Prosecutor asks California federal judge to sentence Holmes to 15 years in prison

SAN JOSE, Calif., Nov 18 (Reuters) – Theranos founder Elizabeth Holmes should serve 15 years in prison, a prosecutor told a California federal judge on Friday as Holmes awaited conviction on charges of fraud against investors in her now-defunct blood-testing startup .

Holmes, wearing a black skirt and dark blouse, sat in court facing US District Judge Edward Davila, who will convict her on three counts of investor fraud and one count of conspiracy. A jury convicted 38-year-old Holmes in January after a three-month trial.

Assistant US Attorney Jeff Schenk told the judge that by handing out a 15-year sentence, he would be “making a statement that the ends do not justify the means.”

“Day after day, week after week, month after month and finally year after year, Ms. Holmes made the decision to defraud her investors,” he said.

Defendants in other major fraud cases have received sentences ranging from 10 to 25 years, prosecutors said in court filings. Examples included Enron CEO Jeffrey Skilling, who was sentenced to 14 years in prison for his conviction in the company’s spectacular collapse.

Holmes’ attorney Kevin Downey urged Holmes to be lenient at the hearing, saying that unlike someone who has committed a “great crime,” she is not motivated by greed. Holmes has not cashed her multi-billion dollar stake in Theranos, he said.

Holmes has asked in court documents for a lighter sentence of 18 months house arrest followed by community service.

More than 130 friends, family members, investors and former Theranos employees submitted letters to Davila asking for leniency.

Among them was US Senator Cory Booker from New Jersey, who said Holmes “despite mistakes could make the world a better place”.

Prosecutors said in court that Holmes misrepresented Theranos’ technology and finances, including by claiming that its miniaturized blood-testing device was capable of performing a series of tests on a few drops of blood. The company secretly relied on conventional equipment from other companies to conduct patient testing, prosecutors said.

Holmes testified in her own defense and said she believed her statements were accurate at the time.

Although she was convicted on four counts, Holmes was acquitted on four other counts alleging she defrauded patients who paid for Theranos tests.

The once $9 billion company Theranos Inc promised to revolutionize the way patients receive diagnostics by replacing traditional laboratories with small machines intended for use in homes, drugstores and even on the battlefield are.

But the startup collapsed after a series of articles in The Wall Street Journal in 2015 questioned its technology.

Reporting by Jody Godoy in New York and Dan Levine in San Jose; Edited by Noeleen Walder and Diane Craft

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Jody Godoy

Thomson Reuters

Jody Godoy reports on banking and securities law. Reach her at [email protected]