Justices hear Elizabeth Holmes’ appeal of fraud conviction while still incarcerated in Texas

SAN FRANCISCO — A panel of federal judges spent two hours Tuesday wrestling with a series of legal questions raised in an attempt to overturn a fraud conviction that sent Theranos CEO Elizabeth Holmes to prison after a meteoric rise to stardom of Silicon Valley.

The hearing before the San Francisco Greed and Hubris Court of Appeals came nearly two and a half years after a jury convicted Holmes of orchestrating a blood test scam that became a parable about greed and hubris in Silicon Valley. Holmes’ instrument of deception was Theranos, a Palo Alto, Calif., startup she founded shortly after leaving Stanford University in 2003, with the goal of revolutionizing the health care industry.

Holmes, who did not attend the hearing, is currently serving an 11-year sentence in a Bryan, Texas, prison.

But Holmes’ parents and her partner, the father of her two young children, Billy Evans, sat in the front row of the courtroom and listened intently to the closing arguments. All three federal prosecutors who presented the U.S. Justice Department’s case during the initial four-month trial were present in the courtroom, including two attorneys — Jeffrey Schenk and John Bostic — who have since worked for firms private lawyers.

Three appeals court judges — Jacqueline Nguyen, Ryan Nelson and Mary Schroeder — gave few clues as to whether they were leaning toward upholding or overturning Holmes’ conviction. However, they have periodically made clear that they would need compelling evidence to overturn the jury’s verdict.

Nelson seemed the most torn of the three judges, showing some sympathy when Holmes’ lawyer, Amy Saharia, said the outcome of her trial merited careful consideration because the jury also acquitted her of four others counts of fraud and conspiracy and was unable to reach a verdict on three other counts.

Before adjourning the hearing, Nguyen said a decision would be made “in due course,” without providing a specific timeline. Appeals courts can take anywhere from a few weeks to more than a year to decide appeals involving criminal convictions.

Holmes will remain in prison, with a currently scheduled release date of August 2032 – before the end of his sentence due to his good behavior thus far.

A decade ago, Theranos had become such a popular health product that it was called an example of American ingenuity by several figures, including then-Vice President Joe Biden. Holmes had become a media sensation with a fortune of $4.5 billion.

The excitement came from Holmes’ claim that devices designed by Theranos could analyze a few drops of human blood for hundreds of potential diseases. But the devices produced unreliable results that Holmes and his former business partner and then-lover, Ramesh “Sunny” Balwani, tried to hide.

Once the glaring flaws in its technology were exposed, Theranos collapsed in a scandal that led to criminal charges against Holmes and Balwani. Prosecutors hoped to break the “fake it till you make it” mentality adopted by Silicon Valley entrepreneurs hoping to get rich off still-buggy products.

In addition to hearing from Holmes’ lawyers on Tuesday, the panel of appeals judges also listened to arguments from another group of lawyers representing Balwani, who is trying to overturn the 13-year prison sentence he received. received after his conviction in July 2022 for fraud and conspiracy in a separate case. trial.

Balwani, 58, claims federal prosecutors distorted evidence to bias the jury against him while weaving a different narrative than the one they presented during Holmes’ trial, which ended shortly before it began in March 2022. Unlike Holmes, Balwani was found guilty in all 12 trials. He is accused of fraud and conspiracy, a factor that contributed to his longer prison sentence. He is currently scheduled to be released from a federal prison in Southern California in November 2033.