Elizabeth Holmes made a splash with her rise to tech fame and her precipitous fall. Holmes styled herself on Steve Jobs himself, and she managed to elicit favorable comparisons as she skyrocketed into the tech spotlight.
This was before she became a convicted criminal and was sentenced to eleven years and three months in prison, which the judge in her case recommended be at a minimum-security women’s prison camp outside of Houston.
If you or someone you care about is facing a criminal charge, it is time to consult with an experienced Killeen criminal defense attorney. Working with a skilled attorney gives you the best chance of ending up with a favorable outcome for your case.
The Edison Box
Holmes is the female founder of Theranos, which, according to Bazaar, was billed as the “Apple of health care.” Her business idea was distilling a blood lab down to the size of a box. Her creation would take the doctor’s visit, the big blood draw, and the wait out of the equation. Instead, patients could prick their fingers and get immediate results from the Edison box.
While many high-powered movers and shakers wanted to – and did – believe in her vision, it was predicated on a scientific impossibility that played well in the media but had no bearing in reality.
Holmes spun an altruistic yarn about saving lives and not having to say goodbye too soon. Unfortunately, she had nothing but her charm and salesmanship to back these platitudes up.
The Inception of Theranos
Holmes was a mere undergrad studying chemical engineering at Stanford when she dropped out to go the way of many Silicon Valley prodigies before her. After registering her first patent in 2003, Homes left Stanford in 2004 with plans of starting Theranos, which was intended to be a medical company based on bolstering health outcomes through early detection.
By late 2004, Holmes had raised $6 million, and at the height of the Theranos hype, the company was valued at $9 billion. The facts that the company’s focus was saving lives and that it had a young woman at the helm were helpful in terms of creating buzz.
Building Her Brand
The fact that Theranos managed to continue garnering massive amounts of attention and funding is a testament to Holmes’ steadfast refusal to disclose the scientific miracle she was touting – claiming that the information was proprietary and that divulging it would be like handing trade secrets to rival companies.
However, the money and accolades were all based on blind faith in Holmes and her vision – without a drop of evidence to be found. None of the investors knew that before Theranos was formed, a world-class pharmacologist and Stanford professor told Holmes that her brilliant idea “was not physically possible.” This assessment should have stopped things in their tracks but did not.
This situation led to countless white-collar crime charges that required skilled legal intervention. If you are facing white-collar crime charges, you need the guidance of a Killeen criminal defense attorney.
The Brewing Storm
By 2015, Holmes’ star was dimming, and those spreading the word against her and her company were not all outsiders. There were whistleblowers within the very private walls of Theranos who were prepared to testify that the Edison machines did not work and that they never had. Theranos was defrauding its investors to the tune of many millions of dollars.
In 2016, the Center for Medicare and Medicaid Services investigated the operation and implemented a two-year ban on Holmes taking any of the following actions:
Owning a blood-testing service
Running a blood-testing service
Operating a blood-testing service
By 2017, things had become even more bleak, and cascading lawsuits began. By 2018, Theranos was shuttered, and Holmes was slapped with 11 fraud charges. After Covid-related delays and the fact of Holmes’ first pregnancy, her trial began in August 2021, and she was ultimately found guilty on four of the charges and was sentenced accordingly.
In Her Defense
One of the primary defense strategies employed by Holmes and her defense team was claiming that her partner and codefendant kept her in his clutches by abusing and traumatizing her to the extent that she was incapable of engaging in fraudulent intent – often referred to as a Svengali defense.
Another defense tactic employed was that of failure. Holmes claimed that she tried but failed to make her dream a reality. One of her attorneys summed it up this way: “Trying your hardest and coming up short is not a crime.” The law, however, took a dimmer view.
Wth complicated crimes such as these, it is essential to work closely with a lawyer to identify your strongest defense strategies. Contact a Killeen criminal defense attorney today to discuss your case.
Sentencing
U.S. District Judge Edward Davila had this to say to Holmes prior to sentencing her to 11 years and three months in prison: “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. I suppose we step back and we look at this, and we think what is the pathology of fraud? Is it the inability or the refusal to accept responsibility or express contrition in any way?”
Bid for Appeal or Delay
Holmes requested to remain free while she moves forward with appealing her conviction – and in light of her second pregnancy. Requests like these are common and are most likely to be granted when presented by a skilled criminal defense lawyer.
However, according to CNN, the judge in her case found that, while Holmes does not pose a danger to the community and is not a flight risk, her appeal is unlikely to end with either a reversal or a new trial on any of the four guilty counts.
The judge also addressed the fact that Holmes had booked a one-way flight to Mexico in early 2022, saying, “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.”
The judge chose to read Holmes’ plans as “ill-advised” rather than an attempt to flee.
