back to article Elizabeth Holmes is going to prison – with a $500m bill

Disgraced Theranos founder Elizabeth Holmes' final bid to keep herself out of prison has failed. That leaves her with a ticket to Club Fed to begin an 11-year sentence after being convicted last year of defrauding billionaires who invested in her imploded blood-testing startup. Holmes' most recent attempt to delay the start of …

  1. Youngone Silver badge

    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.

    1. Anonymous Coward
      Anonymous Coward

      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.

      1. Len

        Re: I'm a bit torn

        To be fair, and I'm not a massive fan of VCs plus I think most of them are not as smart as they think they are, in this case hardly any (or even none?) VCs were involved. Theranos went shopping for investment with the usual suspects and all of them turned them down. They probably sniffed something suspicious that they couldn't put a finger on.

        That's how Theranos ended up with such an odd collection of investors, a few rich politicians, some rich business people, some random idiots with way more money than sense but very few investors for whom investing is their day job.

    2. Richard 12 Silver badge

      Re: I'm a bit torn

      If it makes you feel better, they'll never see even 10% of that money.

      Enforcing court orders for large repayments is basically impossible. If a reasonable proportion of the money exists, then the felon can generally hide it quite well. And if it doesn't, well, it doesn't.

      1. John Brown (no body) Silver badge

        Re: I'm a bit torn

        Well, the enforcement order lasts for 20 years, long after their sentences will be completed, of which it's quite probably they will only serve 1/2 to 3/4 anyway. Unless they are planning on taking minimum wage employment and living on the breadline, I'd expect there to be a percentage based repayment plan in place on all future earnings. I suppose a lot depends on who they are still friends with once they get out. They'll need to be very creative to get back to their previous lifestyle while trying to "hide" money as being theirs. Family might let them live in a mansion rent free and pay their bills for them I suppose, but it will all be scrutinised very carefully.

        1. GBE

          Re: I'm a bit torn

          [...] long after their sentences will be completed, of which it's quite probably they will only serve 1/2 to 3/4 anyway.

          On what do you base that statement? Everything I've read says that the maximum reduction you can get in the federal prison system is 15% off for good behavior.

          1. Michael Wojcik Silver badge

            Re: I'm a bit torn

            ... unless you get a Presidential pardon. Even excluding mass pardons (the largest of which was Carter's pardon for Vietnam War draft dodgers, amounting to a couple hundred thousand people; most recently Biden pardoned more than six thousand for marijuana possession), some presidents have pardoned thousands of convicts, often as the POTUS in question is on the way out the door. Clinton's pardon of Marc Rich is one infamous recent example, but see also e.g. Trump's December pardons (Stone, Manafort, etc).

            1. Anonymous Coward
              Anonymous Coward

              Wouldn't hold my breath on that one

              They will probably be out of prison before someone who could pardon them would bother. Trump will probably in the next cell over, and anyone else would likely only consider it as they were heading out the door in a Clintonesque lame duck pardon party.

              I'm still annoyed how much she and people like her still get so much special treatment when they are committing massive fraud. People got worse sentences for importing soviet tractor parts or stealing mail. Massive white collar crime deserves swift and stern punishment. She made this a farce.

        2. david 12 Silver badge

          Re: I'm a bit torn

          The Federal system abolished Parole in 1987. (Parole is the system by which you serve part of your sentence in Goal, and part 'on parole').

          Part of this is just a renaming exercise. Holmes still gets 'supervised release' (parole) after the end of her prison residency. But it wasn't entirely Orwellian: average length of residency has approximately doubled.

          This had had no effect on reducing crime, but has significantly increased costs, increased employment, and lead to massive contracts with the three major private contractors who own and operate 12 Federal prisons.

          There is still an 'out' available. "In Prison" can mean a Government Prison, or a Private Prison, or your own house. I don't think the last is likely in this case, but if something like COVID comes back, home detention may return too.

          1. jake Silver badge

            Re: I'm a bit torn

            "you serve part of your sentence in Goal"

            If you're trying to show the world how important you are by using a dated spelling of the word, kindly splel it correctly. Ta.

      2. Baximelter

        Re: I'm a bit torn

        "Enforcing court orders for large repayments is basically impossible."

        Indeed. I think immediately of OJ Simpson.

        1. Eclectic Man Silver badge

          Re: I'm a bit torn

          In the case of O J Simpson (USAfolk lawyers please correct me if I'm wrong) I believe that his pension is basically immune to repayments (otherwise he'd be forced to live off state funds) and he has otherwise very few, if any, liquid assets.

