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  • The 6 Worst Health Scandals of the Past 25 Years

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    In medicine, there’s almost no such thing as a free lunch. Just about every drug or intervention will have its side effects.

    Ideally, rigorous studies and the regulatory process will ensure that an approved drug’s benefits clearly outweigh any potential harms. But sometimes, researchers (and patients) will uncover side effects that went unnoticed during the approval process. Other times, more rarely, a drug’s maker is revealed to have buried incriminating information about their drug’s harms from the public or to have created a product that doesn’t work at all as intended. And when that happens, a bad or ineffective treatment can spark a major scandal.

    There’s no shortage of pharmaceutical scandals that have occurred over the years, but to keep things short, let’s just focus on some of the biggest ones to have happened in this quarter-century.

    1. Johnson & Johnson’s talcum powder products

    For decades, people had unsuccessfully tried to sue J&J over its consumer products containing talc, particularly baby powder, claiming that the products had contributed to their cancers.

    In 2018, however, an explosive report from Reuters found the company had hidden evidence that the talc it used could sometimes contain detectable levels of asbestos, a known carcinogen. The report helped fuel a new wave of lawsuits and growing public distrust in the company’s baby powder products. In the years since, the company has repeatedly lost civil suits over its talc products, some totaling into the billions, and its appeals continued to fail, even before the Supreme Court.

    Though J&J has maintained that its products are safe, the company eventually removed talc from all its powder brands (instead using cornstarch), tried and failed to cover its liability over these lawsuits by having a subsidiary declare bankruptcy, and even this year has continued to lose court cases tying its products to people’s cancer.

    Interestingly enough, though asbestos is known to cause cancer, past research hasn’t found a clear link between talc as a whole (including asbestos-free talc) and cancer, and there remains some disagreement over the extent of the risk posed by talcum powder products. The American Cancer Society states that if talc can raise a person’s risk of ovarian cancer (the primary type of cancer linked to talc), the “overall increase is likely to very be small” for an individual woman. The World Health Organization has stated that asbestos-containing talc should be considered carcinogenic, while talc in general is “probably carcinogenic.

    2. Biogen and the Alzheimer’s drug that wasn’t

    In June 2021, the FDA approved Biogen and Eisai’s antibody-based Alzheimer’s drug Aduhelm. At first glance, the approval should have been good news: the first drug of its kind, and one intended to actually target a key driver of the degenerative disorder, beta amyloid. But in actuality, it was anything but.

    In a rare move at the time, the FDA went against the recommendations of its expert advisory panel, who voted against approval. The outside experts rightly noted that the data supporting the drug’s effectiveness was mixed at best. The FDA also granted Aduhelm accelerated approval, a special category that requires less rigorous evidence. Media outlet STAT News later uncovered an unusually friendly relationship between top Biogen employees and FDA officials, which prompted a Congressional investigation into the matter. And to add insult to injury, Biogen initially set Aduhelm’s list price at $56,000 a year—a cost high enough to potentially devastate the pockets of patients and Medicare if the drug saw widespread use among older Americans.

    Many doctors soon rebelled against the approval, refusing to prescribe it to their patients, while Medicare decided to severely restrict its coverage of the drug. Biogen eventually gave up trying to make Aduhelm a thing, following years of poor sales, and pulled the drug from the market in early 2024.

    This saga does have a bit of a happy ending, at least. There have been other similar drugs developed and approved in recent years, and unlike Aduhelm, these drugs do seem to have a real, if still modest, effect on treating the condition.

    3. Purdue Pharma and OxyContin

    Purdue Pharma has perhaps become the most infamous poster child for the opioid crisis.

    Bottles of Oxycontin. © PureRadiancePhoto via Shutterstock

    Its blockbuster drug, OxyContin, helped fuel growing rates of opioid use disorder following its release to the public in 1996. And though there are many drivers of the crisis, including the proliferation of more potent agents like fentanyl in later years, the company did eventually admit to downplaying the addictive risk of its products, paying doctors illegal kickbacks to prescribe their drugs, and turning a blind eye to the widespread diversion of its drugs from pharmacies to the black market.

    Following a glut of civil and federal lawsuits over OxyContin, Purdue Pharma shuttered its doors, and its sole owners—the Sackler family—agreed to pay out more than $4 billion as part of a far-reaching settlement in 2021. The courts bumped this up to $6 billion in 2023. That settlement, however, also provided immunity from further civil charges against the Sacklers themselves. And though the situation has finally started to improve as of late, roughly 50,000 Americans still died from opioid overdoses last year.

    4. Martin Shkreli’s drug price surge

    Sometimes the scandals aren’t about the drugs themselves, but what they’re being sold for.

    In 2015, Martin Shkreli became public enemy number one when his company, Turing Pharmaceuticals, bought the anti-parasitic and anti-HIV drug Daraprim and raised its $13.50 price tag per pill by over 5,000 percent. Shkreli’s cocky, unrepentant attitude toward his many critics earned him the nickname of the “Pharma bro.”

    Ironically enough, his initial downfall had nothing to do with Daraprim. Soon after he became infamous, federal prosecutors in New York charged Shkreli with securities fraud, and in 2017, he was convicted and sentenced to seven years of federal prison.

    Martin Shkreli
    Martin Shkreli speaks to the press after the jury issued a verdict in his case at the U.S. District Court for the Eastern District of New York, August 4, 2017.  © Drew Angerer via Getty

    Though Shkreli was released early in 2022, his company’s management of Daraprim did later come back to bite him. In 2020, the FTC and others sued the company, now called Vyera Pharmaceuticals after Shkreli’s imprisonment, alleging that it carried out an “elaborate anticompetitive scheme” to maintain its monopoly on the drug. The company reached a settlement with the FTC a year later, and the legal battle eventually required Shkreli himself to pay out a $64 million fine and to stay away from the pharmaceutical industry entirely. In 2023, Vyera declared bankruptcy and sold the rights to Daraprim. Last year, the U.S. Supreme Court snubbed Shkreli’s attempt to dismiss his personal fine and ban.

    Don’t feel too bad for Shkreli, though. Since his release from prison, he’s been busy trying to shill crypto and AI knockoffs of WebMD.

    5. Abbott’s tainted baby formula

    Powderedbabyformula
    Baby formula powder in a measuring scoop © Strigana via Shutterstock

    In early 2022, the FDA warned families to stay away from certain powdered baby formulas produced by the company Abbott Nutrition. The products, it turns out, were contaminated by Cronobacter bacteria.

    Several children were hospitalized, and two infants who had consumed the products later died. Abbott issued a widespread recall of its products and shut down its formula production facility in Sturgis, Michigan. The FDA’s investigation concluded that Abbott had failed to maintain sanitary conditions and that the facility had at least eight recent instances of Cronobacter contamination dating back to 2019.

    It would take four months for the company’s Sturgis plant to reopen, following an agreement with the FDA to overhaul its safety practices, the length of which helped contribute to a nationwide formula shortage that year. Lawmakers on both sides also criticized the FDA for its delayed response to the crisis, since the agency first caught wind of potential issues as early as September 2021.

    Though there haven’t been similar recalls or reported outbreaks since, an extensive ProPublica report in April 2025 interviewed workers who claimed that the Sturgis plant continues to have serious safety and sanitary risks to this day. One employee reported what they found to the FDA, but it’s unclear whether the new Trump administration will take action.

    6. Elizabeth Holmes and Theranos

    Elizabeth Holmes founded the company Theranos in 2003. It centered around the development of a device intended to make blood tests easier than ever. With just a few drops of blood from a single finger prick, Holmes claimed, her company’s “Edison” device could accurately detect a litany of health conditions. By the mid-2010s, Holmes’ marketing of Theranos had allowed her to become a darling of the biotech world: a young, self-made entrepreneur styled after Steve Jobs, who at one point was worth nearly $5 billion.

    The trouble was, as the world eventually found out, it was all based on falsehoods. Starting in late 2015, Wall Street Journal reporter John Carreyrou exposed the fraudulent practices of Holmes and Theranos. Though Holmes had struck a partnership with retail chain Walgreens in 2013 to provide the Edison device to its customers, the Edison could simply never do what Holmes claimed it could. And eventually, the company secretly resorted to using other commercially available machines to perform most of its blood testing services.

    Holmes’ deception didn’t just mislead investors; several people reported that the faulty test results provided by Theranos made them fearful about having medical conditions they didn’t actually have, such as HIV, or otherwise harmed their health.

    Holmes was convicted of investor fraud and other charges over Theranos in 2022 and was sentenced to an 11-year stint in prison (later reduced by two years), while her co-executive and one-time romantic partner Ramesh “Sunny” Balwani was sentenced to nearly 13 years the next month. As of this year, she’s made her return to social media (via having someone else post her words).

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    Ed Cara

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  • Elizabeth Holmes And ‘Real Housewives’ Star Jen Shah Have ‘Bonded’ In Prison

    Elizabeth Holmes And ‘Real Housewives’ Star Jen Shah Have ‘Bonded’ In Prison

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    Theranos founder Elizabeth Holmes has reportedly made friends with ex-Real Housewives Of Salt Lake City Star Jen Shah in prison, with Shah’s reps claiming “they’re both rehabilitating and have bonded over being on this journey of positive change.” What do you think?

    “Bad move. You’re supposed to beat down the first Real Housewife you see.”

