Theranos founder Elizabeth Holmes began serving an 11-year sentence in a Texas federal prison on Tuesday, completing a dramatic fall for a biotech entrepreneur who once dazzled Silicon Valley with promises of breakthrough blood-testing technology.
A spokesman for the minimum-security prison in Bryan, Texas confirmed to Yahoo Finance that Holmes arrived Tuesday. Her Bureau of Prisons register number, the spokesman said, is 24965-111.
The 39-year-old Holmes was convicted in January last year on multiple counts of fraud. She was acquitted on charges of defrauding Theranos patients.
San Jose federal district court judge Edward Davila, who presided over Holmes’ case, sentenced her to 11 years and three months in prison. He also denied Holmes’ request to remain free on bail while an appeal of her case plays out in the 9th Circuit Court of Appeals. The appeals court similarly denied Holmes’ request.
Holmes’ prison sentence represents approximately 14% of the maximum allowable time of 80 years that the U.S. sentencing guidelines permit for her four fraud convictions. Each of her convictions allows for a sentence up to 20 years, along with $250,000 in fines for each count, plus restitution.
Holmes’ former boyfriend and former Theranos president and COO, Ramesh “Sunny” Balwani, was tried before a separate San Jose jury for his role in defrauding investors and Theranos patients.
Balwani’s jury returned guilty verdicts on all 12 counts of fraud charged against him. Judge Davila sentenced Balwani to serve 12 years and 11 months in prison.
Judge Davila jointly ordered Holmes and Balwani to repay their victims $452 million, an order that Holmes has appealed.
Holmes started Theranos in 2003 as a Stanford university dropout. At its peak, Theranos reached a valuation of $9 billion, making Holmes at the time the world’s first self-made female billionaire.
Holmes successfully attracted nearly a billion dollars in backing from high-profile investors including billionaire venture capitalist, Don Lucas, Oracle co-founder Larry Ellison, the Walton family, and the family of former US Secretary of Education, Betsy DeVos.
Theranos’ board included former US Secretary of State Henry Kissinger, former US Secretary of Defense James Mattis, former US Senator Sam Nunn, and the late US Secretary of State George Shultz.
Drug store giant Walgreens poured $140 million dollars into the venture and together with Theranos opened blood-testing outposts within its drugstores in California and Arizona.
The fall of Holmes started in 2015 when The Wall Street Journal revealed that Holmes had overhyped Theranos’ “finger stick” technology by purporting to run dozens of standard diagnostic tests from a few drops of blood.
Shultz’s grandson, Tyler Shultz, was in large part responsible for exposing what happened. He worked as a research engineer at Theranos.
The judge who sentenced her, Davila, characterized Holmes’ legal battle — one of the most closely watched in Silicon Valley history — as one that could serve as a lesson for future founders.
“I suppose we step back and ask what is the pathology of fraud? Is it the refusal to accept responsibility or express contrition in any way?” he said at her sentencing. “Perhaps that is the cautionary tale that will go forward from this case.”
Davila also responded to letters from Holmes’ supporters who suggested that a long prison sentence was too harsh for an entrepreneur whose environment was one where investors understood their investments as high risk, considering it “normal” to lose 90% of their funds.
“One thing that was missing from those letters…the letters did not say anything about, nor did they endorse, failure by fraud,” Davila said.
Minutes before learning her sentence, Holmes told the courtroom: “I stand before you taking responsibility for Theranos…I loved Theranos. It was my life’s work. My team meant the world to me. They wanted to make a difference in the world. I am devastated by my failings.”