The Texas Prison Facility
The Washington Post shares that Judge Davila proposed that Holmes be imprisoned in the Bryan Federal Prison Camp, and Holmes has been ordered to surrender herself into custody by April 27. The final decision on where Holmes will be incarcerated is up to the U.S. Bureau of Prisons, so it remains to be seen if the judge’s recommendation will be implemented.
Some of the many perks of the Bryan Federal Prison Camp (FPC) include the following features:
It is a standalone facility, which means it shares neither management nor staff with any nearby men’s facility, and, as such, those who work there are less likely to have a “prison mentality.”
The prison camp has no fences, bars, or walls imprisoning the inmates.
Bryan FPC has dormitory housing, is oriented toward work and other programs, and has a low ratio of staff to inmates.
The camp houses about 900 non-violent, white-collar female criminals, and most are serving sentences for various brands of fraud.
The average age of inmates in Bryan is 32 – Holmes turned 39 in February.
Judge Davila shared his finding in support of this facility by making the following statement: “The court finds that family visitation enhances rehabilitation.”
Faked Documents
A key piece of evidence in Holmes’ trial was Theranos’ technology validation reports. Bearing the names and logos of trusted pharmaceutical giants like Pfizer, the reports were used to solicit investments. However, the companies whose names graced the reports had not been involved in their creation and had not approved them.
Prosecutors called this a clear instance of fraud. While on the stand, Holmes acknowledged her personal involvement with the documents for the first time by sharing that she had attached the logos to the reports. Her reasoning was that she was attempting to convey the partnership Theranos had with the companies in question.
What Is Fraud?
Fraud refers to the act of depriving someone else of something of value through deceit, overreaching, or trickery, and the Theranos debacle certainly qualifies.
Once the company had a few savvy investors under its wing, those who followed relied on the expansive claims the company was making – assuming that the big-name investors who had already bought in had done the necessary vetting.
Despite the $990 million that Theranos projected in revenue in 2015 – according to The New York Times – the actual number was much closer to nothing at all.
Fraud charges like these are very serious and shouldn’t be faced alone. If you are facing fraud charges, contact a skilled Killeen criminal defense attorney for the legal guidance you need.
Types of Fraud Charges
Fraud charges can take many different forms, but some of the most common include the following offenses:
Mail fraud
Computer fraud
Wire fraud
Healthcare fraud
Bankruptcy fraud
Fraud against the government via false statements and false claims
Government program bribery and fraud
The specific fraud charges that Elizabeth Holmes was convicted of include these offenses:
One count of conspiracy to commit fraud on investors
Three counts of committing fraud on individual investors – involving wire transfers that totaled more than $140 million
Holmes was acquitted of several other charges that were levied against her, including those involving patient-related fraud conspiracy and fraud against individual patients. The jury could not reach a unanimous verdict on still more charges, and one charge was dismissed over the course of the trial.
Elements of Fraud Charges
In order for the charge of fraud to apply, several elements must be accounted for, including the following factors:
The accused made a claim to the person or entity that was defrauded. Theranos, for example, made many claims about the Edison box’s ability to perform blood tests from a small blood sample.
The claim was both significant and false. Theranos’s claim of the Edison box’s value and ability to generate extremely high revenues was entirely false.
The accused either made the false claim even though they knew it was false or made the false claim recklessly. In the case of Holmes, the jury determined that she either knew that the outrageous claims were false or should have known.
The accused made the false claim to persuade the defrauded party to act. Theranos clearly made false claims as a means of generating billions in investments.
The other party experienced losses as a result of acting on the false claims. The jury found that Holmes did commit fraud on investors, amounting to many millions of dollars in losses.
The Inmate & Orientation Handbook
According to the Inmate & Orientation Handbook for Bryan Federal Prison Camp, the relatively easygoing rules at the facility include:
The general wake-up call for all inmates is at 6 AM.
Inmates are furnished with enough properly fitted, climatically suitable, and presentable prison-issue clothing to allow at least three clothing changes per week.
Inmates can wear a plain wedding band and a chain with an appropriate religious medallion that has no stone, which must be tucked underneath the shirt collar. The value of either item cannot exceed $100.
The proper uniform includes a khaki shirt and pants. Only approved religious headgear is allowed.
Visits from family members, friends, and community groups are encouraged in order to foster deep, ongoing relationships.
There is a minimum of five official inmate counts during every 24-hour period.
While Bryan FPC is considered one of the cushiest places a woman can do time, it is clear that inmates still face serious obstacles, including the social stigma attached to being charged with, convicted of, and incarcerated for a white-collar crime.
Do Not Wait to Consult with an Experienced Killeen Criminal Defense Attorney
If you or someone you care about is facing a criminal charge, the time to seek skilled legal guidance is now.
Brett Pritchard at The Law Office of Brett H. Pritchard in Killeen, Texas, is a formidable criminal defense attorney committed to zealously protecting his clients’ legal rights in focused pursuit of advantageous case outcomes. He is here for you, too, so please don’t hesitate to contact us online or call us at (254) 781-4222 for more information about what we can do for you.