    Mira Stanton, Freelance Affixer

    “Aw, prison sounds nice.”

    Bryce Shapiro, Pet Clothier

    “Just tell me what channel it’s on.”

    Newel Mishra, Systems Analyst

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  • 5 Things To Know About Elizabeth Holmes’ Prison | Entrepreneur

    5 Things To Know About Elizabeth Holmes’ Prison | Entrepreneur

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    Theranos founder Elizabeth Holmes checked into the FPC Bryan facility on Tuesday to begin serving her 11-year sentence for felony, fraud, and conspiracy.

    The facility is located in Bryan, Texas, about 100 miles from Houston. It’s a minimum-security federal prison camp for women only. Unlike the prisons depicted in shows like Oz or Orange is the New Black, FPC Bryan is for non-violent offenders.

    “Sometimes they’re called ‘Camp Fed’ because they have a little bit more amenities, and they’re a little nicer places,” Keri Axel, a criminal defense attorney told Yahoo News. But she added, “They’re not great places. No one wants to be there.”

    Here is what its newest inmate can expect.

    Related: Elizabeth Holmes — Now ‘Liz’ — ‘Giggles’ About Her Faux Deep Voice and Recalls ‘Sleeping in Walmart Parking Lots’ in RV Ahead of Trial

    1. Holmes is not the only celebrity inmate

    Bryan holds about 720 inmates, mostly in for white-collar crimes, low-level drug offenses, and harboring illegal immigrants, according to the Wall Street Journal.

    Holmes is not the only famous face to serve time at Bryan. Another celebrity inmate is “Real Housewives of Salt Lake City” star Jen Shah, who was sentenced to 6 1/2 years in prison for conspiracy to commit wire fraud earlier this year. Michelle Janavs, an heir to the Hot Pockets fortune, also served time there in 2020 after being convicted of a college admissions scandal.

    2. She’ll sleep on a very thin mattress

    The residential hall boasts four housing units, which open at 6 a.m. and close at 10 pm. All inmates must return to their dorms standing bedside at 4 p.m. and 10 pm on weekdays and 10 am, 4 pm, and 10 pm on weekends and holidays.

    According to the WSJ, the cells hold as many as four inmates. Each room has two bunk beds with mattresses “about as thick as the width of a hand,” inmates told WSJ.

    Reportedy, inmates have mixed feelings about Holmes

    “Some people are like, ‘I want to be her friend,’” Tasha Wade, a current inmate, told WSJ. “But other people are like, ‘I can’t believe that’s all she got for taking all that money.’”

    Holmes will be expected to keep her room clean. There is no maid service. Each inmate is responsible for making her bed, sweeping and mopping her room floor, and removing trash. Inmates can be fined for making a mess.

    3. Holmes can make up to $1.15 an hour

    All inmates, who have been medically cleared, will get a regular job assignment, including food service and factory jobs. According to the inmate handbook, workers can earn between 12 cents and $1.15 per hour in their job assignments.

    4. She’ll be able to maintain her vegan diet

    Holmes is a vegan. She is said to have adopted this diet because it enabled her to work late without sleep. So it may come as some relief to her that Bryan offers a no-flesh dining option. Inmates can also cook for themselves using kitchen ingredients and inventive cooking methods, inmates told WSJ.

    5. Families can visit on weekends

    Holmes can expect to see her family on weekends and holidays. Because she grew up in Houston, her parents live relatively close. Holmes also has two children — a baby and a toddler — who can visit her in the prison’s play area. Kids under 10 can sit on their parent’s laps, and women can breastfeed babies during visits.

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    Jonathan Small

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  • When Will Elizabeth Holmes Go to Prison? | Entrepreneur

    When Will Elizabeth Holmes Go to Prison? | Entrepreneur

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    Despite Elizabeth Holmes’ last-ditch effort to avoid prison time, her request to remain free on bail while she files to appeal her conviction was rejected by the court Tuesday, according to Reuters.

    Holmes was convicted on several counts of defrauding investors and sentenced to 11 years in prison in November. She has been appealing her conviction with her lawyers alleging mistakes and misconduct during her trial.

    Holmes was supposed to begin her sentence on April 27, which was delayed after her last-minute request.

    RELATED: Elizabeth Holmes — Now ‘Liz’ — ‘Giggles’ About Her Faux Deep Voice and Recalls ‘Sleeping in Walmart Parking Lots’ in RV Ahead of Trial

    At Tuesday’s hearing, U.S. District Judge Edward Davila also ordered the disgraced Theranos founder to pay $452 million in restitution to her victims, according to reports.

    Ramesh “Sunny” Balwani, Theranos’ former COO and Holmes’ former romantic partner, already began his 13-year prison sentence for several counts of fraud in April, but he and Holmes are both being held jointly liable for the amount of restitution.

    Judge Davila has recommended a women’s prison in Bryan, Texas, for Holmes to serve her sentence, however, it’s not yet known if the federal Bureau of Prisons will honor the recommendation.

    Davila has yet to set a new start date for Holmes to report to prison.

    RELATED: What Happened to Theranos CEO Elizabeth Holmes? Everything from Her Net Worth to Where She Is Now

    Original Story:

    Elizabeth Holmes isn’t trading in her black turtle neck for an orange jumpsuit just yet.

    The former Theranos CEO – who was set to start her 11-year prison sentence on Thursday after she was convicted in November on multiple charges of defrauding investors – will remain free, for now, following a last-minute appeal.

    Holmes was scheduled to report to prison on April 27 after a judge denied her request to remain free while she appeals her conviction, per CNN. However, Holmes’ legal team filed to appeal the judge’s decision on Tuesday, allowing her to remain free on bail while the court considers her last-minute appeal.

    Additionally, Holmes cited the birth of her second child when she filed her initial appeal to postpone the start of her sentence.

    Former Theranos COO and Holmes’ ex-boyfriend, Ramesh “Sunny” Balwani, reported to prison in April to begin his 13-year sentence. He was convicted of fraud charges in a separate trial.

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    Sam Silverman

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  • 5 things to know for April 21: Starship, Biden, Gun violence, North Dakota, Theranos | CNN

    5 things to know for April 21: Starship, Biden, Gun violence, North Dakota, Theranos | CNN

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    CNN
     — 

    Artificial intelligence tools like ChatGPT have shown they can be remarkably adept at everything from generating student essays to writing wedding vows and even composing sermons for pastors and rabbis. Now, one city is turning to the AI chatbot for something else: helping to run the government.

    Here’s what else you need to know to Get Up to Speed and On with Your Day.

    (You can get “CNN’s 5 Things” delivered to your inbox daily. Sign up here.)

    SpaceX’s Starship, the most powerful rocket ever built, exploded midair shortly after it launched on Thursday from Texas. No injuries or property damages were reported following the explosion of the unmanned rocket, the FAA said. CEO Elon Musk congratulated the company and said the team “learned a lot” from the “rapid unscheduled disassembly.” Preparations are now underway for the company’s next test launch, which Musk said will happen in a few months. SpaceX is known to embrace fiery mishaps during the rocket development process. The company maintains that such accidents are the quickest and most efficient way of gathering data, an approach that sets the company apart from its close partner NASA, which prefers slow, methodical testing over dramatic flare-ups.

    Plans are underway for President Joe Biden to formally announce his bid for a second term as soon as next week, according to several sources familiar with the matter. A campaign-style video is set to be released to definitively answer the question of whether he will run again and ignite an aggressive fundraising effort to help Democrats hold the White House. Advisers inside and outside the White House caution that timing could still change, pending unforeseen events, but a decision has been reached that it is “no longer helpful or necessary to not just say the obvious: He’s running,” a senior Democratic official told CNN. Biden’s campaign headquarters will be based in Wilmington, Delaware, aides said, as a nod to the pride in his hometown and the place where he spends most of his weekends.

    Biden expected to announce reelection bid next week

    he shooter who killed five co-workers at a Louisville, Kentucky, bank this month left notes that revealed part of his goal was to show how easy it was in America for someone dealing with a serious mental illness to buy an assault-style weapon. The gunman purchased the AR-15-style rifle seven days before the April 10 shooting after quickly passing a records check. Separately, communities across the US are grieving several recent shootings in which young people were shot after making a common blunder. Among the cases, a 6-year-old girl was shot after an angry neighbor opened fire over a basketball rolling into his yard. Other young victims include two teenage cheerleaders in Texas who mistakenly approached someone else’s vehicle in a grocery store parking lot, a 16-year-old boy who rang the wrong doorbell in Kansas City and a 20-year-old woman who turned into the wrong New York driveway.

    Louisville Body Cam

    Video shows officers walking head-on into gunfire to stop Louisville shooter

    North Dakota’s Republican Gov. Doug Burgum signed a bill this week banning gender-affirming care for most minors. Burgum, in a statement to CNN, said the bill “is aimed at protecting children from the life-altering ramifications of gender reassignment surgeries.” It also bars providers from prescribing minors puberty-blocking medication and hormone therapies for the purpose of gender transition. Health care professionals who violate the new legislation could face a class B felony charge, which is punishable by up to 10 years in prison or a fine of $20,000, according to North Dakota law. This comes as a growing number of states are restricting access to health care services for transgender youth. Indiana and Idaho enacted their own bans earlier this month, and several other states have signed into law restrictions on gender-affirming care for minors since the start of the year.

