleagues praising Holmes.

Prosecutors want Holmes to pay $804 million (£675m) in restitution. The amount covers most of the nearly $1 billion (£840,000m) that Holmes raised from a list of sophisticated investors that included software magnate Larry Ellison, media mogul Rupert Murdoch, and the Walton family behind Walmart.

While wooing investors, Holmes leveraged a high-powered Theranos board that included former US Defense Secretary James Mattis, who testified against her during her trial, and two former US Secretaries of State, Henry Kissinger and the late George Shultz.

Federal prosecutor Robert Leach declared Holmes deserves a severe punishment for engineering a scam that he described as one of the most egregious white-collar crimes ever committed in Silicon Valley.

In a scathing 46-page memo, Mr Leach told the judge he has an opportunity to send a message that curbs the hubris and hyperbole unleashed by the tech boom of the past decade.

What was Theranos and what did the firm's technology claim to do?

Theranos, founded by Holmes aged 19 in 2003, was at one point valued at £6.5 billion.

The firm was seen as the darling of Silicon Valley as it promised to revolutionise the healthcare industry. Holmes set out to create a cheaper, less painful and more convenient method to scan for hundreds of diseases by taking a finger prick of blood instead of inserting a needle into a vein.

She said that a machine called 'Edison' could screen the blood to provide early diagnosis of hundreds of conditions and could be used at accessible locations such as grocery stores and pharmacies.

But these claims began to unravel in 2015 after a Wall Street Journal investigation revealed how this blood-testing technology did not actually work and was inaccurate.

The newspaper exposed how tests were actually running on traditional lab equipment behind closed doors.

Holmes "preyed on hopes of her investors that a young, dynamic entrepreneur had changed healthcare," Mr Leach wrote. "And through her deceit, she attained spectacular fame, adoration, and billions of dollars of wealth."

Holmes’ lawyer Kevin Downey painted her as a selfless visionary who spent 14 years of her life trying to revolutionise health care with a technology that was supposed to be able to scan for hundreds of diseases and other aliments with just a few drops of blood.

Although evidence submitted during her trial showed the tests produced wildly unreliable results that could have steered patients in the wrong direction, her lawyers asserted Holmes never stopped trying to perfect the technology until Theranos collapsed in 2018.

They also pointed out that Holmes never sold any of her Theranos shares - a stake valued at $4.5 billion (£3.78bn) in 2014 when Holmes was being hailed as the next Steve Jobs on the covers of business magazines.

Defending herself against criminal charges has left Holmes with "substantial debt from which she is unlikely to recover," Mr Downey wrote, suggesting that she is unlikely ever to pay any restitution that Davila might order as part of her sentence.

Mr Downey also asked the judge to consider the alleged sexual and emotional abuse Holmes suffered while she was involved romantically with Ramesh 'Sunny' Balwani, who became a Theranos investor, top executive and eventually an accomplice in her crimes.

Balwani, 57, is scheduled to be sentenced December 7 after being convicted in a July trial on 12 counts of fraud and conspiracy.

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