Theranos founder Elizabeth Holmes surrendered to federal prison authorities Tuesday, ending a dramatic, yearslong fall from charismatic, high-flying Silicon Valley CEO to inmate — U.S. Bureau of Prisons register No. 24965-111 — at a minimum-security camp in Bryan, Texas.
Under federal prison rules, the 39-year-old mother of two young children must serve at least 9½ years of her more than 11-year sentence for defrauding investors.
Her arrival at the prison was first reported at 10:20 a.m Pacific time by FOX7 television news in a tweet by a reporter accompanied by video footage from a distance.
“Elizabeth Holmes has arrived in jeans & a light brown top. She seemed to be in good spirits & laughing with the guards,” reporter Meredith Aldis tweeted.
Other reports with video footage from the Bryan prison soon emerged showing Holmes’ face clearly, before the prisons bureau confirmed her incarceration. She is one of hundreds of women in the prison on 37 acres about 100 miles from Houston, where Holmes spent time as a child.
A Stanford University dropout who launched the now-defunct Palo Alto blood-testing company in 2003, Holmes had been free on bail since federal authorities hit her with fraud charges in 2018. Her imprisonment Tuesday capped a five-year legal odyssey for the fallen entrepreneur who battled in court first to avoid a conviction and prison sentence, then to delay her incarceration. With an appeal underway in the U.S. Court of Appeals for the Ninth Circuit, she has one shot left at freedom. But a recent ruling suggests that bid may fail.
Russell Hancock, CEO of Joint Venture Silicon Valley, a San Jose think tank, sees Holmes’ case as an outlier in Silicon Valley’s innovation economy, where startup founders often seek to entice investors by hyping the potential of their products and services.
“Theranos was not hype, it was fraud,” Hancock said. “Any population has bad actors — it might even have malevolent actors — but I think it would be completely wrong to generalize. For the most part, investors are very astute (and) conscientious. This became a case where the board and the investors just were star-struck by the CEO, by the founder.”
Holmes was convicted by a jury in U.S. District Court in San Jose in January 2022 after a four-month trial of defrauding investors in her startup. In November, Judge Edward Davila sentenced her to prison but allowed a pregnant Holmes to defer incarceration until April 27. Holmes’ subsequent fight to remain free on bail through her appeal, which could take more than a year, ended earlier this month when the Ninth Circuit denied her final attempt.
At the Bryan facility, she will share a cell with up to three other inmates and work a prison job that could involve, at first, cleaning bathrooms or stuffing brown-bag lunches, according to Holli Coulman, who advises female defendants going into federal prisons. According to a 2016 Federal Prison Camp Bryan inmate handbook, those in the Texas facility who are eligible to work can earn between 12 cents and $1.15 per hour in their job assignments.
Holmes won’t be the only well-known inmate. “Real Housewives of Salt Lake City” star Jennifer Shah, who was sentenced earlier this year to 6 1/2 years in prison for defrauding thousands of people in a years-long telemarketing scam, is also serving time in Bryan.
Holmes’ visits with her fiancé, hotel heir Billy Evans, and their children — a newborn and a son just under 2 — will take place in the prison visiting room. Limited physical contact is allowed, with the amount depending on the guards on duty, former inmate Starling Thomas told this news organization earlier.
Female federal prisoners are allowed to bring into prison a plain wedding band, earrings without stones worth less than $100, medical or orthopedic devices, legal documents and ID, and warden-approved religious items that do not pose a security threat.
Holmes, who had adopted the iconic black turtleneck of the legendary technologist and Apple co-founder Steve Jobs, built her company to a valuation as high as $9 billion on the lie that it could conduct a wide variety of tests on just a few drops of blood from a finger-stick.
Jurors in her trial heard she deluded investors and business partners with deceitful insinuations about her technology’s battlefield use and concealed Theranos’ use of other companies’ machines for work hers could not do. The jury heard that she stole logos from pharmaceutical companies and affixed them to glowing internal Theranos reports and that she gave out documents with false information about the financial state of the company.
The trial generated world-wide media coverage, and jurors convicted Holmes of four counts of defrauding investors but not on the charges related to blood-testing patients. Earlier this month, Davila also ordered Holmes to pay more than $450 million in restitution to investors; Walgreens, which housed Theranos blood-testing machines; and Safeway, which dissolved a partnership with Theranos.Silicon Valley historian Michael Malone said revelations about Holmes’ fraud made Silicon Valley venture capitalists wary of startups, leading to lasting effects, especially for funding of medical technology companies.
“She had a really devastating effect,” Malone said.
Holmes has said in court filings that she “continues to work on ideas for patents” but “has essentially no assets of meaningful value” and “has incurred substantial debt from which she is unlikely to recover.” Holmes late last week filed a brief court notice that she is appealing Davila’s restitution order.
Holmes has asked to walk free from prison long before the end of her sentence, but she would need to win an unlikely appeal. The Ninth Circuit’s one-page ruling earlier this month denying Holmes’ final bid to remain free on appeal was seen as an ominous sign, with the appeals court saying her motion failed to raise questions of law or fact that could overturn her conviction, give her a new trial or reduce her sentence.
The Associated Press contributed reporting.