          I suspect that neither of the defendants in the Theranos case have anything like $400 million assets of any sort. What really amazes me is that people who set up these scams do not realise that when their 'product' demonstrably does not work, they are bound to be caught and seem so affronted and confused that they are actually held to account. We even (sometimes) manage to do that in the UK, and the USA is way more litigious.

          See for James McCormick, who, IMHO should have been put in the middle of a minefield with a selection of his products and told to find his own way out, but then I'm a vindictive old git.

      3. Big Softie

        Re: I'm a bit torn

        It doesn't exist, she spent it on expensive lawyers to keep people from telling the truth, and a lavish lifestyle befitting such a successful CEO...

  2. Richard Jukes

    Gotta love the world today.

    It's to complex to enforce repayment for the small investors but the bog boys have that perk.

    1. Sceptic Tank Silver badge

      The bog is too good for them

      1. EricB123 Bronze badge

        I Know What's Good for Them

        "The bog is too good for them"

        How about someone's septic tank? Preferably one that hasn't been pumped out in a decade.

    2. Dabooka

      Just what I was going to post

      fuck the small guys, but there's your wedge chaps.

      And yes I'm aware they'll not see a fraction of it but that's hardly the point. 'Insufficient evidence' gimme a break

      1. that one in the corner Silver badge

        Re: Just what I was going to post

        > 'Insufficient evidence' gimme a break

        Typo - he meant to "insufficient money paid on lawyers, especially my nephew, Saul".

  3. Anonymous Coward
    Anonymous Coward

    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?"

    1. Insert sadsack pun here

      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

    2. Timop

      Re: Insufficient Evidence?

      Insufficient evidence, insufficient connections. Sometimes the line is just too blurry and these things might accidentally mix.

      And now I started thinking about billionaires getting higher return to capital compared to averages. Bit like the playing field was tilted by design.

      1. SimonL

        Re: Insufficient Evidence?

        B0llocks isn't it.

        Typical of how money works.

        The corporation who put $10m in can afford to lose it, but can claim it all back.

        The guy who scrapes 10 bucks together in the hope of making his life a little better, entitled to bugger all back.

        The irony being, that as said, it's unlikely the big boys will get much back, but I bet there will be plenty available that could have paid back the small guys first.

    3. Version 1.0 Silver badge

      Re: Insufficient Evidence?

      "When St Patrick drove the snakes out of Ireland they all came to New York and became Judges" - Brendan Behan

    4. Michael Wojcik Silver badge

      Re: Insufficient Evidence?

      Frankly, small investors who invested directly in Theranos were either comfortable with a high degree of risk, or were idiots.

      As others have noted, these restitution orders are essentially symbolic; their chief function is to make it difficult for people like Holmes and Balwani to get rich again for the next two decades. No one's likely to see much in the way of payment.

      There's little social benefit in having the court spend who knows how long trying to track down every two-bit investor, none of whom would actually be significantly compensated.

    5. martinusher Silver badge

      Re: Insufficient Evidence?

      If you want to invest at that level then you need to be 'qualified' per SEC rules. Qualified doesn't just mean 'more money than sense', it implies that you know what you're doing and are prepared to risk your stake.

  4. Anonymous Coward
    Anonymous Coward

    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.

    1. mevets

      Re: Mixed feelings today

      I am not sure what the exact crime was -- fraud or losing money?

      It seems that Theranos did almost the exact same thing as Uber -- used investors money to pretend they had a viable service when they didn't.

      One difference is that Uber had a sort of business model.

      All it needed to do was drive the traditional taxi companies out of business, then could stop *dumping* its services and charge realistic fines.

      In effect, the use of investors money transformed from *providing the illusion of a viable product* to *bankrupting the competition in taxi-like services*.

      Yet there is no talk of Uber facing *anti-trust* charges for predatory pricing; nor dozens of others that exploited similar strategies.

      1. Yet Another Anonymous coward Silver badge

        Re: Mixed feelings today

        There is a difference between optimistic view of future performance and outright lying. Especially when the FDA are involved

        Assuming the original plan was legitimate, and they were "faking it till you make it", then at some point it became obvious that the tech would never work and it turned into a scam.

        This isn't that unusual, the iPhone that Jobs first demonstrated only worked on stage because they had setup a private cell network just for that device.

        A lot of pre-release game consoles demo'ed at CES with the game actually running on a bunch of servers behind the curtain.

      2. katrinab Silver badge

        Re: Mixed feelings today

        The difference is that lots of people take Über rides, and they work as described. The question is about whether they can do it profitably, not whether they can do it at all.