    The former chief operating officer of the failed startup Theranos, Ramesh “Sunny” Balwani, has reported to prison, according to his attorney. Once valued at $9 billion, Theranos attracted top investors and retail partners with claims that it had developed technology to test for a wide range of conditions using just a few drops of blood. The company began to unravel after a Wall Street Journal investigation in 2015 revealed Theranos had only ever performed roughly a dozen of the hundreds of tests it offered using its proprietary technology, and with questionable accuracy. Balwani’s arrival into custody this week marks an end to a yearslong saga which saw him become one of the rare tech executives convicted for fraud. The founder of the company, Elizabeth Holmes, was also convicted on multiple counts of defrauding investors and has been ordered to turn herself in next week.

    Ramadan ends today with the arrival of Eid al-Fitr

    For many Muslims, today brings the end of Ramadan, the Islamic holy month of fasting. The conclusion of the 30-day fast is celebrated with delicious feasts around the world.

    What it’s like to be a theme park designer

    With this cool job, some of the most out-of-the-box ideas are greatly appreciated. Oh, and did we mention plenty of free perks are involved?

    Man loses it on plane over crying baby

    A passenger threw a total fit over a crying baby on his flight. Watch the meltdown here.

    Gwyneth Paltrow leaves door open for further involvement in the Marvel Cinematic Universe

    Never say never! The actress who starred in “Iron Man” and “Avengers” said she would consider a return if asked. 

    Ikea announces $2 billion expansion in the US

    The retailer is making its biggest-ever investment in a single country with several new stores set to open in the US over the next three years.

    Which small intruder crawled through a fence at the White House this week, prompting a swift response from the US Secret Service?

    A. Snake

    B. Dog

    C. Cat

    D. Toddler

    Take CNN’s weekly news quiz to see if you’re correct!

    $500 million

    That’s how much President Biden on Thursday pledged to invest in curbing deforestation in the Amazon rainforest. The sum would make the US one of the world’s largest donors to the Amazon Fund, an international conservation program that aims to preserve the environment in the South American region.

    “Our investigators have their eyes open to all avenues.”

    — Stephen Duivesteyn, a police spokesman in Canada, announcing that a cargo container carrying more than $15 million in gold and other valuables disappeared from Toronto’s Pearson International Airport this week. Police are still trying to find out who is behind the high-value heist.

    Check your local forecast here>>>

    The fastest window cleaner in the world

    This man holds several Guinness World Records for his turbo squeegee techniques. Watch this quick video to see him in action. (Click here to view)

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  • Failure of Silicon Valley Bank Could Reveal Surprising Extent of Corporate Fraud | Entrepreneur

    Failure of Silicon Valley Bank Could Reveal Surprising Extent of Corporate Fraud | Entrepreneur

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    Opinions expressed by Entrepreneur contributors are their own.

    The high-profile and sudden failure of Silicon Valley Bank — which has been accused of hiding huge losses from its depositors, investors, and regulators — highlights the dangers of corporate fraud for our financial system. It confirms the kind of problems highlighted by a recent study published in the Journal of Financial Economics, estimating that only one-third of corporate frauds are detected, with an average of 10% of large publicly traded firms committing securities fraud every year. This means that the true extent of corporate fraud is much larger than what is currently being reported. The study also estimates that corporate fraud destroys 1.6% of equity value each year, which equals $830 billion in 2021.

    These findings indicate a clear need for better risk management and oversight to address corporate fraud. As a highly experienced expert in this topic, I have consulted for many companies on how to mitigate the risk of fraud and the impact it can have on their business. In this article, I will share some insights and best practices for addressing corporate fraud, as well as some real-world examples of how this issue has affected companies.

    Related: ‘I Never Thought It Could Happen to Me’ — How to Avoid Business Fraud

    Real-world examples of corporate fraud

    While the situation with Silicon Valley Bank is still under investigation, we have plenty of well-known examples of fraud. FTX, a trading platform for crypto investors, was accused by the U.S. Securities and Exchange Commission of defrauding its investors by steering money from the company into another venture between 2019 and 2022. The company’s majority owner, Sam Bankman-Fried, allegedly used the cash to purchase homes in the Bahamas, invest in other companies, and fund favored political causes. When crypto assets took a significant plunge in 2022, the cash spigot went dry at both FTX and the other venture, leading to federal prosecutors stepping in to issue fraud charges and bankruptcy for the company.

    Theranos — initially heralded as an innovative healthcare technology company — was exposed as having unworkable technology in 2015. Federal and state regulators filed fraud charges against the company, which dissolved in 2018. The company’s founder, Elizabeth Holmes, and former president, Ramesh “Sunny” Balwani, were both found guilty and sentenced to prison in 2022. Top-tier investors such as Rupert Murdoch, Carlos Slim, and Betsy DeVos lost millions from Theranos investments, with little hope of getting the money back.

    Wirecard, an electronic payments firm based in Munich, Germany, faced the biggest corporate fraud case in German history in 2022, with former CEO Markus Braun and two senior executives facing multiple years in prison if convicted. Another senior executive, Jan Marsalek, is on the run and is reportedly hiding out in Russia. Wirecard declared insolvency in 2020 after authorities discovered $1.9 billion was missing from the company’s accounts, amid allegations from German regulators that the money never existed at all.

    Luckin Coffee, a China-based company, was embroiled in a legal quagmire stemming from a 2020 fake revenue scandal. Internal financial analysts discovered the company’s growth was artificially inflated due to bulk sales to businesses linked to the company’s chairman, and management had fraudulently engineered the purchase of raw materials from suppliers. When these investigations became public, investors fled and the company’s share price slid. With the company delisted from Nasdaq and the senior executives involved in the scandal out of the picture, Luckin Coffee is now trading over the counter.

    These are just several examples of serious fraud in the news. However, I’ve seen fraud occur in many smaller and mid-size companies as well. In fact, such occurrences in my experience are more common at smaller companies, which have less rigorous risk management and oversight policies.

    Related: Keep Your Business Fraud-Free With These 3 Steps

    Addressing corporate fraud through risk management and oversight

    To mitigate the risk of corporate fraud, companies — big and small — need to have strong risk management and oversight systems in place. This includes having clear policies and procedures for detecting and preventing fraud, as well as regular training and education for employees on how to recognize and report fraud.

    One important aspect of risk management is having an effective internal control system. This includes having a system of checks and balances in place to prevent fraud from occurring in the first place, as well as systems for detecting and investigating fraud if it does occur. This can include measures such as separating duties among employees, implementing segregation of duties and conducting regular internal audits.

    Another important aspect of risk management is having an effective compliance program. This includes having policies and procedures in place to ensure that the company is in compliance with relevant laws and regulations, as well as having a system in place for identifying and reporting any potential violations.

    Addressing cognitive biases that facilitate corporate fraud

    Cognitive biases can also play a role in corporate fraud, as they can lead individuals to make irrational decisions and overlook potential red flags. For example, confirmation bias can lead individuals to only pay attention to information that confirms their preconceived notions, while ignoring information that contradicts them. This can make it difficult for individuals to recognize and report fraud. Theranos might be an example: despite the lack of evidence for their technology working, stakeholders persistently refused to see this reality.

    The sunk cost fallacy is another cognitive bias that can lead to fraud. This occurs when individuals continue to invest in a project or venture, even if it is no longer viable because they have already invested so much time and resources into it. This can lead to individuals engaging in fraudulent activities in order to justify their previous investments. The situation with FTX falls into this category, with Sam Bankman-Fried refusing to accept losses at his crypto trading firm Alameda Research, and using customer funding from the FTX exchange to cover these losses.

    To mitigate the impact of cognitive biases on corporate fraud, companies need to be aware of these biases and take steps to counteract them. This can include regular training and education for employees on how to recognize and overcome cognitive biases, as well as implementing systems and processes that help to counteract these biases.

    For example, companies can implement peer review systems where multiple individuals review and approve financial transactions, rather than relying on a single individual. This can help to counteract the confirmation bias, as multiple individuals will be looking at the same information and can point out any potential red flags.

    Another example is implementing an independent fraud detection and investigation team within the company. This team can be responsible for reviewing financial transactions and identifying potential fraud. This can help to counteract the sunk cost fallacy, as the team will not be invested in the project or venture and can provide an objective assessment of its viability.

    Related: Yes, You Are Getting Scammed. How to Combat Fraud and Increase Efficiency

    Conclusion

    Corporate fraud is a serious issue that affects companies of all sizes and industries. A recent study published in the Journal of Financial Economics estimates that only one-third of corporate frauds are detected, with an average of 10% of large publicly traded firms committing securities fraud every year. This highlights the need for better risk management and oversight to address corporate fraud.

    Companies can mitigate the risk of fraud by having strong risk management and oversight systems in place, including an effective internal control system and compliance program. They also need to be aware of cognitive biases and take steps to counteract them, such as implementing peer review systems and independent fraud detection and investigation teams.

    As a highly experienced expert in this topic, I have consulted for many companies on how to mitigate the risk of fraud and the impact it can have on their business. I strongly recommend that leaders of companies take the necessary steps to address corporate fraud, in order to protect their bottom line and reputation.

