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Theranos Founder Elizabeth Holmes’s Bid to Stay Out of Prison Is Denied

The federal judge who oversaw the criminal-fraud trial of Theranos Inc. founder

Elizabeth Holmes

denied her request to stay out of prison while she appeals her guilty verdict.

U.S. District Judge

Edward Davila

said in a court filing late Monday that he denied Ms. Holmes’s request because he didn’t think her arguments for reversing her conviction or getting a new trial raise issues significant enough to merit a different outcome.

Ms. Holmes was found guilty on three counts of fraud and one count of conspiracy to commit fraud against Theranos investors in January 2022. Judge Davila sentenced her in November to more than 11 years in prison and ordered her to surrender to prison April 27. The court recommended that she serve her time at a federal prison camp in Bryan, Texas, that allows for family visitation, which it said “enhances rehabilitation.”

Ms. Holmes, the disgraced founder and chief executive of the blood-testing startup, is appealing the guilty verdict and asked to stay out of prison while her case winds its way through that process. She may now take her request to the Ninth Circuit Court of Appeals directly, which has already denied Ramesh “

Sunny” Balwani’s

request to stay out of prison while he appeals his conviction for defrauding Theranos investors and patients.  

Elizabeth Holmes was sentenced Friday to 135 months in prison for defrauding investors at her now-defunct blood-testing company Theranos. WSJ’s Heather Somerville reports on the judge’s decision and the defense’s appeal for leniency. Photo: Peter DaSilva/Shutterstock

Judge Davila’s decision comes after arguments in a hearing last month from the government and a lawyer for Ms. Holmes about whether she should be allowed to stay out pending appeal. Much of the conversation centered on whether she was a flight risk—Ms. Holmes previously had a one-way plane ticket to Mexico scheduled to depart a few weeks after the jury reached its verdict, court filings show. 

Judge Davila said he didn’t think Ms. Holmes, who recently gave birth to a second child, had been attempting to flee the country but that still wasn’t enough to allow her to stay out.

In her filing appealing the guilty verdict, Ms. Holmes challenged several of Judge Davila’s rulings on whether Theranos’s technology was accurate and reliable, among other things.

Judge Davila said in his decision Monday that even if the Ninth Circuit Court of Appeals were to side with her on the issue of the rulings, that still likely wouldn’t be grounds for a reversal of the conviction or a new trial since that was only one aspect of the case. Judge Davila previously denied Ms. Holmes’s requests for a new trial. 

“The mere fact that a purported error touched upon the accuracy or reliability of Theranos technology is not likely to support a finding that the jury’s verdict was materially affected, especially where the government had presented evidence of other misrepresentations unrelated to Theranos’s accuracy and reliability,” he wrote.

Ms. Holmes also challenged other rulings that Judge Davila said were also not likely to result in grounds for a new trial. A lawyer for Ms. Holmes didn’t respond to a request for comment.

Judge Davila recently also denied Mr. Balwani’s bid to stay out of prison pending appeal. Mr. Balwani, Theranos’s president and chief operating officer who oversaw the lab, was convicted of wire fraud and conspiracy to commit wire fraud against Theranos patients and investors and sentenced to nearly 13 years in prison. 

He also appealed the guilty verdict and asked Judge Davila to allow him to stay out of prison during the process. Following the judge’s decision, Mr. Balwani asked the appeals court directly to stay out; that request was also denied. Judge Davila has now told Mr. Balwani to report to prison by April 20, after originally telling him to do so by March 15. 

One of Mr. Balwani’s lawyers, Jeff Coopersmith, said they look forward to the Ninth Circuit’s consideration of the issues on appeal.

Ms. Holmes ran Theranos for nearly 15 years, attempting to revolutionize the blood-testing industry. She sought to develop technology that could test for a range of health conditions with just a finger prick and a few drops of blood, instead of the large needles and vials of blood that are used today. 

The Testimony of Elizabeth Holmes: Regret, Revelations and Deflections

Making the technology work proved difficult. Theranos managed to use its finger-prick blood-testing device for 12 types of tests, but the results were unreliable, according to evidence and testimony during Ms. Holmes’s monthslong trial. The company ended up secretly running most of its blood tests on commercial devices from other companies, some that it had altered to be able to use small amounts of blood.

Ms. Holmes also forged reports provided to some investors and partners by adding logos of

Pfizer Inc.

and other major drug companies without permission from the companies, prosecutors said. The government showed how some text had been deleted and added to the documents, which led some investors to think they were complimentary validation reports from the drug companies.

On the stand in her trial, Ms. Holmes testified that she made innocent mistakes and thought that the Theranos blood-testing technology was showing signs of success.

Mr. Balwani, her then-boyfriend, joined Theranos in 2009, six years after the company’s founding, as its vice chairman of its board. He became president and chief operating officer the following year. Mr. Balwani sometimes fired employees who raised concerns about the performance of Theranos’s technology, prosecutors and witnesses said. 

He also helped finance the company by underwriting a $12 million loan in April 2010, and bought $4.6 million in stock. His lawyers said his investments in the startup were proof of good faith, since he put millions of dollars on the line.

Prosecutors said he was responsible for the financial models that were given to investors that greatly exaggerated revenue and he also managed Theranos’s partnership with

Walgreens Boots Alliance Inc.,

which used the startup’s finger-prick tests at some of its drugstores. Mr. Balwani didn’t testify in his trial.

Write to Meghan Bobrowsky at [email protected]

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