Theranos founder Elizabeth Holmes just suffered a major legal setback because a federal appellate panel upheld her fraud convictions. A three-judge panel of the 9th U.S. Circuit Court of Appeals on Monday affirmed the convictions, sentences and nine-figure restitution ordered against both Holmes and Theranos president, Ramesh “Sunny” Balwani.
Holmes and Balwani, who were also in a personal relationship and Holmes said he abused her, were tried separately. She was sentenced to about 11 years (135 months), while he was sentenced to about 13 years (155 months). According to the federal Bureau of Prisons, Holmes, 41, is in a minimum security federal prison camp in Texas with a release date in 2032, while Balwani, 59, is in a medium security facility in California with a 2033 release date.
Theranos was supposedly going to revolutionize medical laboratory testing with the ability to run fast, accurate and affordable tests with just a drop of blood from a finger prick. “But the vision sold by Holmes and Balwani was nothing more than a mirage,” 9th Circuit Judge Jacqueline H. Nguyen wrote for the panel, adding that the “grandiose achievements touted by Holmes and Balwani were half-truths and outright lies.”
Holmes was convicted of crimes related to fraud against investors while the jury acquitted her or hung on other counts. Balwani was convicted on all counts at his trial.
The federal panel rejected a slew of arguments from both defendants, including that their trials featured improper testimony from Theranos employees. While the ruling is a major setback for the defendants, they can further appeal to a fuller panel of 9th Circuit judges and the Supreme Court, which generally has broad discretion over whether to accept cases for review. Subscribe to the Deadline: Legal Newsletter for expert analysis on the top legal stories of the week, including updates from the Supreme Court and developments in Donald Trump’s legal cases.
Jordan Rubin is the Deadline: Legal Blog writer. He was a prosecutor for the New York County District Attorney’s Office in Manhattan and is the author of “Bizarro," a book about the secret war on synthetic drugs. Before he joined MS NOW, he was a legal reporter for Bloomberg Law.
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