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    Gleb Tsipursky

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  • Theranos Founder Elizabeth Holmes Tried to Flee US

    Theranos Founder Elizabeth Holmes Tried to Flee US

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    Elizabeth Holmes, the former CEO of blood-testing startup Theranos, was convicted of defrauding investors in January 2022. According to a recent court filing, Holmes booked a one-way ticket to Mexico in an attempt to “flee the country” after her conviction.


    NurPhoto | Getty Images

    Holmes was sentenced to 11 years in prison in November 2021 and is currently appealing her conviction. However, CNN reports that prosecutors argue she should begin her sentence now, citing her suspect travel plans and her current living arrangements on an estate with reported monthly expenses of $13,000 as evidence she is a flight risk.

    The court filing revealed that Holmes had booked a one-way flight to Mexico on January 26, 2022 —without a scheduled return trip. Her travel plans were canceled after the government questioned Holmes’s attorneys, who claimed that the travel reservation was made before the verdict and that she only meant to attend a friend’s wedding in Mexico.

    At the height of its success, Theranos was valued at $9 billion. It attracted major retail partners with claims that its technology could test for numerous conditions using a small amount of blood.

    However, everything unraveled after a 2015 Wall Street Journal investigation revealed that the technology was unproven and unreliable, ultimately leading to the company’s downfall and its CEO’s conviction.

    Holmes is set to begin her prison sentence on April 27, 2023.

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    Steve Huff

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  • Elizabeth Holmes Living Lavishly While Appealing Sentencing

    Elizabeth Holmes Living Lavishly While Appealing Sentencing

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    Elizabeth Holmes is still living the high life, prosecutors claimed in a court filing on Thursday, per Insider.


    Justin Sullivan / Staff

    Elizabeth Holmes and Billy Evans.

    The founder of Theranos, who was sentenced to 11.25 years in prison in November, is living on an estate where the upkeep costs $13,000 a month, prosecutors wrote. They cited documents provided by Holmes to the probation office.

    This filing was in response to efforts by her legal team to keep Holmes out of prison while she appeals her case, per Bloomberg. She is currently scheduled to report to prison in April, which she should still do, prosecutors argued.

    “There are not two systems of justice — one for the wealthy and one for the poor — there is one criminal justice system in this country,” they wrote in the filing.

    They also said that Holmes “continues to show no remorse to her victims,” in the filing in California’s Northern District Court, where Holmes was tried for fraud.

    Holmes started Theranos in 2003 after dropping out of Stanford University, inspired to create a better way to draw and test blood due to her anxiety over needles.

    Related: What Happened to Theranos CEO Elizabeth Holmes? Everything from Her Net Worth to Where She Is Now

    She later bedazzled investors with claims that her Edison machine could perform over 200 tests with one drop of blood, and then raked in the funding, including $700 million from people including Larry Ellison.

    The company was valued at some $10 billion at its peak.

    However, the FDA began investigating her company in 2015, and the Wall Street Journal reported the same year that the company’s blood tests were struggling to live up to its public image.

    By 2018, the Securities and Exchange Commission had charged Holmes and COO Sunny Sunny Balwani with fraud. Holmes’ trial, which was delayed because of her first child’s birth, began in September 2021, and she was found guilty in January 2022.

    The court later handed down a sentence of 11.25 years (she had asked for 18 months of home confinement). During the trial, she said: “I regret my failings with every cell of my body.”

    While awaiting legal proceedings, she married hotel heir William “Billy” Evans in 2019 and appeared to be pregnant with her second child at trial.

    CNBC reported in September 2021 that Holmes was living with Evans at a smaller home on a 74-acre estate in California, then for sale for $135 million.

    Prosecutors also said Holmes had told probation officers she still wanted to work on patents related to blood testing, per Bloomberg.

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    Gabrielle Bienasz

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  • Ex-Theranos President Ramesh Balwani Gets 13 Years In Prison

    Ex-Theranos President Ramesh Balwani Gets 13 Years In Prison

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    Disgraced Theranos Inc. President and Chief Operating Officer Ramesh “Sunny” Balwani was sentenced today to 13 years behind bars for defrauding investors and patients.

    U.S. District Judge Edward Davila handed down the sentence in a San Jose, California, federal courthouse.

    Last July, Balwani was convicted of collaborating with Theranos CEO Elizabeth Holmes in a giant fraud scheme involving investors and patients of the blood-testing company. The startup falsely claimed that the device they developed could detect diseases and conditions from just a few drops of blood.

    Holmes was sentenced in January to over 11 years in prison for her role in duping investors.

    In addition to being second in command at Theranos, Balwani was Holmes’ boyfriend, although she claimed in her trial that Balwani sexually and verbally abused her.

    Related: What Happened to Theranos CEO Elizabeth Holmes? Everything from Her Net Worth to Where She Is Now

    Who is Ramesh Sunny Balwali?

    Not much is known about Balwani, including how he got the nickname “Sunny.”

    According to a New York Times expose, Balwani once worked as a sales manager for Microsoft and was president of a start-up called CommerceBid.com during the dot.com boom. Balwani made $40 million on that exit and eventually landed a job as the number two at Theranos.

    He was later arrested and convicted of two counts of conspiracy and ten counts of wire fraud for his role in the multi-million-dollar Theranos scheme.

    Balwani did not speak in his own defense during his trial or his sentencing. He is expected to appeal his conviction.

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  • Former Theranos COO sentenced to nearly 13 years | CNN Business

    Former Theranos COO sentenced to nearly 13 years | CNN Business

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    CNN Business
     — 

    Ramesh “Sunny” Balwani, the former chief operating officer of failed blood testing startup Theranos, was sentenced Wednesday to nearly 13 years in prison for fraud. It marks an end to the stunning downfall of a high-flying Silicon Valley company that resulted in the rare convictions of two tech executives.

    “There is an unfortunate saying in Silicon Valley: ‘Fake it ‘til you make it.’ Elizabeth Holmes and Sunny Balwani stretched this idea to a place much farther than the law allows and in so doing put vast amounts of investor dollars at risk,” said Stephanie Hinds, US Attorney for the Northern District of California, in a statement. “Significantly, today the court also made clear that Sunny Balwani’s decision to deceive doctors and patients also put the health of patients at risk. Ms. Holmes and Mr. Balwani now will be justly punished for their illegal conduct.”

    Hinds added, “Let this story be a cautionary tale for entrepreneurs in this district: Those who use lies to cover up the shortfalls of their promised accomplishments risk substantial jail time.”

    The sentencing comes weeks after Elizabeth Holmes, the founder of Theranos and Balwani’s ex-girlfriend, was sentenced to more than 11 years in prison.

    Theranos raised $945 million from an A-list cohort of investors with its promise to test for a wide range of conditions using just a few drops of blood. At its peak, the company was valued at $9 billion.

    The company began to unravel after a Wall Street Journal investigation in 2015 reported that Theranos had only ever performed roughly a dozen of the hundreds of tests it offered using its proprietary technology, and with questionable accuracy. It also came to light that Theranos was relying on third-party manufactured devices from traditional blood testing companies rather than its own technology. Theranos ultimately dissolved in September 2018.

    Holmes and Balwani were first indicted together four years ago on the same 12 criminal charges pertaining to defrauding investors and patients about Theranos’ capabilities and business dealings in order to get money. Their trials were severed after Holmes indicated she intended to accuse Balwani of sexually, emotionally and psychologically abusing her throughout their decade-long relationship, which coincided with her time running the company. (Balwani’s attorneys have denied her claims.)

    In July, Balwani was found guilty on all 12 charges he faced, which included ten counts of federal wire fraud and two counts of conspiracy to commit wire fraud. Holmes was found guilty in January on four charges relating to defrauding investors, and found not guilty on three additional charges concerning defrauding patients and one charge of conspiracy to defraud patients.

    Like Holmes, Balwani faced up to 20 years in prison as well as a fine of $250,000 plus restitution for each count.

    In a recent court filing, prosecutors noted that Balwani was convicted not only of defrauding investors but also defrauding patients. They recommended a 15-year prison sentence for him, as well as an order for Balwani to pay $804 million in restitution. In a separate filing, attorneys for Balwani requested a sentence of probation, noting he had no criminal history.

    Before joining Theranos, Balwani had a career as a software executive. Balwani, nearly 20 years older than Holmes, first met her in 2002 before she dropped out of Stanford. He served as an informal adviser to Holmes in Theranos’ earliest days and the two became romantically involved. Balwani guaranteed a “multimillion-dollar loan” to the startup in 2009, court filings show, and took on a formal role as president and chief operating officer. Holmes and Balwani largely kept their romantic relationship hidden while working together.

    During her trial, Holmes claimed Balwani tried to control nearly every aspect of her life — including disciplining her eating, her voice and image, and isolating her from others. She testified that while he didn’t control her interactions with investors, business partners and others, “he impacted everything about who I was, and I don’t fully understand that.”

    Holmes is expected to appeal her conviction but was ordered to turn herself into custody on April 27, 2023.

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  • Former Theranos COO Sunny Balwani sentenced to nearly 13 years in prison

    Former Theranos COO Sunny Balwani sentenced to nearly 13 years in prison

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    Former Theranos chief operating officer and president Ramesh “Sunny” Balwani was sentenced to nearly 13 years in prison Wednesday for fraud, after the unraveling of the blood-testing juggernaut prompted criminal charges in California federal court against both Balwani and Theranos founder Elizabeth Holmes, who on Nov. 18 was sentenced to more than 11 years in prison.