    2. Skiver

      Re: Mixed feelings today

      She's not going to rot in jail.

      She's probably being sent to white collar criminal prison and it is unlikely she will serve her whole sentence actually incarcerated.

      Since she comes from money, her life is likely to continue relatively unchanged once she's free from prison and probation.

      1. Insert sadsack pun here

        Re: Mixed feelings today

        Federal prisoners do 85% of their sentence, at least. Holmes will serve many years.

        "White collar criminal prisons" don't exist. You are presumably making a sarcastic and ill-informed to minimum security facilities. But they're not comfortable or enjoyable - it's prison, and as Holmes's sentence exceeds ten years she is not even eligible for minimum security.

        She's going to be separated from her children and kept in a prison. Maybe she deserves it, but it's nothing to revel in.

  5. vtcodger Silver badge

    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.

    1. Francis Boyle Silver badge

      If she wants try giving Murdoch some grief

      she might even have my support. You must choose your enemies carefully.

    2. Ideasource Bronze badge

      Re: And you think YOU had a bad day

      You can spend 20 years trying to pay that back, or wait out the 20 years broke operating by cash for labor under the table and direct trade of service.

      If she has wealthy friends or family that cares and oftentimes wealthy people do have wealthy friends, she might just camp out in guest rooms for the rest of her life living relatively well.

      Or maybe she'll reinvent herself in the wandering festival scene where a traveling person can disappear under a new name.

      Money's just business.

      The jail time is the only real punishment

      1. katrinab Silver badge
        Black Helicopters

        Re: And you think YOU had a bad day

        If Wikipaedia is correct, her father was a vice president at Enron.

        I'm not sure if that means he is very rich or not at all rich. but clearly it runs in the family.

  6. Charles Bu

    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)

    1. My other car WAS an IAV Stryker

      Re: I don't think you wanted to do that!

      2 Timothy 6:10 -- For the love of money is a root of all kinds of evils. (ESV)

      Doesn't get much more to the heart of the matter than that.

  7. Anonymous Coward
    Anonymous Coward

    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.

    1. Jellied Eel Silver badge

      Re: 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.

      Yep, an element of caveat emptor should apply. Walgreens should have know better, them being 'trade' and having (or should have) access to medical professionals who could have advised. More private investors like Murdoch maybe have more of an excuse for having been conned, but I've done some due diligence work for those types as well.

      1. jake Silver badge

        Re: End of an error


        Shit, I knew it was fraud, just from the description. So did many of the other commentards here on ElReg, and elsewhere online. We commented on it at fairly great length. The technology just isn't there yet.

        It WILL be. Maybe in 10-20 years or so.

        1. Richard 12 Silver badge

          Re: End of an error

          The "it will be" is why they invested.

          If you posit that technology will get there eventually, at some point someone who claims they got it working isn't going to be lying.

          Of course, large step changes in technology never happen out of nowhere, there's always been multiple scientific papers along the way. Due diligence would imply looking for them.

          1. Jellied Eel Silver badge

            Re: End of an error

            The "it will be" is why they invested.

            If you posit that technology will get there eventually, at some point someone who claims they got it working isn't going to be lying.

            Yep. There's also a lot of optimism bias in my albeit limited experience of doing due diligence. So either being contracted by a bid team, who may want a rather optimistic opinion. If they 'win' the bid, they usually get a success fee based on the deal size. So those may have been somewhat biased. Or I got to find out what a 'private office' was, and those were more fun to consult with because if they lost their owner's money, they'd get fired. Those tended to want a more honest opinion.

          2. Paul Hovnanian Silver badge

            Re: End of an error

            "The "it will be" is why they invested."

            You want to be like Apple. Not the first one to the table with a phone or MP3 player. But the one who has watched the early adopters mistakes, learned from them and produced a well thought out product.

            1. DiViDeD

              Re: End of an error

              But I thought Apple were the first on the table with a smartphone?

          3. Someone Else Silver badge

            Re: End of an error

            If you posit that technology will get there eventually, at some point someone who claims they got it working isn't going to be lying.

            In that case I'll be eagerly awaiting the non-bullshit version of the Mr. Fusion.

        2. DiViDeD

          Re: End of an error

          "I knew it was fraud, just from the description. So did many of the other commentards here on ElReg"

          Could it be possible (and I realise this is a bit of a long shot) that Rupert Murdoch doesn't read El Reg?

          Then how does he keep up on important societal trends?

    2. UCAP Silver badge

      Re: End of an error

      Same skill required - pure greed. Nothing added. nothing taken away.

