Feb. 24 (UPI) — A federal appeals court on Monday upheld the conviction of Theranos founder and CEO Elizabeth Holmes for defrauding investors with false claims about her company’s blood-testing technology.
A three-judge panel in the 9th U.S. Circuit Court of Appeals in San Francisco turned down the appeal in a 54-page opinion that included keeping the 11-year sentence and $452 million restitution. Also upheld was the conviction of the blood-testing company president, Ramesh “Sunny” Balwani, who was sentenced to nearly 13 years in prison.
“The vision sold by Holmes and Balwani was nothing more than a mirage,” Judge Jacqueline H. Nguyen wrote for the panel as the “grandiose achievements touted by Holmes and Balwani were half-truths and outright lies.”
“Theranos’s blood-testing device failed to deliver faster and more accurate testing results than conventional technology,” she wrote. “Pharmaceutical companies never validated the technology, as Holmes and Balwani had told investors. Contrary to the rosy revenue projections shared with investors and business partners, Theranos was running out of money.”
The other circuit judges were Mary M. Schroeder and Ryan D. Nelson.
ABC News didn’t receive a comment from the defense’s lawyers.
In January 2022, Holmes, 41, was found guilty of four counts of investor fraud and conspiracy, and sentenced to 135 months in prison after a four-month trial.
While awaiting prison in February 2023, she gave birth to her second child.
In May 2023, she reported to the minimum security federal prison camp in Byran, Texas, to serve her sentence, but Federal Bureau of Prisons records in July 2023 show that she is now scheduled to be released two years earlier on Dec. 29, 2032.
Balwani, 59, is the former romantic partner of Holmes and president of the now-defunct company, who was convicted of fraud and conspiracy in July 2022 and sentenced to 155 months in prison.
In 2015 journalists and regulators investigated the medical company’s product, which claimed to provide accurate information from tests using just a few drops of blood.
District Judge Edward J. Davila enhanced the sentence for Holmes and Balwani because there were at least 10 victims in the case.
In their appeal submitted on June 11, 2024, they argued there was no evidence introduced at trial for five of the victims. The appeals court found there was no basis to this claim.
The company raised $700 million from investors.
The restitution included $125 million to media titan Rupert Murdoch, who invested in Theranos. Other victims were former Secretary of Education Betsy DeVos, and the Walton family, the founders of Walmart. Walgreens and Safeway. They had deals with Holmes to utilize Theranos’ technology.
Holmes and Balwani argued restitution should have been based on the diminution in value of the shares after the fraud came to light and not the money each victim invested. Investors haven’t recovered any money with the company dissolved without any assets.
Holmes founded Theranos in 2003 when she was 19 years old.
She rose from a Stanford University dropout in 2003 to a star business leader. At one time she was worth $4.5 billion, according to Forbes, making her the richest self-made woman in the United States.
The rise and fall led to a book by Wall Street Journal report John Carreyrou, and documentaries from ABC and HBO.
