Female billionaire fraudster refuses to compensate victims

Lawyers argued that Elizabeth Holmes had “limited financial resources” and should not be required to pay $250 a month in restitution after her release from prison.

In court documents filed last week, US federal prosecutors said the court’s ruling contained a clerical error that failed to clearly outline a path for Elizabeth Holmes to pay $452 million in compensation to victims of fraud at the blood testing company she founded, Theranos.

Holmes is currently only required to pay $25 a quarter while in prison, so prosecutors are asking Judge Edward Davila, who is presiding over Holmes’ case, to amend the paperwork to require her to also pay monthly restitution after her release.

Elizabeth Holmes leaves court in California in March. Photo: AP

Like her ex-boyfriend, former Theranos COO Ramesh "Sunny" Balwani, Holmes has said she can't afford to pay back hundreds of millions of dollars. This is a common scenario in major financial fraud cases. However, the offender must still pay restitution. Therefore, judges often set a payment schedule to ensure the convicted person makes an effort to pay.

Davila, who judged both Holmes and Balwani, ordered them to pay a total of $452 million in damages. Of that, $125 million went to Theranos investor Rupert Murdoch. The other 13 victims received smaller amounts.

The judge ordered Balwani to pay $25 per quarter while in prison and at least $1,000 per month after his release.

Holmes did not object to the $25 a quarter in restitution while in prison. However, she argued that the lack of a post-release restitution plan was not an error on the judge's part.

Holmes' lawyers asked Davila on June 12 to dismiss the prosecutors' request to amend the ruling, arguing that the court "had sufficient evidence that Holmes had limited financial resources and therefore the verdicts for Holmes and Balwani were different." They cited the example of Balwani having to pay a $25,000 fine, while Holmes did not.

Elizabeth Holmes turned herself in to a Texas prison late last month to begin serving an 11-year sentence. She is a rare Silicon Valley entrepreneur convicted of fraud. She dropped out of Stanford University at age 19 to found Theranos, and was once considered a female Steve Jobs thanks to her promise of technology that could test for a wide range of diseases using just a few drops of blood.

Investors, patients, and fans bought into the story. Theranos raised more than $700 million from investors, outwitting even the smartest people in Silicon Valley.

The scandal came to light after a 2015 Wall Street Journal investigation. Theranos performed only about 12 of the hundreds of tests it promised to use exclusively. It was also found to have used third-party equipment to perform traditional blood tests, instead of its own technology. In early 2022, Holmes was found guilty of four counts of fraud, marking the end of the once-famous tech icon.

Ha Thu (according to Bloomberg)

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