Theranos founder Elizabeth Holmes' appeal to be heard in San Francisco federal court

ByMax Zahn ABCNews logo
Tuesday, June 11, 2024
Theranos founder Elizabeth Holmes' appeal to be heard in San Francisco federal court
The hearing comes one year after Holmes reported to a Texas prison.

SAN FRANCISCO -- Disgraced Theranos founder Elizabeth Holmes' appeal will be heard at a federal courthouse in San Francisco on Tuesday.

The hearing arrives one year after Holmes began a more than 11-year sentence at a Texas prison for defrauding investors with false claims about her company's blood-testing technology.

In a 47-page court filing in November, Holmes' attorneys said the prosecution failed to prove a cornerstone of its case: that Holmes hoodwinked investors while knowing full well the deficiencies of her product.

"The public narrative regarding the spectacle of Theranos' downfall is that the company's technology simply did not work and Holmes knew it," Holmes' attorneys wrote. "But Holmes' intent and knowledge on this central question were intensely contested at trial."

"Substantial evidence showed that Holmes and Theranos' scientists believed in good faith that Theranos had developed technology that could accurately run virtually any blood test," the attorneys added.

Holmes' attorneys focused their appeal on the judge's decision to permit testimony from ex-Theranos clinical lab director Kingshuk Das as a source of information about key events rather than as an expert witness.

MORE: Life after Theranos: What 130 personal letters to sentencing judge reveal about Elizabeth Holmes

Former Theranos CEO Elizabeth Holmes is set to be sentenced on Friday. She was found guilty of four counts of fraud earlier this year.

The defense also took issue with limits placed on cross-examination of another key witness and the case's treatment of voided blood test results.

In a previous filing, the prosecution strongly rebuked the alleged grounds for appeal. Prosecution attorneys challenged allegations of missteps in the case and cited evidence of misrepresentations about the product made by Holmes.

"Her claims are meritless, but, regardless, unavailing given the overwhelming evidence and independent categories of fraudulent statements Holmes made," prosecutors said in a court filing last August.

Judge Edward Davila, who oversaw the trial of Holmes, ordered her to report to prison last year after the U.S. Court of Appeals for the Ninth Circuit denied her request to remain free pending an appeal.

In denying a previous attempt to delay Holmes' prison sentence, Davila said she had failed to raise a "'substantial question of law or fact' that is 'likely to result in a reversal or an order for a new trial on all counts.'"

The appeal hearing on Tuesday marks the latest development in a legal saga that turned the former billionaire entrepreneur, who swore her startup could run hundreds of tests on a single drop of blood, into a symbol of excess and deception in Silicon Valley.

Ramesh "Sunny" Balwani, the former romantic partner of Holmes and president of the now defunct blood testing company, began serving his nearly 13-year sentence at a prison in San Pedro, California, last April. Balwani, who was second in command to Holmes at Theranos, was convicted of fraud and conspiracy.

In November 2022, Holmes was sentenced to 135 months, or 11 1/4 years, in prison.

Holmes was convicted the following January on four counts of investor fraud and conspiracy while at the helm of Theranos.

The verdict followed a four-month trial that detailed Holmes' trajectory from a Stanford University dropout in 2003 to a star business leader on the cover of Fortune magazine little more than a decade later.

But in October 2015, a bombshell Wall Street Journal report came out, detailing the turmoil within Theranos. As Holmes and her company were hit with official scrutiny, her fortune quickly dwindled. Less than a year later, Forbes downgraded its assessment of Holmes' net worth from $4.5 billion to $0.