Elizabeth Holmes, former CEO of Theranos, on November 18, 2022 at San Jose in California.
Theranos founder Elizabeth Holmes, who has been indicted for fraud and mismanagement of the company's blood test business, will not be sent to prison this coming week despite an order from a judge that she start serving her 11-year jail sentence on Thursday.
Holmes' lawyers appealed the ruling late Tuesday to the U.S. 9th Circuit Court of Appeals, located in San Francisco. According to the rules of the court, this means that Holmes will be released on bail until further notice.
Holmes, 39, is the mother of two children. The first was born in 2021, before she went to trial for fraud. The second child was born in November, after Holmes' sentencing.
In San Jose, California a federal jury convicted Holmes in 2014 on four counts of fraudulence against investors in her failed company. U.S. district judge Edward Davila gave her a prison sentence of 11 years, three months in November. Holmes' lawyers asked for her to be released on bail until she appealed her conviction. However, Davila rejected this motion earlier this month and ordered that she report to prison no later than April 27.
Holmes' lawyers said in their last-minute appellation that Davila’s ruling contained “numerous, unexplainable errors,” including referring "patient fraud counts," when Holmes was cleared of the charge that she defrauded Theranos Patients. She should be free to appeal her conviction, they say, because it is likely to lead to a reversal. The government has ten days to respond.
Federal prosecutors opposed Holmes' attempts to remain free. In January, they claimed that Holmes was a flight-risk, noting she had booked an one-way ticket to Mexico just before her conviction. Davila agreed that the ticket incident was an oversight. However, he said that it was unlikely that her appeal would change the outcome of her case.
The Tuesday motion may keep Holmes out of jail for the time being, but it could be only a temporary reprieve. Ramesh Balwani, Holmes' mentor and ex-boyfriend, was convicted of a different crime in a separate court last year. He also wanted to remain out of prison pending appeal. Balwani appealed the decision to Davila to the 9th Circuit. The appeals court denied his request in three weeks. Balwani, aged 57, was reported last week to a federal prison of low security in Los Angeles, to begin his almost 13-year term.
Holmes' appeal against her conviction was filed last week. She argues that Holmes couldn't have misrepresented to investors her "revolutionary blood-testing" technology because she truly believed it worked.
Theranos scientists with high credentials told Holmes that the technology worked in real-time. The technology was deemed to be working by outsiders. Theranos' revolutionary developments received many Patents", the appeal stated.
Her lawyers argued that government's case was "largely parroted" by the public narrative, first laid out in negative Wall Street Journal articles from 2015 that Holmes had knowingly committed fraud.
The appeal challenges Davila's multiple rulings on witnesses and evidence, including the decision to allow a former Theranos laboratory director to testify in court as an expert witness. The National Association of Criminal Defense Lawyers has filed a brief supporting Holmes' appeal.
The group argued that in Holmes's case the government had abused the rules regarding expert testimony, and that this was part of a larger trend.
Attorney Brian Goldman said that this kind of sleight-of-hand is unfortunately common. The government has subverted federal rules and blurred the line between expert and lay witness testimony.
The government must respond by May 3rd to Holmes' appeal.