Elizabeth Holmes is going to prison – with a $500m bill
- Reference: 1684350576
- News link: https://www.theregister.co.uk/2023/05/17/elizabeth_holmes_prison/
- Source link:
Holmes' [1]most recent attempt to delay the start of her stretch behind bars saw her begging the Ninth Circuit Court of Appeals to reverse Judge Edward Davila's denial of her [2]previous attempt to let her remain free on bail while appealing her conviction. The Ninth Circuit was brief in its dismissal of her claims, and came to a conclusion similar to Davila's denial of Holmes' request for freedom in April.
The failed bio-biz founder "has not shown that the appeal raises a 'substantial question' of law or fact that is 'fairly debatable,'" the three-judge panel [3]said [PDF], meaning it was unlikely the outcome of any appeal against her conviction would reverse the verdict, result in a new trial, or otherwise modify her sentence.
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It's the Ninth Circuit telling her she's at a dead end. So much for that [5]soft profile piece by the New York Times on "Liz" the other week.
[6]
[7]
Holmes' lawyers had argued that Judge Davila made an error in denying her bail request, and that the guilty verdict resulted from "prejudicial errors" that warranted a new trial. Under Ninth Circuit Court rules, a defendant on bail who files an appeal with the court remains on bail until a ruling is issued in the motion. Thus, they felt she should remain free while waiting to overturn her conviction, a point the courts have dismissed.
Holmes' co-defendant and former Theranos lieutenant Ramesh 'Sunny' Balwani made a similar appeal to the Ninth Circuit, and his request was denied on similar grounds of not raising a substantial question of law or fact likely to result in a reversal of his conviction. Balwani, who received a 13-year sentence, reported to prison on April 20, a week before Holmes was originally scheduled to begin her sentence.
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According to a [9]preliminary order [PDF], Holmes' latest prison report date is May 30, giving her just shy of two weeks to get her affairs in order before turning herself in at the Big House.
Judge puts a price on Theranos' fraud
Along with ordering Holmes to prison this week, Judge Davila also published a [10]restitution order [PDF] in the Holmes/Balwani case, finding the pair jointly responsible for repaying $452,047,268 (£361,533,844) to Theranos investors defrauded by the pair.
Investors include News Corp supremo Rupert Murdoch, who is due just shy of $125 million; pharmacy chain Walgreens and grocery chain Safeway, who are owed $40m and $14.5m, respectively; the DeVos family's RDV Corporation, which Davila ordered be repaid nearly $100m; and eight other individuals and investment funds. The court said there was insufficient evidence to order restitution for lower class investments.
[11]Elizabeth Holmes is not going to prison – for the moment
[12]Theranos founder Holmes ordered to jail after appeal snub
[13]Theranos' Sunny Balwani gets longer sentence than Elizabeth Holmes
[14]Former Theranos CEO Elizabeth Holmes sentenced to 11 years in prison
According to the restitution order, Holmes and Balwani tried to wiggle their way out of repaying investors using the "complexity exception," which allows a court to waive mandatory restitution in cases that are complex enough to delay the sentencing process. Judge Davila didn't agree with Holmes and Balwani's attorneys, saying that "the Court does not find that the calculation here involved such unwieldy issues of fact to preclude restitution."
And while Holmes may have been acquitted on some counts, Davila said she's still liable for repayments since she was a key part of Theranos.
"To the extent Defendant Holmes may object that restitution is improper as to her on the individual investor fraud counts for which she was not convicted, restitution may nonetheless be ordered 'based on related but uncharged conduct that is part of a fraud scheme,'" Davila said.
