December 3, 2022

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Theranos scam, Elizabeth Holmes was sentenced to more than 11 years in prison

Before FTX in cryptocurrency and Nikola in electric vehicles, there was Theranos. One of the biggest scams to rock Silicon Valley and Wall Street, perhaps the mother of all contemporary scandals between high technology and finance, has reached its final chapter. Elizabeth Holmes, founder and CEO of a startup that promised to revolutionize blood testing and be worth up to $9 billion, will serve 11 years and three months in prison – 135 months. The sentence handed down by the San Diego District Court judge in charge of the case was less than the maximum possible and what the prosecution had requested, but much heavier than the defense had hoped. The judge announced another hearing to decide on damages and compensation. Holmes, who is set to begin serving his sentence on April 27, has announced plans to appeal.

From dropout to high-tech superstar

Holmes is 38 today and he was 19 when he born his company in the most classic tradition, left Stanford as a dropout and used the money from his studies otherwise, i.e. to start his startup. She also became one of the rare women who broke into American high technology, which is still often dominated by men. She has now heard the judge’s decision after convicting her last January, after a months-long trial, of four counts of defrauding investors, because her innovative technology didn’t really exist.

Theranos saga

The Theranos saga, which went bankrupt in 2018, has become a symbol of the dangers of excess, manipulation and fraud in the high-tech world, with the constant search for next genius and future innovation to create wealth accompanied by inadequate controls and oversight by both authorities and sometimes seasoned financiers. The deception in the story was exposed through investigative reporting by The Wall Street Journal and has since spawned books, films, and TV series.

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Analyze with a drop

Theranos raised 945 million from investors and secured agreements and partnerships with prestigious pharmacy chains, such as Walgreens, claiming the success of an invention that would have allowed extensive analyzes using very few drops of blood and a simple finger prick. In fact, the company relied on traditional technologies at best, because its obscure innovations never worked as advertised.

perfect sentence?

Judge Edward Davila’s decision was, in addition to the merits of the case, complicated by the public significance of the scandal. The stress of sending a message prevents and deters similar scams. Holmes risked up to 20 years in prison, with prosecutors seeking 15 years behind bars and $800 million in damages, accusing the entrepreneur of endangering patients’ health by lying about the effectiveness of her technology. Instead, the defense suggested no more than 18 months in prison, perhaps only house arrest and community service. In support of Holmes, who apologized to the court for the scandal, he also cited dozens of letters from his supporters who still portrayed her above all as an exemplary business woman. In the end, the sentencing seemed in line with observers’ expectations: On average, according to studies cited by The Wall Street Journal, women convicted of similar crimes risk 11 years in prison, compared to sentences approaching 20 years for men.