    3. Anonymous Coward
      Anonymous Coward

      Re: End of an error

      But the pretty blonde lady said it was revolutionary, isn’t that enough?

    4. Erik Beall

      Re: End of an error

      This is my very cynical take, what these corporate and non-pro investors (and often also the professional investors) were knowing investing in was the chance to be part of the largest pool of funds with the best chance at bullying/buying/hopefully also inventing (but this is the least important to them) their way into market dominance for a new and potentially massive and lucrative industry. They don't care if the company needs to fake it until they can buy it off an inventive company with much smaller liquidity behind them. Fake it until you can take it. I'm hopeful that interest rates at or higher than inflation will help tamp this kind of bullshit extractive investment down and leave space for actual value creating investment.

  8. jake Silver badge

    The cynic in me wonders ...

    ... how long before she "suddenly" finds herself pregnant again, and uses that to beg house arrest instead.

  9. Roland6 Silver badge

    Does 11 years actually mean 11 years?

    In the UK the expectation would be that she would be in prison for 5.5 years then out on licence for 5.5 years.

    1. JamesWRW

      Re: Does 11 years actually mean 11 years?

      No parole in the US Federal system. The best she gets is one sixth off for good behaviour, so a touch over nine years.

      1. Michael Wojcik Silver badge

        Re: Does 11 years actually mean 11 years?

        Per macjules' post below, the US DoJ appears to disagree with that claim.

    2. macjules

      Re: Does 11 years actually mean 11 years?

      Similar to the UK. She could serve just a third of her sentence but given the serious nature of the offence and her pretty clear lack of remorse I doubt she will get released that quickly.

  10. Doctor Syntax Silver badge


    That's precision.

    1. Phil O'Sophical Silver badge

      Re: $452,047,268

      But is it accurate?

  11. cjcox

    When you steal, steal from unimportant people.

    Words to live by.

  12. Anonymous Coward
    Anonymous Coward

    Bloody good result

    Slam that door behind her.

    1. Anonymous Coward
      Anonymous Coward

      Re: Bloody good result

      Never mind slam it, brick it up!

  13. Anonymous Coward
    Anonymous Coward

    so when does musky get prosecuted for the same type of lying?

    1. Anonymous Coward
      Anonymous Coward

      Isn't he too rich to be prosecuted?

      1. Anonymous Coward
        Anonymous Coward

        it won't last...

    2. anothercynic Silver badge

      Well, his companies actually *make* something. There's an actual product that *works*.

      Theranos didn't.

  14. Anonymous Coward
    Anonymous Coward

    I've previously said I thought she looked like Jimmy Page. Looking at this pic of her on the New York Post, I have to revise that opinion: I now think Jimmy Page is prettier.

    1. mevets

      I am sure

      You are a real treat yourself. Go burrow back under that bridge, will ya.

  15. Zippy´s Sausage Factory

    How does she get two weeks notice to go to jail? Shouldn't it just be "I'm ordering you to jail, take her down" and it starts right there and then?

    (I'm not talking legally, I mean morally)

    1. drand

      If the court decides reasonably that the criminal is not a threat to others in that two weeks, and is motivated to sort their affairs out, then it's fair enough. There will be plenty of cases where the dependents of the criminal would be even more screwed over by their behaviour if it were straight to the slammer; hopefully a little time would give innocent relatives, children, spouses a chance to get their shit together.

      1. John Brown (no body) Silver badge

        On the other hand, she already knew of the custodial sentence, and has done for quite some time. Both the judge and her lawyers will have made it abundantly clear to her in advance the possible outcomes. In those circumstances, she should have already been prepared to be "taken down" at the end of that process. It may be that, knowing her lack of remorse and her self-confidence and/or arrogance, she didn't expect to fail in this attempted stay, but that is entirely on her and is not a good reason to be nice and accommodating to her. I suspect if this was a low level criminal passing a few counterfeit notes down the local supermarket, s/he'd have to been given that leeway.

      2. Zippy´s Sausage Factory

        I very much doubt that a person off the street who gets busted for having a single joint gets any chance to "sort their affairs out". Why should "pretty people" like Holmes get special treatment? Everyone should be equal in the eyes of the law, or it just makes a mockery of the judicial system.

  16. BPontius

    Cry me a river

    Boo hoo little Liar!

  17. Anonymous Coward
    Anonymous Coward

    Liz' learns you don't screw over rich people

    should have run, but thought she can go on juuuuust a little longer....

  18. WorkShyEU

    Is she going to invoke the "Glass Cliff" excuse.

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