Prosecutors Seek 15-Year Prison Sentence

Fifteen years ago, Elizabeth Holmes was on her way up, having already raised millions o’ dollars for Theranos, the medical device company that she had founded in 2003 despite having little experience in the field. Fifteen years from now, the picture may be rather different. Holmes may potentially be on her way out of prison if U.S. prosecutors get their way. On Friday, the U.S. Department of Justice filed a recommendation that Holmes serve a 15-years prison sentence and pay $800 million to investors for defrauding them.

What a U-turn in a story that essentially began with a prick. Theranos became a thing when Holmes started claiming that her company was developing technology that could use just a few drops of bloods from a finger prick to test for all sorts of medical conditions. Normally, much more blood is needed. Medical experts who actually understand this area had long been skeptical about Holmes’ prick-ly claims. However, many investors, TED Talk and other conference organizers, boards, political figures, and others didn’t seem to listen to such medical experts before saying hey, Holmes, and joining her bandwagon. After all, why listen to real scientists and experts, right?

Things started to unravel in 2015 after John Carreyrou published an exposé article on Theranos and Holmes in The Wall Street Journal. Holmes and her lawyer had reportedly tried to stop the article from being published through legal threats and other means. Once the article came out, it became clear why Holmes wouldn’t have wanted Carreyrou’s piece out there. This wasn’t exactly a why-she-wears-black-turtle-necks-all-the-time exposé. Instead, the article revealed how the company’s Edison device wasn’t doing what Theranos had claimed it could do and that Theranos was actually using other companies’ machines to provide its testing services. Both of those were a bit more than “Oops, I Did It Again,” allegations. They suggested that Holmes’ wasn’t being straightforward about her claims. Upon the article’s release, Holmes’ response on CNBC’s “Mad Money” was in her trademark baritone voice, “This is what happens when you work to change things, first they think you’re crazy, then they fight you, and then all of a sudden you change the world.”

Well, Holmes hasn’t exactly changed the world, at least not in the way that she intended to do so, but her world could soon be changing. In January, she was convicted on four counts of wire fraud and conspiracy with each count carrying a maximum 20-year prison term. If you’ve been waiting for Holmes to apologize, well, as that Rolling Stones song goes, you can’t always get what you want. Holmes has continued to push back against all such charges, deny wrongdoing, and ask for a new trial. U.S. District Judge Edward Davila has essentially said not-going-to-happen to Holmes’ request for a new trial. Holmes’ sentencing should occur this coming week. The prosecutors have stated, “Considering the extensiveness of Holmes’ fraud… the sentencing of 180 months’ imprisonment would reflect the seriousness of the offenses, provide for just punishment for the offenses, and deter Holmes and others.”

Holmes’ meteoric rise has shown how many people fail to do true due diligence, look at, you know, science, and closely examine the facts themselves before making major decisions. Instead, they will often rely on what certain other people say. It’s sort of like high school extended where personal connections and popularity drive impressions and decisions rather than facts.

Holmes has had many backers. For example, she had amassed an impressive Board of Directors for the company, impressive if Theranos had wanted to invade a small country. The Board consisted largely of former military and political leaders like retired U.S. Marine Corps four-star General Jim Mattis, former U.S. Secretary of State George Shultz, and former U.S. Secretary of Defense William Perry rather than enough relevant scientific advisors.

Many of Theranos’s investors were high profile too, high profile more in a red carpet than a laboratory, sciency sense. Such high profile-ness probably helped other investors overlook the obvious flaws with the company and jump in as well because if high school has taught us anything, it’s that people tend to follow the popular folks. After all, you know how deals get done, by conversations on the golf course, in the club room, or over dinner where you have to pay way too much for cold soup far away from most ordinary folks. For example, in February 2005, media mogul Rupert Murdoch, whose name may not exactly scream science, led a $5.8 million Series A for Theranos. Oracle Executive Chairman and founder Larry Ellison was an investor as well. And Tim Draper, a partner with the Draper Fisher Jurvetson venture capital firm, continued to actively defend Theranos until around 2018 when it became freaking obvious that something was really amiss. Oh well.

In retrospect, the whole situation seemed a bit absurd. Imagine someone with little experience in medicine making claims about something medical without providing any real concrete scientific evidence. And people believing that person. Something like that would never happen these days during say a national emergency such as a pandemic or something like that, right?