Theranos founder Elizabeth Holmes on Monday received a reprieve from an expected prison sentence, with the judge in her case delaying her sentencing for up to three months.
Holmes, convicted in January on four counts of felony fraud in connection with her failed Palo Alto blood-testing startup, was to be sentenced Oct. 17 in U.S. District Court in San Jose.
But in August, a key prosecution witness — former Theranos lab director Dr. Adam Rosendorff — showed up at her home. According to Holmes’ partner Billy Evans — the father of their one-year-old son — Rosendorff said he felt “guilty,” and “like he had done something wrong.” The doctor purportedly told Evans that while on the witness stand in Holmes’ trial, “he tried to answer the questions honestly but that the prosecutors tried to make everybody look bad,” and that the prosecution “made things sound worse than they were.”
Holmes’ legal team argued that Rosendorff’s statements indicated that federal prosecutors may have engaged in misconduct with regard to the former lab director, and they demanded that Judge Edward Davila either throw out the jury’s verdict, or schedule a hearing to address the matter. Holmes lawyer Lance Wade on Monday raised the question of whether federal prosecutors “elicited a false narrative” from Rosendorff in front of the jury.
Prosecutor John Bostic countered that granting a hearing would be “enabling a fishing expedition” by Holmes’ lawyers. “There was no such misconduct, so that evidence won’t be found.”
Bostic contended that a sworn declaration Rosendorff made after his visit to Holmes’ residence showed his trial testimony was truthful.
Davila agreed to the defense’s demand for a “limited” hearing that he said would address the allegation of possible prosecutorial misconduct. “This is not going to be a fishing expedition,” Davila warned Wade. “Really, what I want to know is, ‘Did (Rosendorff) tell the truth?'” Davila said.
Holmes, on camera in a white-walled room, wearing a blue blazer and white blouse, did not appear to show a significant response to the delayed sentencing. Legal experts expect she will receive a multi-year prison sentence.
The jury found Holmes guilty of defrauding investors in the now-defunct Palo Alto blood-testing startup she founded in 2003 at age 19. Theranos went bust in 2018 after the charismatic Holmes and her former lover, the firm’s chief operating officer Sunny Balwani, were charged with fraud. The case attracted world-wide attention, and spawned three documentaries, a TV series, a best-selling book, and an upcoming movie starring Jennifer Lawrence as Holmes. Balwani was found guilty in July on a dozen fraud counts.
Rosendorff, in his testimony at her trial, said Theranos “valued PR and fundraising over patient care” and that he had felt a moral obligation to go public about inaccurate test results. In response, a lawyer for Holmes sought to blame Rosendorff’s alleged “incompetence” for problems at the company.
After Rosendorff appeared at Holmes’ residence, prosecutors filed in court the sworn declaration by Rosendorff stating that he felt “compassion” for Holmes, and “even more” for her family members who would be affected by her punishment. But, he added that he had answered every question on the witness stand “completely, accurately and truthfully” and stood by his testimony.
“I have no reason to believe that the government misrepresented or otherwise created a misimpression about Ms. Holmes’ … conduct at Theranos,” Rosendorff wrote.
The prosecution claimed Holmes was trying to use Rosendorff’s visit as a “ticket to a new trial.”
On Monday, Bostic said Rosendorff, in his declaration, was “telling us that he did not mean to withdraw or to call into question any of his testimony.”
But Holmes lawyer Wade on Monday argued that Rosendorff’s “carefully crafted” declaration did not address the “new issues” the doctor purportedly raised while speaking with Evans. Wade called Rosendorff’s visit “extraordinary” and said it “suggests that there’s more there.”
Davila said Rosendorff’s statements indicated the doctor felt “personal sorrow” over his involvement in the case, testifying against someone he worked with closely. And Davila expressed agreement with Bostic’s assertion that Rosendorff’s testimony was more relevant to the charges of defrauding patients, rather than investors, and that the jury acquitted Holmes on the patient-related charges.
Davila, a federal judge since 2011, said the appearance of a key prosecution witness at the home of a convicted defendant they had testified against was new to him. “I haven’t seen a case where this has happened,” Davila said.
Davila set Oct. 17 as the hearing date to bring Rosendorff before the court, and added that he did not expect the hearing to last all day. The judge gave both sides several options for a new sentencing date, “should sentencing be needed.” Possible dates, Davila said, were in mid-November, early December or mid-January. Bostic told Davila there was a “public interest” in proceeding with sentencing as soon as possible.
