Disgraced tech entrepreneur Elizabeth Holmes reported to prison on Tuesday to begin serving time for fraud in a case that rocked Silicon Valley.
Holmes was convicted by a California court in 2022 on four counts of defrauding investors over failed blood-testing technology, and in November was sentenced to 11 years and three months in jail. She will serve her time in a minimum-security prison in Bryan, Texas, about 70 miles from Houston.
The controversial case centered on Theranos, a firm Holmes founded in 2003 after dropping out of Stanford at the age of 19. Theranos claimed to have created a groundbreaking technology that could conduct hundreds of health tests on a single drop of blood. But it didn’t work as described.
As investors handed over cash, the media-savvy Holmes established herself as a darling of Silicon Valley, attracting attention not only for her exciting technology that promised so much, but also for her unique personal style, distinctive voice, and penchant for wearing Steve Jobs-like black turtlenecks.
As Theranos increased its profile — the now-defunct business was once valued at $9 billion — the startup won over prominent backers who included former Secretary of State Henry Kissinger, former Defense Secretary James Mattis, and media mogul Rupert Murdoch.
But things began to go awry following a Wall Street Journal investigation in 2015 that claimed Theranos had only carried out a fraction of the huge number of tests that it said were possible with its proprietary technology. The startup was also exposed for using machines from established blood testing companies to do most of its work, with its own machine at the end of 2014 only being used for 10% of tests.
When she was sentenced last year, Holmes and her former business partner Sunny Balwani were ordered to pay $452 million to dozens of high-profile investors whom they defrauded through the startup. Balwani is already serving a 13-year jail sentence in California for his involvement in Theranos.
When U.S. District Judge for the Northern District of California Edward Davila sentenced Holmes last year, he said the “tragedy of this case is that Ms. Holmes is brilliant. She had creative ideas. She is a big thinker. She was a woman moving into an industry that was dominated by, and let’s face it, male ego. That young women entrepreneurs are regrettably denied access to, but she made that. She made that. She got into that world,” but added: “This is a fraud case where an exciting venture went forward with great expectations and hope only to be dashed by untruth, misrepresentations, hubris, and plain lies.”
Holmes told the court that she “loved Theranos,” saying that it was her “life’s work.” But she added that she was “devastated by my failings” before apologizing to everyone linked to Theranos, from employees and investors to the patients who once placed so much faith in the startup’s technology. “I’m so, so sorry,” Holmes said. “I gave everything I had to build our company and to save our company. I regret my failings with every cell in my body.”
It’s thought the Theranos story will have made other tech bosses think twice about pursuing a highly risky “fake it until you make it” approach when attempting to secure funding for their “revolutionary” projects.