    During the sentencing hearing, attorneys for Balwani attempted to pin the blame on Holmes, telling U.S. District Court Judge Edward J. Davila that “decisions were made by Elizabeth Holmes.”

    Davila had set a sentencing range of 11 years plus 3 months to 14 years, but prosecutors today sought a 15-year sentence given his “significant” oversight role at Theranos’ lab business.

    The final guideline sentence was 155 months, plus three years of probation. Davila set a Mar. 15, 2023, surrender date.

    Sunny Balwani, former president of Theranos Inc., arrives at federal court in San Jose, California, on Wednesday, Dec. 7, 2022.

    David Paul Morris | Bloomberg | Getty Images

    Balwani and Holmes, former romantic partners, helmed Theranos as the company enjoyed a meteoric rise, attracting backers ranging from the DeVos family to news magnate Rupert Murdoch. It was one of Murdoch’s publications, The Wall Street Journal, that first reported on irregularities with Theranos’ purportedly revolutionary blood-testing machines.

    As COO, Balwani managed both the laboratory business and the financial aspects of the company. Theranos was marred with repeated failures during his tenure, including falsified documents and erroneous test results.

    “I am responsible for everything at Theranos,” Balwani said in a message to Holmes. Balwani assumed broad responsibility for day-to-day operations at the company.

    Theranos claimed the machines required just a few drops of blood to run and could execute more than 1,000 tests. In reality, the Journal reported the company could only process a little over a dozen tests. The Journal’s reporting eventually prompted the company’s dissolution in 2018 and, later, the arrest of Balwani and Holmes on fraud charges.

    Balwani’s sentencing in federal court marks the end of the Theranos saga, which enthralled the public and prompted documentary films and novel treatments.

    With a star-studded investor list, a captivating founder who drew comparisons to Apple’s Steve Jobs, and a potentially revolutionary technology, the company for a time represented the apex of Silicon Valley ingenuity.

    The revelations about Theranos brought about a stunning fall from grace for both Balwani and Holmes, who were in a relationship for much of their tenure at the company. Holmes accused Balwani of abuse in court proceedings, providing text messages and contemporaneous notes from their relationship as evidence.

    “Kill the old Elizabeth,” Balwani purportedly told her.

    Balwani perpetrated a “decade-long campaign of psychological abuse,” Holmes’ lawyers argued. Balwani is nearly 20 years older than Holmes, who testified that he managed the lab and financial side of the business.

    This is a developing story. Please check back for updates.

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  • Understanding The Rise And Fall Of FTX, FTT And Alameda Research

    Understanding The Rise And Fall Of FTX, FTT And Alameda Research

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    The rise and fall of FTX and Sam Bankman-Fried revealed holes in the crypto space that industry peers, the media, and government officials either chose to overlook or refused to question further.

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  • Elizabeth Holmes Sentenced To More Than 11 Years In Prison

    Elizabeth Holmes Sentenced To More Than 11 Years In Prison

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    Elizabeth Holmes, founder of the failed start-up Theranos, has been sentenced to 11.25 years for fraud after deceiving investors about the purported efficacy of her company’s blood-testing technology. What do you think?

    “She must pay the price for what she did to Walgreens.”

    Ken Molina, Corncob Inspector

    “Is that the typical sentencing for unrepentant white-collar sociopaths?”

    Leo Acosta, Shock Jock Trainer

    “I worry this could discourage others from defrauding investors.”

    Phoebe Hinton, Unemployed

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  • The rise and fall of Elizabeth Holmes: A timeline | CNN Business

    The rise and fall of Elizabeth Holmes: A timeline | CNN Business

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    CNN
     — 

    More than three years after Elizabeth Holmes was first indicted and nearly four months after her trial kicked off, the founder and former CEO of failed blood testing startup Theranos was found guilty on four out of 11 federal fraud and conspiracy charges.

    The verdict comes after a stunning downfall that saw Holmes, once hailed as the next Steve Jobs, go from being a tech industry icon to being a rare Silicon Valley entrepreneur on trial for fraud.

    A Stanford University dropout, Holmes – inspired by her own fear of needles – started the company at the age of 19, with a mission of creating a cheaper, more efficient alternative to a traditional blood test. Theranos promised patients the ability to test for conditions like cancer and diabetes with just a few drops of blood. She attracted hundreds of millions of dollars in funding, a board of well-known political figures, and key retail partners.

    But a Wall Street Journal investigation poked holes into Theranos’ testing and technology, and the dominoes fell from there. Holmes and her former business partner, Ramesh “Sunny” Balwani, were charged in 2018 by the US government with multiple counts of wire fraud and conspiracy to commit wire fraud. (Both pleaded not guilty.)

    Here are the highlights of the rise and fall of Elizabeth Holmes and Theranos.

    Holmes, a Stanford University sophomore studying chemical engineering, drops out of school to pursue her startup, Theranos, which she founded in 2003 at age 19. The name is a combination of the words “therapy” and “diagnosis.”

    Balwani joins as chief operating officer and president of the startup. Balwani, nearly 20 years her senior, met Holmes in 2002 on a trip to Beijing through Stanford University. The two are later revealed to be romantically involved.

    A decade after first starting the company, Holmes takes the lid off Theranos and courts media attention the same month that Theranos and Walgreens announce they’ve struck up a long-term partnership. The first Theranos Wellness Center location opens in a Walgreens in Palo Alto where consumers can access Theranos’ blood test.

    The original plan had been to make Theranos’ testing available at Walgreens locations nationwide.

    Holmes is named to the magazine’s American billionaire list with the outlet reporting she owns a 50% stake in the startup, pinning her personal wealth at $4.5 billion.

    Theranos has raised more than $400 million, according to a profile of the company and Holmes by The New Yorker. It counts Oracle’s Larry Ellison among its investors.

    The FDA clears Theranos to use of its proprietary tiny blood-collection vials to finger stick blood test for herpes simplex 1 virus – its first and only approval for a diagnostic test.

    The Wall Street Journal reports Theranos is using its proprietary technique on only a small number of the 240 tests it performs, and that the vast majority of its tests are done with traditional vials of blood drawn from the arm, not the “few drops” taken by a finger prick. In response, Theranos defends its testing practices, calling the Journal’s reporting “factually and scientifically erroneous.”

    A day later, Theranos halts the use of its blood-collection vials for all but the herpes test due to pressures from the FDA. (Later that month, the FDA released two heavily redacted reports citing 14 concerns, including calling the company’s proprietary vial an “uncleared medical device.”)

    One week after the Journal report, Holmes is interviewed on-stage at the outlet’s conference in Laguna Beach. “We know what we’re doing and we’re very proud of it,” she says.

    Holmes speaking at a Wall Street Journal technology conference in Laguna Beach, California on October 21, 2015.

    Amid the criticism, Theranos reportedly shakes up its board of directors, eliminating Henry Kissinger and George Shultz as directors while moving them to a new board of counselors; the company also forms a separate medical board.

    Safeway, which invested $350 million into building out clinics in hundreds of its supermarkets to eventually offer Theranos blood tests, reportedly looks to dissolve its relationship with the company before it ever offered its services.

    Centers for Medicare and Medicaid Services (CMS) sends Theranos a letter saying its California lab has failed to comply with federal standards and that patients are in “immediate jeopardy.” It gives the company 10 days to address the issues.

    In response, Walgreens says it will not send any lab tests to Theranos’ California lab for analysis and suspends Theranos services at its Palo Alto Walgreens location.

    CMS threatens to ban Holmes and Balwani from the laboratory business for two years after the company allegedly failed to fix problems at its California lab. Theranos says that’s a “worst case scenario.

    Balwani departs. The company also adds three new board members as part of the restructuring: Fabrizio Bonanni, a former executive vice president of biotech firm Amgen, former CDC director William Foege, and former Wells Fargo CEO Richard Kovacevich.

    Theranos voids two years of blood test results from its proprietary testing devices, correcting tens of thousands of blood-test reports, the Journal reports.

    Forbes revises its estimate of Holmes’ net worth from $4.5 billion to $0. The magazine also lowers its valuation for the company from $9 billion to $800 million.

    Walgreens, once Theranos’ largest retail partner, ends its partnership with the company and says it will close all 40 Theranos Wellness Centers.

    CMS revokes Theranos’ license to operate its California lab and bans Holmes from running a blood-testing lab for two years.

    Holmes tries to move past recent setbacks by unveiling a mini testing laboratory, called miniLab, at a conference for the American Association for Clinical Chemistry. In selling the device, versus operating its own clinics, Theranos seeks to effectively side-step CMS sanctions, which don’t prohibit research and development.

    Theranos investor Partner Fund Management sues the company for $96.1 million, the amount it sunk into the company in February 2014, plus damages. It accuses the company of securities fraud. Theranos and Partner Fund Management settled in May, 2017, for an undisclosed amount.

    The company also lays off 340 employees as it closes clinical labs and wellness centers as it attempts to pivot and focus on the miniLab.

    Walgreens sues the blood testing startup for breach of contract. Walgreens sought to recover the $140 million it poured into the company. The lawsuit was settled August, 2017.

    Theranos downsizes its workforce yet again following the increased scrutiny into its operations, laying off approximately 155 employees or about 41% of staffers.

