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What happens next to Theranos founder found guilty of fraud

Theranos founder Elizabeth Holmes (center). (Photo: Reuters)
Written by publishing team

What will happen next for Elizabeth Holmes?

Prosecutors have suggested a sentencing date in mid-September for Ms Holmes and said they did not plan to pursue the three counts that have left the jury dead in her criminal fraud trial.

If the proposal is accepted by the federal judge overseeing the case, Ms Holmes will remain out of bail for at least eight months. Her $500,000 bond must now be secured by title.

The government has proposed a sentencing date in September to give time for another Theranos-related trial, that of Ramesh “Sunny” Balwani, Ms. Holmes’ former deputy and ex-boyfriend.

Silicon Valley has promised to revolutionize blood testing, claiming that its technology can test more than 200 health conditions from a finger prick of blood. The problematic Theranos could only test dozens of devices, and relied on commercial blood analyzers for the rest; His results were unreliable and inaccurate. The trial showed that Ms. Holmes told investors lies, including a partnership with the military did not exist

What are her chances of appeal?

Ms. Holmes is sure to appeal, a process that could take years. On appeal, Ms. Holmes can challenge aspects including evidence allowed by the judge to the defense’s objections or any sign of juror misconduct, although none has yet come to light.

Trial observers said the mixed nature of the verdict could make it difficult to appeal because it’s hard to say the jury didn’t know what it was doing or the jury was unfairly biased in the case.

Lawyers who observed the trial said US District Judge Edward Davila’s handling of the case makes the appeal more difficult for Ms. Holmes. Observers said he often divided disagreement on his rulings, and at times appeared respectful to Mrs. Holmes and her legal team.

Even before appealing to a higher court, her lawyers said they intended to petition Judge Davila, asking him to overturn the conviction or grant a new trial. These deposits are due in the coming months.

What possible prison time would Mrs. Holmes face?

The guilty verdict against Ms. Holmes means she could go to prison for years. Sentencing is a complex and time-consuming process, and many steps remain between Ms. Holmes and any potential time in prison.

Each of the four counts carries a maximum prison sentence of 20 years, so she technically faces up to 80 years in prison. However, sentencing experts do not believe that this will happen. In practice, government data shows that for years judges have been handing out more reduced sentences than the guidelines suggest for economic crimes such as fraud, theft and insider trading.

An analysis by the Wall Street Journal by sentencing counsel Imperial Justice LLC found that the average prison term for defendants with similar cases to Ms. Holmes was 16 years.

The first step is to have the conduct officer look into the facts of the case and compile a detailed report before passing judgment. The report must be submitted to each side at least 45 days prior to the sentencing hearing.

What was the rule for count after count in the Elizabeth Holmes trial?

1. Plot to commit wire fraud against Theranos investors: Guilty

2. Conspiracy to commit wire fraud against patients paying for Theranos: Not guilty

3. Electronic Fraud Against Theranos Investors: $99,990 Wire Transfer from Alan Jay Eisenman: No Verdict

4. Electronic Fraud Against Theranos Investors: $5,349,900 Wire Transfer from Black Diamond Ventures: No Verdict

5. Electronic Fraud Against Theranos Investors: $4,875,000 Wire Transfer from Hall Phoenix Inwood Ltd: No Verdict

6. Electronic Fraud against Theranos Investors: $38,336,632 Wire Transfer from PFM Healthcare Master Fund: Guilty

7. Electronic fraud against Theranos investors: $99,999,984 wire transfer from Lakeshore Capital Management LP: Guilty

8. Electronic Fraud Against Theranos Investors: $5,999,997 Wire Transfer From Mosley Family Holdings LLC: Guilty

9. Prosecutors dropped this charge in November, after a mistake was made that resulted in a judge dismissing essential testimony, making it impossible for the plaintiffs to prove the charges against them.

10. Wired fraud against patients paying for Theranos: wire transfer of patient ET blood test results: not guilty

11. Wired fraud against patients paying for Theranos: wire transfer of patient ME blood test results: not guilty

12. Wire fraud against patients paying for Theranos: $1,126,661 wire transfer used to purchase ads for Theranos Wellness Centers: Not guilty

How did the jury reach its verdict?

