Elizabeth Holmes case: Tech fraudster set to be sentenced in federal court

SAN JOSE, Calif. - A federal court judge is scheduled to sentence convicted biotech fraudster Elizabeth Holmes on Friday, wrapping up a complex legal saga that has captured international attention and prompted scrutiny of Silicon Valley’s business culture. 

Holmes faces a potentially lengthy sentence in federal prison – a 20-year max – after being convicted of four counts of conspiracy and fraud after swindling investors in her company Theranos.

Prosecutors cited numerous aggravating factors in court documents this week, asking the judge to give the 38-year-old mother, who’s pregnant, 15 years in prison and order her to pay $804 million in restitution.

The federal probation department recommended 9 years in prison in its report to the judge. 

"She will have to be sentenced to a certain number of years, I would think, somewhere in the 3 to 5 year range at the low end. And I would expect something under ten at the high end," said Ellen Kreitzberg a professor of law emeritus at Santa Clara University. 

Since Holmes doesn’t appear to be a danger to the community and likely won’t be given large sums of money again, Kreitzber said the main factor the judge will likely consider is stopping future fraudsters. 

"He’s going to look at general deterrence," she said. "How will this be viewed to those in the community to deter their behavior in the future?"

The charges alone have reverberated through Silicon Valley where startup founders have long been known to play fast and loose with the truth in a so-called "fake it till you make it" culture. 

But even as many CEOs have pie-in-the-sky ambitions, Holmes’ went further, bringing her shoddy product to market and endangered patients, prosecutors said. 

Holmes’ legal team is asking a less harsh sentence -- a mere 18 months of home confinement. 

For the past week, federal court judge Edward Davila has been inundated with court papers, including an 82-page memo from Holmes' team, with hundreds of accompanying pages of letters from her family, friends and acquaintance asking the judge for compassion and leniency.

"We should always want a court to show compassion when it's appropriate, but his decision-making will be quite constrained under the federal guidelines," Kreitzberg said. 

Judge Davila will review not only the counts Holmes was convicted of – totaling $144 million in fraud – but he can consider all the evidence submitted at trial, legal experts say. 

That includes hundreds of millions more in investor fraud, accusation that Holmes endangered patients who used her bogus blood-testing tech, and the former CEO’s attempts to silence whistleblowers and reporters through intimidation.

Holmes has also not shown remorse or accepted responsibility for her actions, arguing she was only guilty that her company failed when she took the witness stand last year.

Her defense team never offered a believable explanation to jurors for why Holmes doctored documents, misled investors and lied about using third-party blood analyzers.

The judge can also consider evidence from Holmes that may have not been relevant to the jury, including accusations that her partner and former boyfriend, Sunny Balwani, abused her. 

Balwani was convicted of 12 counts of fraud and conspiracy earlier this year. He’s scheduled to be sentenced in December. 

It’s unclear what effect Holmes’ pregnancy may have with the judge.

Kreitzberg said it likely won’t influence the judge’s overall sentence but may affect when Holmes is ordered to surrender to authorities to begin her sentence.

"I would hope people can stop talking about pregnancies as a way of trying to manipulate the system, because, in fact, and her lawyers would be very clear with her, it won't do that," Kreitzberg said. "It might affect the date that she would go to prison, but not the fact of whether she goes to prison."

Evan Sernoffsky is an investigative reporter for KTVU. Email Evan at Evan.Sernoffsky@foxtv.com and follow him on Twitter @evansernoffsky. Lisa Fernandez is a reporter for KTVU. Email Lisa at lisa.fernandez@foxtv.com or call her at 510-874-0139. Or follow her on Twitter @ljfernandez.