    The Wall Street Journal reports that Theranos failed a second regulatory lab inspection in September, and that the company was closing its last blood testing location as a result.

    Theranos settles with the CMS, agreeing to pay $30,000 and to not to own or operate any clinical labs for two years.

    Theranos also settles with the Arizona Attorney General Mark Brnovich over allegations that its advertisements misrepresented the method, accuracy, and reliability of its blood testing and that the company was out of compliance with federal regulations governing clinical lab testing. Theranos agrees to pay $4.65 million back to its Arizona customers as part of a settlement deal.

    The SEC charges Holmes and Balwani with a “massive fraud” involving more than $700 million from investors through an “elaborate, years-long fraud in which they exaggerated or made false statements about the company’s technology, business, and financial performance.”

    The SEC alleges Holmes and Balwani knew that Theranos’ proprietary analyzer could perform only 12 of the 200 tests it published on its patient testing menu.

    Theranos and Holmes agree to resolve the claims against them, and Holmes gives up control of the company and much of her stake in it. Balwani, however, is fighting the charges, with his attorney saying he “accurately represented Theranos to investors to the best of his ability.”

    Reporter John Carreyrou, who first broke open the story of Theranos for the Wall Street Journal, publishes “Bad Blood,” a definitive look at what happened inside the disgraced company. Director Adam McKay (who directed “The Big Short”) secures the rights to make the film, starring Jennifer Lawrence as Holmes, by the same name.

    Holmes and Balwani are indicted on federal wire fraud charges over allegedly engaging in a multi-million dollar scheme to defraud investors, as well as a scheme to defraud doctors and patients. Both have pleaded not guilty.

    Minutes before the charges were made public, Theranos announced that Holmes has stepped down as CEO. The company’s general counsel, David Taylor, takes over as CEO. Holmes remains chair of the company’s board.

    Former Theranos COO Ramesh

    Taylor emails shareholders that Theranos will dissolve, according to a report from The Wall Street Journal. Taylor said more than 80 potential buyers were not interested in a sale. “We are now out of time,” Taylor wrote.

    Alex Gibney, the prolific documentary filmmaker behind “Dirty Money,” “Enron: The Smartest Guys in the Room,” and “The Armstrong Lie,” debuts “The Inventor” on HBO, following the rise and fall of Theranos.

    A new court document reveals Holmes may seek a “mental disease” defense in her criminal fraud trial. Later, in August 2021, unsealed court documents reveal Holmes is likely to claim she was the victim of a decade-long abusive relationship with Balwani. The allegations led to the severing of their trials. His trial is slated to begin in 2022.

    Initially set to begin in July 2020, Holmes’ criminal trial is further delayed til July 2021 due to the coronavirus pandemic.

    News surfaces that Holmes’ is expecting her first child, once more further delaying her criminal trial. Holmes’ counsel advised the US government that Holmes is due in July 2021, a court document revealed. She gave birth in July.

    Holmes collects her belongings after going through security at the Robert F. Peckham Federal Building with her defense team on August 31, 2021 in San Jose, California.

    More than 80 potential jurors are brought into a San Jose courtroom for questioning over the course of two days to determine if they are fit to serve as impartial, fair jurors for the criminal trial of Holmes. A jury of seven men and five women is selected, with five alternatives.

    After three months of testimony from 32 witnesses, the criminal fraud case of Theranos founder Elizabeth Holmes makes its way to the jury of eight men and four women who will decide her fate. The jury would go on to deliberate for more than 50 hours before returning a verdict.

    Holmes is found guilty of one count of conspiracy to defraud investors as well as three wire fraud counts tied to specific investors. She is found not guilty on three additional charges concerning defrauding patients and one charge of conspiracy to defraud patients. The jury returns no verdict on three of the charges concerning defrauding investors. Holmes faces up to 20 years in prison as well as a fine of $250,000 plus restitution for each count.

    “The Dropout,” a scripted miniseries about Theranos produced by ABC, debuts on Hulu. Amanda Seyfried stars as Holmes and Naveen Andrews plays Balwani. Their romantic and professional relationship features prominently in the show.

    Following delays due to Holmes’ prolonged trial then a surge of Covid-19, jury selection for Balwani’s trial gets underway. On March 22, opening arguments are held and the government’s first witness, a former Theranos employee turned whistleblower, is called to the stand.

    After four full days of deliberations, a jury finds Balwani guilty of ten counts of federal wire fraud and two counts of conspiracy to commit wire fraud. Like Holmes, Balwani faces up to 20 years in prison as well as a fine of $250,000 plus restitution for each count of wire fraud and each conspiracy count.

    Holmes asks for a new trial after claiming that a key witness visited her house unannounced and allegedly said he “feels guilty” about his testimony.

    In a court filing with the United States District Court for the Northern District of California, Holmes’ attorneys said Adam Rosendorff, a former Theranos lab director who was one of the government’s main witnesses, arrived at her home on August 8 asking to speak with her. According to the filing, Rosendorff did not interact with Holmes but did speak to her partner Billy Evans, who recounted the exchange in an email to Holmes’ lawyers shortly after.

    “His shirt was untucked, his hair was messy, his voice slightly trembled,” Evans wrote about Rosendorff. According to Evans’ email, Rosendorff “said when he was called as a witness he tried to answer the questions honestly but that the prosecutors tried to make everybody look bad.”

    The former Theranos lab director also “said he felt like he had done something wrong,” Evans wrote.

    Rosendorff takes the stand again to address concerns from Holmes’ defense team and their claims he had shown up at her home after the trial concluded asking to speak with her and expressed regrets about his testimony.

    At the hearing, Rosendorff reaffirmed the truthfulness of his testimony at Holmes’ trial and said that the government did not influence what he said.

    A federal judge denies Elizabeth Holmes’ request for a new trial, according to court filings, paving the way for the founder of failed blood testing startup Theranos to be sentenced later in the month.

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  • Elizabeth Holmes, Who Is Pregnant With Her Second Child, Sentenced To 11 Years In Prison

    Elizabeth Holmes, Who Is Pregnant With Her Second Child, Sentenced To 11 Years In Prison

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    By Stacy Lambe, ETOnline.com.

    Elizabeth Holmes, the disgraced CEO who is currently pregnant with her second child, has been sentenced to 11 years in prison after being found guilty on fraud charges related to the fallout of her blood sampling company, Theranos.

    Holmes, who is expected to appeal, must report to prison on April 27, 2023. She is also required to serve three years of probation after her release.

    “Failure is normal but failure by fraud is not OK,” U.S. District Judge Edward Davila said while ruling on Friday.

    Before she was sentenced, an emotional Holmes spoke before the judge. “Thank you for the chance to speak. I’m grateful for this chance,” she said, according to reporters in the courtroom. “I stand before you taking responsibility for Theranos. It was my life’s work.”

    “I am devastated by my failings. I have felt deep pain for what people went through, because I failed them,” she continued. “To investors, patients, I am sorry… I regret my failings with every cell of my body.”

    The decision, meanwhile, comes after a jury of her peers convicted her on four counts of wire fraud following an extensive deliberation and four-month trial that concluded in January.

    In the time since, Hulu released “The Dropout”, a scripted, true-crime series about Holmes’ involvement in her company’s fraudulent claims with Amanda Seyfried winning an Emmy for her performance.

    Additionally, Sunny Balwani, her ex-boyfriend and the former president and COO of Theranos, was also found guilty on all 12 criminal fraud charges brought against him.

    Leading up to her sentencing, Holmes requested a new trial, arguing that new evidence had come to light over the summer. In August, former Theranos lab director Dr. Adam Rosendorff visited her, expressing regret for his participation against her in court.

    He also reportedly revealed “that [Holmes] is pregnant again.”

    AP Photo/Nic Coury

    While in court, Holmes appeared visibly pregnant, with the judge even offering for her to sit through the entire proceedings.

    On Friday, before the judge made his ruling, probation officers recommended that she only spend nine years in federal prison while the prosecution asked for a 15-year sentence.

    At the time of her conviction, it was believed that she faced a maximum of 20 years behind bars and a fine of $250,000 for each count she was found guilty on. It was also believed that her sentences could be served out concurrently.

    Up next is Balwani, who’s still awaiting sentencing and is also facing up to 20 years in prison. He’s expected back in court in December.

    MORE FROM ET:

    Elizabeth Holmes: What to Know About Theranos, ‘The Dropout’ and Where She Is Now

    Sunny Balwani on Trial: What to Remember About the Theranos President and ‘The Dropout’

    Amanda Seyfried Shares Her Thoughts on Elizabeth Holmes After Playing Her in ‘The Dropout’

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  • Theranos founder Elizabeth Holmes sentenced to more than 11 years in prison

    Theranos founder Elizabeth Holmes sentenced to more than 11 years in prison

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    Theranos founder Elizabeth Holmes was sentenced Friday to more than 11 years in prison for fraud after deceiving investors about the purported efficacy of her company’s blood-testing technology. She was ordered to surrender on April 27.

    Holmes was convicted in January in the U.S. District Court for the Northern District of California. She cried while speaking to the court ahead of her sentencing on Friday.

    “I loved Theranos. It was my life’s work,” Holmes said. “My team meant the world to me. I am devastated by my failings. I’m so so sorry. I gave everything I had to build my company.”

