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Update: Judge denies Theranos founder Elizabeth Holmes appeal to remain free

Elizabeth Holmes seeks to delay start of her sentence
Elizabeth Holmes seeks to delay start of her sentence 01:27

SAN FRANCISCO -- Disgraced Theranos founder Elizabeth Holmes has lost her bid to remain out of federal prison while appealing her conviction for defrauding investors out of millions in one of Silicon Valley's most noteworthy startup failures.

Judge Edward Davila handed down his 11-page ruling on late Monday and leaves Holmes with just a plea to the 9th Circuit Court of Appeals to delay her April 27th 2 p.m. deadline to surrender to begin her 11-year prison sentence.

But earlier this month, the 9th Circuit rejected an effort by convicted Theranos executive and former Holmes boyfriend Ramesh "Sunny" Balwani to delay serving his prison term until his appeal is decided.

"Whether the jury heard more or less evidence that tended to show the accuracy and reliability of Theranos technology does not diminish the evidence the jury heard of other misrepresentations Ms. Holmes had made to investors," Davila wrote according to Bloomberg News. 

Davila has recommended Holmes serve her sentence at a minimum-security facility in Bryan, Texas, but federal prison authorities have the final say on where she will be confined.    

Unless she can find a way to stay free, Holmes will be separated from the two children she had leading up to the trial and after her conviction.

Her first child, a boy, was born shortly before her trial began in September 2021. The youngest child, whose gender hasn't been disclosed in court documents, was born at some point after her November sentencing. She conceived both with her current partner, William "Billy" Evans, who she met after breaking up with Balwani in the midst of Theranos' scandalous downfall.

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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. 

During the 90-minute hearing in March, one of Holmes lawyers -- Amy Saharia -- argued that Holmes should be allowed to remain free because of various missteps in the presentation and omission of evidence during her four-month trial that make it likely an appeals court will overturn her conviction on four counts of fraud and conspiracy.

"We think the record is teeming with issues," Saharia asserted. She specifically cited Davila's refusal to allow the jury to see a sworn deposition that Balwani gave during a Securities and Exchange Commission investigation into Theranos' downfall that Holmes' defense team believes would have helped exonerate her.

Federal prosecutor Kelly Volkar countered there is "no likelihood for reversal" of Holmes' conviction and asserted that the trial documented seven different categories of deception that she engaged in while running Theranos.

 Most of the deceit centered on a device dubbed "Edison" that Holmes had boasted would be able to scan for hundreds of diseases and other health problems with just a few drops of blood taken with a finger prick.

But the Edison produced such wildly unreliable results that Theranos began relying on third-party testing equipment already widely used on the market — a switch that Holmes concealed in an effort to keep the company afloat.

"That was shocking to investors," Volkar reminded Davila.

The two opposing sides also sparred over how much restitution Holmes should pay defrauded investors whose trust briefly boosted her wealth to $4.5 billion based on Theranos' peak value before its collapse.

Federal prosecutor Robert Leach argued her conviction for engineering a conspiracy justified restitution of nearly $900 million to repay Theranos investors swept up in her lies. "Just to apply common sense, the money these investors lost is the money they put in," Leach said.

But Hollmes' lawyer Patrick Looby countered that prosecutors were way off base by pursuing an "all or nothing" restitution amount. He noted that the jury in her trial couldn't reach a verdict on three counts of investor fraud, prompting the prosecutor to dismiss those charges. 

At most, Looby contended, Holmes' restitution penalty should be limited to the handful of investors who testified during her trial.  

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