BREAKING: Elizabeth Holmes has turned herself into the Federal Prison in Bryan, Texas. pic.twitter.com/JmdAqQH4mk
— Ben Peck – KAGS 🦚👍 (@TheBenPeck) May 30, 2023
When less-than-optimal things happen to terrible people, per the Associated Press:
Theranos founder Elizabeth Holmes entered a Texas prison Tuesday where she could spend the next 11 years for overseeing a blood-testing hoax that became a parable about greed and hubris in Silicon Valley.
The minimum-security facility — where the federal judge who sentenced Holmes in November recommended she be incarcerated — is about 95 miles (150 kilometers) northwest of Houston, where she grew up aspiring to become a technology visionary along the lines of Apple co-founder Steve Jobs.
As she begins her sentence, Holmes is leaving behind two young children — a son born in July 2021 a few weeks before the start of her trial and a 3-month old daughter who was conceived after a jury convicted her on four felony counts of fraud and conspiracy in January 2022.
She was free on bail up until Tuesday, most recently living in the San Diego area with the children’s father, William “Billy” Evans. The couple met in 2017 around the same time Holmes was under investigation for the collapse of Theranos, a startup she founded after dropping out of Stanford University when she was just 19…
Together, Holmes and Balwani promised Theranos would revolutionize health care with a technology that could quickly scan for diseases and other problems with a few drops of blood taken with a finger prick.
The hype surrounding that purported breakthrough helped Theranos raise nearly $1 billion from enthralled investors, assemble an influential board of directors that include former Presidential cabinet members George Shultz, Henry Kissinger and James Mattis and turned Holmes into a Silicon Valley sensation with a fortune valued at $4.5 billion on paper in 2014.
But it all blew up after serious dangerous flaws in Theranos’ technology were exposed in a series of explosive articles in The Wall Street Journal that Holmes and Balwani tried to thwart. Holmes and Balwani, who had been secretly living together while running Theranos, broke up after the Journal’s revelations and the company collapsed. In 2018, the U.S. Justice Department charged both with a litany of white-collar crimes in a case aimed at putting a stop to the Silicon Valley practice of overselling the capabilities of a still-developing technology — a technique that became known as “fake it ’til you make it.”
Holmes admitted making mistakes at Theranos, but steadfastly denied committing crimes during seven often-fascinating days of testimony on the witness stand during her trial…
Adam Lashinsky, in the Washington Post, “As Elizabeth Holmes heads to prison, has Silicon Valley learned anything?”
… Holmes’s saga was always a Rorschach test for how to think about the valley, a cautionary tale that either exposed the “fake it till you make it” mentality of start-ups or served as a prime example of the deep-seated misogyny in the technology industry. How is it that a woman is going to jail while the Valley, although chock-full of geniuses, still shields a remarkable number of entitled male grifters cashing in on all the ready money?
More likely, Holmes will be remembered as a colorful executive who lied about what her company could do and suffered the consequences. When her trial began in September 2021, much was made about what her case said about an industry that changed the world — and not always for the better. Yet despite her black turtlenecks and Stanford dropout cred, neither Holmes nor Theranos was really of Silicon Valley. Her venture capital backers weren’t among the A-list investors who had funded the likes of Apple, Google and Facebook. Theranos was a medical device company, a totally distinct — and, truth to tell, junior varsity — subset of the information technology ecosystem.
But with a bit of hindsight, it’s already clear that Holmes’s conviction and Theranos’s failure have had zero impact on the hubristic culture of the start-up world, tut-tutting predictions to the contrary. As you read this, entrepreneurs and investors who run the gamut from charlatans to visionaries are setting aside business plans focused on vague cryptocurrencies and the blockchain and refocusing instead on generative artificial intelligence. (Sad you never figured out crypto? Don’t be.) VC investments in the technology behind the popular ChatGPT revolution grew more than tenfold to $4.5 billion last year from 2018. A new gold rush has begun…
A self-serving argument has crept up of late that somehow Holmes was singled out for something other than defrauding investors. Holmes was acquitted on all counts related to patients, and the jury couldn’t agree on whether she defrauded early Theranos investors. To some, that means Holmes is being incarcerated only for having hoodwinked the big-money likes of Rupert Murdoch and Betsy DeVos…
… I attended day after day of her ennui-inducing nearly four-month trial in San Jose, and I saw just how fair a shake Holmes received. She was convicted by a diligent jury of her peers, responding to instructions by a judge who gave Holmes every opportunity to defend herself. Having been there, I can confirm that the trial was very much about what Holmes did and didn’t do at Theranos. (And let’s not forget the Theranos fiasco also snagged a guy: Sunny Balwani, Holmes’s former romantic and business partner, who was also convicted and sentenced to federal prison in a separate trial.)
Silicon Valley, in all its brilliance and arrogance, its paradigm-shifting moonshots and its spectacular failures, just keeps iterating, in most ways oblivious to its own shortcomings. The captivating rise and fall of Elizabeth Holmes did nothing to change that.
The BBC: “Elizabeth Holmes is going to prison. Will she ever pay victims too?”:
… The disgraced entrepreneur was sentenced to over 11 years in prison and ordered to pay $452m (£365m) with her former business partner Sunny Balwani to dozens of high-profile investors they defrauded through a blood-testing start-up.
It’s a sizeable bill for the former billionaire, who has claimed she does not even have enough money to pay her lawyers…
In Holmes’ case, she has been ordered to pay back some of the wealthiest families in America.
Donors included former Secretary of State Henry Kissinger and the Walton family, known for founding American supermarket chain Walmart.
But after it was revealed her blood-testing technology did not work, many lost a fortune.
Former Secretary of Education Betsy DeVos reportedly gave Holmes $100m while the Theranos founder has been ordered to pay back media mogul Rupert Murdoch $125m, according to court documents.
She will not be able to just declare bankruptcy and shed her debts that way, experts tell the BBC. But victims of her crimes should not get their hopes up about recouping their cash…
A judge has recommended Holmes report to Federal Prison Camp in Bryan, Texas, where all inmates are obligated to work and make between 12 cents and $1.15 an hour.
Half of the small sum she earns – usually around $25 every four months – will go to her victims, said Randy Zelin, a professor at Cornell Law School.
Once her time in prison is finished, she will still not be able to purchase any large assets, including a home, without intervention from the federal government. The government can’t, however, seize assets owned solely by her husband, hotel heir William Evans.
Holmes has acknowledged her dismal financial fate, telling the New York Times this month she will “have to work for the rest of my life” just to pay millions of dollars in legal fees…
In lower profile cases, the US government does not have the resources or the time to investigate every defendant’s assets, sometimes putting the onus on victims to track their financial moves, Mr Zelin said.
But the headline-making nature of Holmes’ fraud – as well as her recent financial choices, including living in a $13,000 a month Silicon Valley estate – means former Theranos investors are more likely to keep watch over her and push prosecutors to get them their money back, experts said.
“They’re not going to stop looking,” Ms O’Neill said. “She’s not going to be able to put a dollar in her bank account… without the government seizing it.”
She’ll have a very nice life, once she’s out… as long as she stays married to Billy Evans, rich sucker. Oooh, I see a 2035 reality-show spinoff: ‘Liz’ Holmes strives to protect her marriage against a bunch of would-be replacement brides, with or without the assistance of the teenage children who barely know her…