    Her defense team argued she should face a maximum sentence of 18 months, according to court filings. Instead, she was given 135 months, which amounts to 11 years and three months, behind bars.

    The Wall Street Journal first broke the story of how Theranos’ blood-testing technology was struggling to meet expectations in 2015. Whistleblowers and other witnesses came forth to provide detailed accounts of how Holmes and former operating chief Ramesh “Sunny” Balwani deceived patients, partners, investors and employees about the company’s progress and the capabilities of its technology.

    Once valued at $9 billion by private investors, Theranos shut down in 2018.

    “Thank you for having me. Thank you for the courtesy and respect you have shown me,” she said Friday. “I have felt deep pain for what people went through because I failed them. To investors, patients, I am sorry.”

    Prosecutors sought a 15 year sentence for the pregnant 38-year-old former billionaire and Silicon Valley celebrity. In July, Balwani, who was romantically involved with Holmes years earlier, was found guilty of 12 criminal fraud charges. His sentencing is set for next month.

    U.S. District Court Judge Edward Davila, who presided over Holmes’ trial, handed down the sentence.

    The erstwhile billionaire had attempted to move for a new trial after a former employee appeared at her doorstep in August to speak with her. Holmes’ partner, Billy Evans, told the court that the former employee made remorseful remarks at their shared residence.

    But that employee, Adam Rosendorff, told the court that his remarks were due to distress at the thought of a child spending time without their mother. The Theranos founder gave birth in July to her first child, and is expecting another.

    Holmes’ sentencing comes as another young tech former billionaire icon, Sam Bankman-Fried, faces a daunting future, following the sudden collapse of his cryptocurrency exchange FTX last week. Bankman-Fried hasn’t been charged with a crime, but he’s in legal jeopardy after revelations that his company was unable to give depositors their money back because some of it was used to fund risky, losing bets.

    WATCH: Elizabeth Holmes appears in court for sentencing

    Holmes appears in court for sentencing today

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  • What Happened to Elizabeth Holmes? Sentencing, Net Worth and More

    What Happened to Elizabeth Holmes? Sentencing, Net Worth and More

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    Elizabeth Holmes, the founder of the not-so-revolutionary blood-testing company Theranos, has been gripping the headlines for nearly a decade.

    Although she was once seen as an impressive young entrepreneur, a shocking Wall Street Journal expose in 2015 revealed that her blood-testing technology didn’t produce accurate results, giving thousands of people faulty reports.

    Holmes stepped down as Theranos CEO in 2018 and was convicted of four fraud-related counts in January 2022.

    The saga was fictionalized by streamer Hulu in March 2022’s “The Dropout” with Amanda Seyfried, who won an Emmy for her portrayal of Holmes.

    Image credit: GLENN CHAPMAN/AFP via Getty Images

    What Is Elizabeth Holmes’ Sentence?

    Elizabeth Holmes was sentenced to 11.25 years in prison followed by 3 years supervised release after over three hours of testimony on Friday, November 18, per NBC Bay Area’s live coverage. She’ll be required to surrender at a later date. She was seen walking into court, appearing to be pregnant with her second child, according to a video obtained by The Wall Street Journal.

    The amount Holmes will need to pay back to investors will be determined at a later date, NBC’s Scott Budman tweeted from the courtroom.

    Holmes spoke at the sentencing, stating, “I regret my failings with every cell of my body.”

    Who Is Elizabeth Holmes?

    Elizabeth Holmes’ journey began at Stanford University in 2002, where she had planned to study medicine until she realized she had a fear of needles and blood. Inspired by her own skittishness, she filed a patent for a wearable medical device that could monitor a patient’s blood and administer medication as needed, per Business Insider.

    Just two years later, Holmes dropped out of Stanford and started her company, Theranos, from her basement.

    Holmes told investors she had proprietary technology that could detect medical conditions like cancer with only a single drop of blood. Additionally, she led investors to believe Theranos offered more than 200 diagnostic tests, although the company was found to be using third-party machines, per BBC.

    Based on these promises, she was able to reel in more than $700 million in investments from big names, including Oracle founder Larry Ellison. By stressing the importance of secrecy, she was able to get investors’ money without revealing how the technology worked.

    Along with COO Sunny Sunny Balwani — it was later revealed that Holmes and Balwani secretly dated throughout their work together — the duo ran the company under the false notion that the technology worked, introducing their blood testing machine, the Edison.

    They continued to rack in millions in funding including several partnerships with major healthcare brands such as Walgreens, where they planned to have Theranos Wellness Centers in locations nationwide, per CNN, and a $350 million deal with Safeway.

    Through it all, Holmes branded herself as a “Girl Boss” and even graced the covers of Forbes and Fortune.

    Image credit: Photo by Michael Kovac/Getty Images for Vanity Fair source

    However, Theranos’ chief scientist Ian Gibbons warned Holmes that there had been inaccuracies in the technology and it wasn’t ready for public consumption.

    In August 2015, the FDA began investigating Theranos after finding “major inaccuracies” in its testing, and just two months later, the WSJ revealed the company was testing blood samples on traditional blood testing machines after getting inaccurate results from their own Edison machine.

    In 2016, the company was investigated by the FDA, the SEC, and the Centers for Medicare & Medicaid Services (CMS), the latter of which said Theranos’ lab was not meeting compliance standards, per CNN and that it determined “deficient practices of the laboratory pose immediate jeopardy to patient health and safety,” per a letter sent to Theranos from the agency.

    Because of these findings, Theranos voided two years of blood tests and corrected thousands of reports, per CNN, and the agency banned Holmes from operating a blood-testing lab for two years. Walgreens closed its 40 Theranos Wellness Centers.

    What Happened to Theranos?

    After Theranos’ lab was shut down, Holmes tried to make a comeback with another product called the “MiniLab,” which would allow her to bypass the CMS’s sanctions by selling the device instead of operating it in its own labs, per CNN.

    While Theranos tried to focus on the MiniLab and battle numerous lawsuits from investors, the company laid off 155 employees.

    Then in March 2018, the SEC charged Holmes and Balwani, who left the company in 2016, with “massive fraud,” per Business Insider. They were indicted in June with nine counts of wire fraud and two counts of conspiracy to commit wire fraud.

    Since Theranos was a private company, Holmes was allowed to stay on as CEO but had to give up financial and voting control of the company, in addition to paying a $500,000 fine and returning $18.9 million in Theranos stock. The same day Holmes was indicted, Theranos announced she would be stepping down as CEO.

    In September 2018 the company announced it would be shutting down after 15 years of business.

    Image credit: David Paul Morris/Bloomberg via Getty Images

    Where Is Elizabeth Holmes Now?

    Despite Holmes’ impending legal troubles, her trial was delayed due to the birth of her first child in July 2021.

    During her trial, Holmes accused Sunny Balwani of abuse, which he has denied, according to The Guardian.

    She was found guilty on four of 11 federal charges in January 2022, including one count of conspiracy to defraud investors and three wire fraud counts, per CNN.

    Although Holmes is currently free on a $500,000 bond, she could face up to 20 years in prison, a $250,000 fine, and restitution for each count.

    Prosecutors have requested a 15-year sentence and $800 million in restitution, per The Guardian, stating it would “reflect the seriousness of the offenses, provide for just punishment for the offenses, and deter Holmes and others.”

    Meanwhile, Holmes’ lawyers requested 18 months of home confinement and no jail time. She was sentenced on November 18.

    As for Sunny Balwani, he was found guilty of ten counts of federal wire fraud and two counts of conspiracy to commit wire fraud in July 2022.

    What Is Elizabeth Holmes’ Net Worth?

    When Holmes was 30 years old, Forbes named her the world’s youngest self-made woman billionaire with a net worth of $4.5 billion. However, the outlet reevaluated the figure in 2016 when various allegations against Holmes came to light.

    At that time, experts determined that $800 million was a more realistic figure, but since she only owned half of Theranos’ stock and with a bevy of investors to pay back, the outlet determined her net worth to be zero.

    In 2019, Holmes married William “Billy” Evans, who is heir to the Evans Hotel Group, which manages three properties in San Diego and was started by his grandparents in 1953, per Business Insider.

    It’s unclear exactly how much Evans or his family are worth, but during her trial, CNBC learned the couple had been living in a 74-acre estate in Woodside, California, worth $135 million.

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  • Elizabeth Holmes scheduled to be sentenced on Friday | CNN Business

    Elizabeth Holmes scheduled to be sentenced on Friday | CNN Business

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    CNN
     — 

    Elizabeth Holmes, the founder of failed blood testing startup Theranos who was convicted of fraud earlier this year, is scheduled to be sentenced on Friday morning by a judge in court in San Jose, California.

    Holmes, who was found guilty in January on four charges of defrauding investors, faces up to 20 years in prison as well as a fine of $250,000 plus restitution for each count.

    Lawyers for the government asked for a 15-year prison term, as well as probation and restitution, while Holmes’ probation officer pushed for a nine-year term. Holmes’ defense team asked Judge Edward Davila, who is presiding over her case, to sentence her to up to 18 months of incarceration followed by probation and community service.

    More than 100 people wrote letters in support of Holmes to Davila, asking for leniency in her sentencing. The list includes Holmes’ partner, Billy Evans, many members of Holmes’ and Evans’ families, early Theranos investor Tim Draper, and Sen. Cory Booker. Booker described meeting her at a dinner years before she was charged and bonding over the fact that they were both vegans with nothing to eat but a bag of almonds, which they shared.

