Former Theranos executive Ramesh ‘Sunny’ Balwani was recently sentenced to 13 years in prison after being convicted on 12 counts of wire fraud and conspiracy. Balwani appealed his conviction, and he’s asked the district court to release him from prison while his appeal is pending. Elizabeth Holmes, the founder and... Read More »
Even with a new baby, convicted Theranos founder Elizabeth Holmes headed to prison during appeal as request to be free on bail denied by court
Elizabeth Holmes, the founder of Theranos, lost her request to remain free on bail as her appeal to overturn her conviction was denied by a California judge. Holmes is the former leader of the infamous medical technology startup that promised investors and consumers a radically new way of testing for health issues via a tiny drop of blood.
Ms. Holmes was still an undergraduate at Stanford University when she began working on her disruptive idea to offer patients the ability to forgo the numerous tubes used to draw blood and replace them with a tiny prick of a finger that would reap a drop or two of blood. Theranos promised its high-tech new system could use the finger prick of blood to screen patients for diseases.
Investors gave Holmes and Theranos almost $1 billion in investments before the new blood system was proven to work as promised. During the time leading up to the lawsuits, the Theranos blood system usually did not work properly, so the firm had to resort to using outside sources, such as typical commercial blood analysis systems to conduct tests for patients.
After a dramatic rise to fame and fortune, a jury convicted Holmes on three counts of wire fraud and one count of conspiracy to commit wire fraud. The jury found that the company, under Ms. Holmes’ mantle, defrauded numerous deep-pocketed investors of more than $100 million over the blood-testing system she loudly claimed was revolutionizing health care, which turned out to be a lie.
The misleading promises to investors plus false advertising to consumers about the efficacy of the Theranos system led to some patients missing vital health markers showing illnesses that needed medical supervision, since the fake blood-testing systems in pharmacies such as CVS did not report accurate results.
After her conviction, Ms. Holmes was sentenced to eleven years of prison and three years of supervised release. Simultaneously, the heavily pregnant woman was about to give birth. Although it is possible a judge will delay imprisonment for a new mother, as Ms. Holmes is now, in this case she is denied freedom on bail as her appeal goes to court.
During an appeal, courts may allow a convicted person, if not considered a flight risk or any kind of threat to others, to remain at home. However, the U.S. District Court for the Northern District of California ruled against her appeal.
The court said that even though Ms. Holmes is not seen as a danger to the community or a flight risk, her appeal did not present new evidence.
Ms. Holmes argued in her appeal that she did not promote a faulty product, which the courts ruled was inaccurate. In court documents, the court states in response to Ms. Holmes’ appeal, that ”these disputes do not directly pertain to the conduct for which Ms. Holmes was convicted.”
The court stated, “Ms. Holmes's misrepresentations to Theranos investors involved more than just whether Theranos technology worked as promised. Ms. Holmes had also made several misrepresentations...such as those regarding the company's financial status, reliance on third-party and commercially available devices, partnership with Walgreens, and validation by pharmaceutical companies.”
In her appeal, Ms. Holmes claimed the “opposition contains misrepresentations of factual misrepresentations and confidential information.”
The court disagreed, saying Ms. Holmes “has not raised a substantial question of law or fact (that is) is likely to result in a reversal or an order for a new trial of all counts.”
In the court documents, the “substantial question” needed for a successful appeal was not found to exist, with the documents stating that based on United States v. Handy 761 F.2d 1279, Ms. Holmes’ appeal “does not involve the likelihood that a reversal will occur in this particular case.” Thus, the court documents state that Ms. Holmes’ question for appeal does not meet the “necessary level of merit.”
Ms. Holmes is due to self-surrender on April 27 for “135 months of imprisonment,” followed by a concurrent sentence of “three years of supervised release.”
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