It's not clear if, when or how Holmes and Balwani will repay the $452m. [15]According to the US Department of Justice, restitution payments are legally enforceable for 20 years following a judgment, but "the chance of full recovery is very low." ®
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[1] https://www.theregister.com/2023/04/26/elizabeth_holmes_appeal/
[2] https://www.theregister.com/2023/04/11/theranos_holmes_prison/
[3] https://regmedia.co.uk/2023/05/17/holmes-9th-circuit-rejection.pdf
[4] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offbeat/science&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2ZGVOiV6LK941jazNDkkRJAAAAAw&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
[5] https://nypost.com/2023/05/08/ny-times-blasted-for-elizabeth-holmes-puff-piece/
[6] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offbeat/science&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44ZGVOiV6LK941jazNDkkRJAAAAAw&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[7] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offbeat/science&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33ZGVOiV6LK941jazNDkkRJAAAAAw&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[8] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offbeat/science&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44ZGVOiV6LK941jazNDkkRJAAAAAw&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[9] https://regmedia.co.uk/2023/05/17/holmes-may30-report-date.pdf
[10] https://regmedia.co.uk/2023/05/17/holmes-restitution-order.pdf
[11] https://www.theregister.com/2023/04/26/elizabeth_holmes_appeal/
[12] https://www.theregister.com/2023/04/11/theranos_holmes_prison/
[13] https://www.theregister.com/2022/12/08/theranos_sunny_balwani_receives_longer/
[14] https://www.theregister.com/2022/11/18/theranos_elizabeth_holmes_prison/
[15] https://www.justice.gov/criminal-vns/restitution-process
[16] https://whitepapers.theregister.com/
Re: I'm a bit torn
I'm torn by the fact that whilst it can be fun to see venture capitalists screwing up, it's probably our pension funds paying for it. The due diligence done on US companies that look like they are doing well is non existent. I'm hoping this means that the process will improve and checks will be made. However, that cost money so is unlikely.
I've been through proper due diligence in a start up where they appointed experts to review all major innovative claims and review code for best practice.
At the time I was warned about certain styles of coding and got some really good feedback. Once the investment came in I got an email from the guy that did the due diligence informing us that he had really enjoyed how cooperative we had been and that he was impressed with the archityand code. He admitted he had to find something to complain about and wished us good luck. His feedback was fair,measured and forced us to improve. When the company was sold on we breezed through due diligence, I thin mostly because the VCs had done a good job.
Gotta love the world today.
It's to complex to enforce repayment for the small investors but the bog boys have that perk.
Insufficient Evidence?
The court said there was insufficient evidence to order restitution for lower class investments.
What is the "insuffcicient evidence" here? Do the judges believe stock-trading records of "the lower class" investors are some how less-reliable than the stock-trading records of the "higher class" investors? Or, is it
(1) the defendants were only proven to have directly lied about Theranos (misrepresented the company and its stock's prospects) to only the "higher class" investors?
(2) the judges think the math is too hard for them -- though those judges won't actually be doing that math (proportionality calculations)?
(3) the judges don't want the court bothered by the potentially-millions of stock sale calculations?
(4) the "higher class" investors sent their emissaries to the judges and said, "Whatever happens, we get our cut first ... right? "
Re: Insufficient Evidence?
At the risk of providing a literal answer to a rhetorical question, it is #1. It can be proven that e.g. Holmes lied to Walgreens; Walgreens invested on the basis of those lies; and Walgreens lost money as a result. For investors not in the room when Holmes lied, who knows? But it's all irrelevant anyway, none of them will ever get anything back
Mixed feelings today
Flinging that crook Holmes in jail has made my day. Long may she rot there.
Ordering her to pay the Dirty Digger a 9-figure sum is too depressing for words. That money would be better spent compensating the victims of fraudster Holmes who suffered because of the faked or wrong results from her machines.
And you think YOU had a bad day
"You're going to jail and, Oh yes, you owe Rupert Murdock and his buddies half a billion dollars" Now that's a bad day.
I can't see that I feel all that badly for Ms Holmes. But there is some good news. She apparently doesn't have the money she's supposed to send to Murdoch and friends.
I don't think you wanted to do that!
"The main thing about money, Bud, is that it makes you do things you don't want to do."
Lou (Wall Street, 1987)
End of an error
So the skills needed to build and run the West's richest, most politically powerful, and influential Media Empire have zero overlap with performing the bare minimum of due diligence required for investment of hundreds of millions of dollars in a technical project.
Media control and owning the politicians is the only way to get rich and stay there. Most tech that actually makes things is too high risk - it can be outsourced to China. The SV bros must have realized this now and are firing everybody not directly supporting control of Media though AI LLM. Next thing you known they'll instruct the pols to regulate AI LLM so only the big boys can play.
The cynic in me wonders ...
... how long before she "suddenly" finds herself pregnant again, and uses that to beg house arrest instead.
I'm a bit torn
On one hand, that weirdo con artist might actually go to prison, but then a bunch of scumbags who should have known better might get some of their money back.
In a perfect world a meteorite would hit the building where they were meeting to celebrate.