Elizabeth Holmes, once heralded as “the world’s youngest self-made female billionaire” and the “next Steve Jobs,” was convicted and sentenced to more than 11 years in prison, despite a motion for a new trial based on questions about whether prosecutors engaged in misconduct in the Theranos fraud trial.
In 2014, Elizabeth Holmes founded a $9B company that would supposedly revolutionize the way we diagnose disease. Theranos, the company Holmes founded, claimed its Edison test could detect medical conditions like cancer and diabetes by analyzing a few drops of blood. The company was backed by moguls like U.S. Treasury Secretary George Schultz, Rupert Murdoch, and the Walton family (of Walmart fame). The Board included the likes of Henry Kissinger and General James Mattis. Their support lent credibility to Theranos and its promises of a revolutionary way to test and diagnose disease.
But within a year, the company was unraveling as The Wall Street Journal and other news outlets wrote damning exposes showing the test results were unreliable and that Theranos had been using commercially available machines made by other companies for most of its testing.
In 2018, Holmes was facing allegations that she fraudulently raised over $900M from investors. She was later charged with wire fraud and conspiracy to commit fraud for misleading patients about the accuracy of the tests and exaggerating the firm’s performance to investors. She was convicted by a jury of three counts of wire fraud and one count of conspiracy to commit wire fraud for deceiving investors. Ironically, she was found not guilty of defrauding patients by providing false blood test results and the jury was unable to reach a verdict on three counts of deceiving investors.
In October, she filed a motion for a new trial based on allegations that prosecutors engaged in misconduct with respect to a key government witness.
Theranos lab director Adam Rosendorff, who testified over six days during Holmes’ trial, stated that he believed prosecutors manipulated him. Months after the trial, Rosendorff visited Holmes at her home, where he appeared “disheveled” and wanted to talk. He claimed that “the government made things seem worse than they were” and that “he felt he had done something wrong in connection with Ms. Holmes’ trial.”
Holmes’ lawyers described Rosendorff’s conduct as “extremely unusual,” claiming in their Motion for a New Trial that it raised an “extraordinary set of circumstances.” In October, the judge held an evidentiary hearing to investigate Rosendorff’s concerns.
At the hearing, Rosendorff testified that he felt remorse over the possibility that Holmes’ child would be without a mother if Holmes were sentenced to prison. Yet he also stated that he does not want to help Ms. Holmes and that “The only person that can help her is herself. She needs to pay her debt to society.”
Despite his misgivings, Rosendorff stood by his testimony and said that the reason he visited Holmes was to seek forgiveness and healing for himself.
In November, Holmes was sentenced to more than 11 years in prison for defrauding investors. She is scheduled to begin serving her sentence in April. Nonetheless, her defense team has argued that Holmes was well-intentioned and tried to help people and that she should spend 18 months under house arrest. They claim she poses no danger to anyone, has openly acknowledged her mistakes and did not benefit materially. Further, they note that she has already been punished in a unique way: she has been assailed in the media, her trial received wall-to-wall coverage, and she will never again be able to live a normal life. Nonetheless, U.S. District Court Judge Edward Davila denied Holmes’ motion for a new trial.
Silicon Valley is known for brilliant entrepreneurs making grandiose promises about the promises of new technology. When investors lose money, it is not uncommon for them to write it off or pursue compensation privately. Holmes’ conviction and sentence serve as a warning to entrepreneurs that there can be serious consequences for misleading investors.
If you are under investigation or are facing charges for a financial crime, New York City federal criminal defense attorney Hope Lefeber should be your first call. Ms. Lefeber has been representing people who are under investigation or charged with fraud and other white-collar crimes for more than 30 years. A former Enforcement Attorney with the Securities and Exchange Commission (SEC), she understands how the government investigates and prosecutes federal white-collar criminal cases. She regularly represents high-profile clients, including executives at Fortune 500 Companies, as well as doctors, lawyers, professors, people involved in securities transactions, educators and students, medical professionals, and people from all walks of life who are under investigation or charged with financial crimes in federal court.
A fierce and tenacious advocate, Ms. Lefeber takes a hands-on approach to every case she takes on and is highly respected by her colleagues in the federal bar, federal judges, and her clients.
Contact Ms. Lefeber today to schedule a confidential consultation to discuss your case.