Their back-to-back trials spanned nearly a year, marking the final chapter in a startup that rose to prominence and a $9 billion valuation with the promise of revolutionizing blood testing, only to become a cautionary tale for tech founders and corporations will.
Now the anticipation is turning to their sentencing hearings, which are set to take place weeks apart, with Holmes’ scheduled for late September and Balwani’s scheduled for mid-November.
The former couple were first charged together four years ago on the same 12 criminal charges relating to defrauding investors and patients about Theranos’ abilities and business relationships in order to get money. Her trials were halted after Holmes indicated she wanted to accuse Balwani of sexually, emotionally and psychologically abusing her during their decade-long relationship, which coincided with her tenure as head of the company. Balwani has firmly denied the allegations by his lawyers. The jury largely set aside Holmes’ emotional testimony about the alleged abuse, deeming it irrelevant to the charges against her, but the issue could be considered in their sentencing.
condemnation
Holmes and Balwani each face up to 20 years in prison and a $250,000 fine plus compensation per charge. But legal experts say it’s incredibly rare for someone to get the full amount. Any prison sentences related to charges will also likely be served at the same time.
“The charge defines the most a person could get, but nobody ever gets the most,” said Nancy Gertner, a former U.S. federal judge and associate professor at Harvard Law School. She also pointed out that judges sometimes choose to weigh amends more heavily over prison time. “It doesn’t happen that often in the last few years because it can look like someone is buying their way out of prison — but it can happen.”
Judge Edward Davila, who presided over the trial of both Holmes and Balwani, will ultimately decide their fate as he sees fit, using the sentencing guidelines as a reference. Judge Davila will consider a variety of factors, including the amount of money to be scammed. For example, charges of wire fraud involving individual investors totaled more than $154 million.
Between their sentencing and their scheduled sentencing dates, the parole board is conducting an investigation into each of the former executives to take a holistic look at their history — from their family to their finances to their crimes — which will help the judge determine one Sentence. This may also include factors such as her psychological history or trauma, which Holmes’ claims about the nature of her relationship with Balwani, who is nearly 20 years her senior, could play a role. Holmes and Balwani will also be allowed to file sentencing memoranda presenting their arguments in court for leniency in sentencing.
“The crime itself is only one factor in the conviction,” Rachel Maimin, a partner at Lowenstein Sandler LLP, which specializes in commercial defense, told CNN Business. “It’s a very important factor, but definitely not the only factor. … They will each be judged on their own actions and their own life story.”
Free on deposit
Separate juries eventually found both Holmes and Balwani guilty, but they returned different verdicts.
Holmes, who left Stanford to work on Theranos in 2004 at the age of 19, was found guilty of four counts of investor fraud. But she was acquitted of patient-related charges, and the jury could not reach a unanimous decision on three counts of fraud by certain investors. (A charge against a patient was dropped due to a mistake by prosecutors.)
Balwani, who assumed a formal role at Theranos in 2009 and oversaw key aspects of the company, including its laboratory that processed patient tests, was found guilty on all 12 counts, including 10 counts of federal wire fraud and two counts of conspiracy to wire fraud.
Both are currently bond-free — Holmes on a $500,000 bond secured by property and Balwani on a $750,000 bond secured by cash or property.
A hearing on Holmes’ request for acquittal is scheduled for later this month.
Meanwhile, Balwani attorney Jeffrey Coopersmith of Orrick, Herrington & Sutcliffe said in a statement Thursday that the defense is exploring avenues to potentially challenge the verdict.
“Of course we are disappointed with the verdicts,” he said. “We plan to review and weigh all of Mr. Balwani’s options, including an appeal.”