Holmes gets 11 years in prison

Holmes gets 11 years in prison

The downfall of the former CEO of Theranos

This story is a cautionary tale for eccentric founders and investors who blindly throw money at their inventions.

After her false claim that her invention could detect diseases from a single drop of blood, she was sentenced Elizabeth More than 11 years in prison.

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Holmes gets 11 years in prison

This ruling is considered the end of the Silicon Valley saga. The verdict passed on the young institution that attracted investors with empty and idealistic promises and reaped hundreds of millions of dollars. Experts say it's an issue that could have an impact on how investors evaluate new startups. Many founders have used hyperbole to describe their visions and raise money, but criminal charges of fraud are rare.

“I pushed the envelope too far,” says Anat Alon Beck, a law professor at Case Western Reserve University

a little". “You fake it ‘til you make it,” but it was too “fake.” “

But the case is not completely over. Holmes' former friend and business partner Ramesh "Sunny" sentenced

Balwani was sent to prison on December 7. He was convicted on 12 felony counts of fraud and conspiracy against Theranos investors. Holmes also accused him of mistreating her, but Balwani denied the allegations.

Theranos, which Holmes pulled out of Stanford University to launch and which Holmes sought funding by claiming that her technology would revolutionize the world of medicine, as she could use a few drops of blood to look for hundreds of diseases. It turned the startup into a $9 billion unicorn. But whistleblowers revealed that Holmes had lied about the capabilities of her invention. Instead of saving lives, it was putting patients at serious risk of false results.

Holmes faced up to 20 years in prison for her actions. In a memo that portrayed Holmes as a compassionate child who grew into a naive young business leader, her lawyers asked that she serve 18 months in residency.

Household followed by supervised release and community service. Prosecutors sought a 15-year prison sentence and $8 million in restitution.

“I stand before you to take responsibility for my failures,” Holmes said before receiving her sentence of 135 months, or 11 years and 25 days, for her love of Theranos. “I regret my failures with every cell in my body.”

This has been my life's work.

In October, Holmes again tried to avoid prison by seeking a new trial. (After her conviction earlier this year, she made several such suggestions.) The latest suggestion came after former Theranos lab director Adam Rosendorf, a witness who testified against Holmes, came to her house in an attempt to apologize for the role he played in her conviction. . That prompted Holmes to argue against using his testimony against her, but the judge denied the request in early November.

In June 2018, Holmes was charged with 11 counts of fraud and convicted of four: one for conspiracy and three for fraud. The jury did not convict her on charges of defrauding patients by subjecting them to false blood tests, which gave them false positive results for HIV and abortion and included plans to set up blood testing centers.

Alun Beck says the Holmes case will have a chilling effect on new startups seeking venture capital. Startups face a market slowdown and layoffs in an overstretched tech industry, but Holmes' case is also important. Alun Beck says it demonstrates the importance of corporate governance and investment monitoring.

Sanjeev Agrawal, president and COO of health tech company LeanTaaS, believes. Holmes' condition will have a direct impact on fundraising, but it is not the only factor.

“It's difficult to separate this effect from the fact that the market is going down,” he says. But he adds that scrutiny of companies, and questions about whether they provide real value and have real customers, have increased.

Investors who jumped in just as the company was on its way up got early benefits, but it also made them responsible for conducting an independent audit — a step many of them skipped, caught up in the excitement of Holmes' promises. But with so many boom and bust cycles, combined with the fear of missing out in a fast-moving market, investors don't always see through the noise. “Investors should do more due diligence,” says Agrawal. “There is so much money in the system that it is easy to spend money on shiny things that look good.”



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