Defense rested on December 8, 2021. Closing arguments took place on December 16 and December 17. The jury delivered the case on December 17 and began deliberating in earnest the following Monday. On January 3, the seventh day of deliberations, the jury notified the judge that it was unable to reach a unanimous verdict on three of the 11 counts. The judge instructed the jurors to continue deliberating. The instructions also urged them not to change their beliefs solely because of the opinions of their fellow jurors.

The jury then continued its deliberations and returned later in the day to inform the judge again that it was still unable to reach a unanimous verdict on all three counts. At that point, the judge polled the jury to confirm the deadlock on the three counts, then returned it to the jury room to fill out a sentencing form on the remaining eight counts.

The jury deliberated for more than 50 hours before returning the verdict.

Have jurors spoken since sentencing?

Some have. Susanna Stefanik, known throughout the trial as juror 8, said jurors focused on two pieces of evidence they believed showed Ms Holmes intentionally lied to investors.

To some, the credit evidence – and what Ms. Stefanek called her first smoking gun – was a report given to investors by Theranos that Ms Holmes altered to make it look like an endorsement from Pfizer Inc. Ms Stefanek also cited a document of financial projections made to potential investors, including prosecution witness Lisa Peterson, who works for the DeVos family office, who invested $100 million in Theranos.

“There were a lot of lies on that paper,” said Ms. Stefanik, managing editor at Apple Inc. The 2014 document projected $40 million in annual revenue from drug companies, although jurors had heard from government witnesses that Theranos had no such contracts at the time.

The juror said the debate was among the most significant in more than 50 hours of deliberation.

What was the main issue raised by the defense?

The defense placed a large and potentially risky bet by putting Mrs. Holmes on the podium to testify over the course of seven days.

Through it all, she told her story in a clear, confident voice that followers of Theranos might remember from the company’s heyday. Mrs. Holmes seldom falters while being questioned by her attorney or the government, answering briefly and making eye contact with the questioner, and only occasionally speaking directly to the jury. She was smiling a lot and laughing a little. Her composure only exploded when she broke down in tears as she testified about what she described as an abusive personal relationship with Mr. Balwani.

Mr. Balwani’s lawyer denied the allegations of abuse.

Ms. Holmes regretted some of the business decisions and admitted mistakes, but she also sought to blame others: Mr. Balwani, the laboratory directors, staff scientists and her marketing agency. The defense approached the trial through several axes.

The first is that her knowledge of the company came from its employees who she trusts. She said the reports she received from subordinates led her to believe that the company’s technology elements were working successfully.

Second, Ms Holmes targeted what lawyers after the trial saw as the prosecution’s strongest evidence: Theranos documents that had been altered to include the names and logos of drug companies, including Pfizer Inc. , which incorrectly indicates that companies have validated Theranos technology. Ms Holmes has admitted manipulating the reports but said it was not done maliciously.

Third, Ms Holmes said Theranos started using commercial blood analyzers because the company couldn’t handle a large volume of patients’ blood samples on its own devices, and not because the company was trying to mislead anyone.

Fourth, Ms Holmes lamented how Theranos handled complaints from lab staff and said she wished she had handled business decisions differently, moments that made her seem more relatable, legal observers said.

Fifthly, Ms. Holmes claimed that Mr. Balwani was emotionally and sexually abused. She described a relationship in which she was forced to have sex against her will and spent more than a decade trying to live up to his strict standards at the expense of her friends, family, and personal agency.

What is the main issue raised by the prosecution?

The plaintiffs provided an account of a CEO who repeatedly fabricated the successes of her technology while building a startup that ultimately failed.

The case included testimony from investors, former employees, scientists and a retired four-star general. It featured information that had not been captured by the extensive media coverage of Theranos: forged documents, a previously unknown lab manager who had never visited the lab, exaggerated revenue expectations for investors, and audio clips from a recording of a call Ms. Holmes was promoting the company to investors.

Investors told the story of how they were persuaded to back Theranos by claims of financial and technological success that turned out to be untrue. Previous employees witnessed how Ms. Holmes and her deputies rejected their efforts to raise alarms about the inaccuracy of Theranos’ tests and to prevent the company from using its devices on patients. Patients testified about receiving blood test results from Theranos that mistakenly led them to believe they had serious health conditions.

Prosecutors described Ms. Holmes’ allegations of abuse against Mr. Balwani as not relevant to the case, and told the jury that the defense had not presented any evidence and that Ms. Holmes had not given any testimony to connect her allegations to personal trauma to the fraud charges against her. she has.

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