    “I still believe that she holds onto the hope that she can make contributions to the lives of others, and that she can, despite mistakes, make the world a better place,” Booker wrote, noting that he continues to consider her a friend.

    Friday’s sentencing hearing caps off Holmes’ stunning downfall. Once hailed as a tech industry icon for her company’s promises to test for a range of conditions with just a few drops of blood, she is now the rare tech founder to be convicted and face prison time for her company’s missteps.

    Holmes, now 38, started Theranos in 2003 at the age of 19 and soon thereafter dropped out of Stanford University to pursue the company full-time. After a decade under the radar, Holmes began courting the press with claims that Theranos had invented technology that could accurately and reliably test for a range of conditions using just a few drops of blood taken from a finger prick.

    Theranos raised $945 million from an impressive list of investors, including media mogul Rupert Murdoch, Oracle founder Larry Ellison, Walmart’s Walton family and the billionaire family of former Secretary of Education Betsy DeVos. At its peak, Theranos was valued at $9 billion, making Holmes a billionaire on paper. She was lauded on magazine covers, frequently wearing a signature black turtleneck that invited comparisons to late Apple CEO Steve Jobs. (She has not worn that look in the courtroom.)

    The company began to unravel after a Wall Street Journal investigation in 2015 found the company had only ever performed roughly a dozen of the hundreds of tests it offered using its proprietary blood testing device, and with questionable accuracy. Instead, Theranos was relying on third-party manufactured devices from traditional blood testing companies.

    In 2016, Theranos voided two years of blood test results. In 2018, Holmes and Theranos settled “massive fraud” charges with the Securities and Exchange Commission, but did not admit to or deny any of the allegations as part of the deal. Theranos dissolved soon after.

    In her trial, Holmes alleged she was in the midst of a decade-long abusive relationship with her then-boyfriend and Theranos COO Ramesh “Sunny” Balwani while running the company. Balwani, she alleged, tried to control nearly every aspect of her life, including disciplining her eating, her voice and her image, and isolating her from others. (Balwani’s attorneys denied her claims.)

    In July, Balwani was found guilty on all 12 charges in a separate trial and faces the same potential maximum prison time as her. Balwani is scheduled to be sentenced on December 7.

    “The effects of Holmes and Balwani’s fraudulent conduct were far-reaching and severe,” federal prosecutors wrote in a November court filing regarding Holmes’ sentencing. “Dozens of investors lost over $700 million and numerous patients received unreliable or wholly inaccurate medical information from Theranos’ flawed tests, placing those patients’ health at serious risk.”

    Holmes’ sentencing, however, could be complicated by developments in her life after stepping down from Theranos. Holmes and her partner, Evans, who met in 2017, have a young son. Holmes is also pregnant, as confirmed by recent court filings and her most recent court appearance in mid October.

    Mark MacDougall, a white-collar defense lawyer and former federal prosecutor, told CNN Business that the fact that Holmes has a young child could impact how she is sentenced.

    “I don’t know how it can’t, just because judges are human,” he said.

    MacDougall also said he doesn’t see what a long prison sentence accomplishes. “Elizabeth Holmes is never going to run a big company again,” he said. “She’s never going to be in a position to have something like this happen again.”

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  • Elizabeth Holmes’ request for a new trial is denied | CNN Business

    Elizabeth Holmes’ request for a new trial is denied | CNN Business

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    CNN
     — 

    A federal judge has denied Elizabeth Holmes’ request for a new trial, according to court filings on Monday, paving the way for the founder of failed blood testing startup Theranos to be sentenced later this month.

    The decision comes weeks after an October 17 hearing held in San Jose, during which Judge Edward Davila had Adam Rosendorff, one of the government’s key witnesses, take the stand again. The hearing was to address concerns from Holmes’ defense team, which claimed Rosendorff had shown up at her home after the trial concluded asking to speak with her and expressed regrets about his testimony.

    At that hearing in the United States District Court for the Northern District of California, Rosendorff, a former Theranos lab director, reaffirmed the truthfulness of his testimony at Holmes’ trial and said that the government did not influence what he said.

    In his decision on Monday, Davila denied all three of Holmes’ motions requesting a new trial. A sentencing hearing, previously scheduled for last month, is now set for November 18.

    Holmes, once hailed as a tech industry icon for her company’s promises to test for a range of conditions with just a few drops of blood, was found guilty in January on four charges of defrauding investors. Ramesh “Sunny” Balwani, her ex-boyfriend and former COO at Theranos, was convicted in a separate trial in July. Both face up to 20 years in prison as well as a fine of $250,000 plus restitution for each count.

    In September, Holmes’ defense team filed a motion asking for a new trial, after claiming that Rosendorff arrived at Holmes’ home on August 8. According to that court filing, Rosendorff did not interact with Holmes but did speak to her partner Billy Evans, who recounted the exchange in an email to Holmes’ lawyers shortly after.

    In Evans’ email, he wrote that Rosendorff “said when he was called as a witness he tried to answer the questions honestly but that the prosecutors tried to make everybody look bad.” The former Theranos lab director also “said he felt like he had done something wrong,” Evans wrote.

    Davila wrote in his order Monday that the court “finds that the statements Dr. Rosendorff made to Mr. Evans do not stand for any of the proposed meanings that Defendant would want and, even if they did, they would not be material to the issues” at trial.

    “Accordingly, a new trial is not warranted based on the ‘newly discovered’ evidence of Dr. Rosendorff’s statements to Mr. Evans,” Davila wrote.

    In a sworn declaration filed with the court on September 21, Rosendorff wrote that he stands by his testimony in the trials of Holmes and Balwani “in every respect.”

    During the hearing last month, Holmes and Evans were present as Rosendorff was asked by a defense lawyer about his decision to visit Holmes’ home. He responded that in the weeks and months following Holmes’ conviction he “started to feel increasingly distressed and uncomfortable at the prospect that a young child, an infant child, would spend their formative years without a mother in their life.” (Holmes has one child with Evans.)

    Rosendorff said that when he visited Holmes’ residence in August, he rang the doorbell and spoke briefly to Evans, who asked him to leave. He went to his car and started to drive away, he testified, but Evans motioned for him to roll down his window; he did, and they had a conversation, Rosendorff said, in which he “expressed sympathy for the rank and file employees at Theranos.”

    When asked by the defense lawyer whether he had said the prosecution was trying to make everyone look bad, Rosendorff said that the prosecution was trying to paint “an angry picture of Elizabeth Holmes. To the extent other people looked bad it was because of their association with Elizabeth.”

    He said he did not recall telling Evans that he felt he had done something wrong, as Evans had written in his email to Holmes’ lawyers after their interaction.

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  • Elizabeth Holmes must report to prison this month while waiting out her appeal, judge rules | CNN Business

    Elizabeth Holmes must report to prison this month while waiting out her appeal, judge rules | CNN Business

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    CNN
     — 

    A judge on Monday denied Elizabeth Holmes’ request to remain free while she appeals her conviction, setting the stage for the disgraced Theranos founder to report to prison later this month.

    In his order, Judge Edward Davila of the Northern District of California said Holmes does not pose a danger to the community or a flight risk, but he cast doubt on her appeal. Even if Homes won her appeal, he said, it is unlikely to result in a reversal, or an order for a new trial, for all of the counts on which she was found guilty.

    Davila previously ordered Holmes to turn herself into custody on April 27, 2023.

    Holmes was sentenced to more than 11 years in prison last November, after she was convicted months earlier on multiple charges of defrauding investors while running the failed blood testing startup Theranos. Attorneys for Holmes did not immediately respond to CNN’s request for comment on the ruling.

    Ramesh “Sunny” Balwani, Holmes’ ex-boyfriend and the former chief operating officer at Theranos, was also found guilty on multiple counts of fraud in a separate trial. He was sentenced to nearly 13 years in prison last December. Balwani’s request to remain out of prison during his appeal was also denied, and he has been ordered by Davila to surrender to prison on April 20.

    Once valued at $9 billion, Theranos attracted top investors and retail partners with claims that it had developed technology to test for a wide range of conditions using just a few drops of blood. The company began to unravel after a Wall Street Journal investigation in 2015 reported that Theranos had only ever performed roughly a dozen of the hundreds of tests it offered using its proprietary technology, and with questionable accuracy.

    Holmes’ trial was initially delayed multiple times, due to the onset of the coronavirus pandemic and then because of her pregnancy. Following her sentencing in November, Holmes sought to delay the start of her prison term after giving birth to her second child.

    While Davila denied Holmes represented a flight risk, he also addressed the fact that she had previously booked a one-way ticket to Mexico in January 2022.

    “Booking international travel plans for a criminal defendant in anticipation of a complete defense victory is a bold move, and the failure to promptly cancel those plans after a guilty verdict is a perilously careless oversight,” Davila wrote in the court filing.

    Holmes’ attorneys had previously claimed that Holmes had hoped the verdict would be different when booking the travel plans and that she wanted to make this trip to attend the wedding of friends in Mexico. Davila wrote in court documents that the court accepts Holmes’ “representation that the oneway flight ticket—while ill-advised—was not an attempt to flee the country.”

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