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Judges hear Elizabeth Holmes’ appeal of fraud conviction while she remains in Texas prison

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

The hearing held in the San Francisco appeals court came nearly 2 1/2 years after a jury convicted Holmes for orchestrating a blood-testing scam that became a parable about greed and hubris in Silicon Valley. Holmes’ instrument of deception was Theranos, a Palo Alto, California, startup that she founded shortly after dropping out of Stanford University in 2003 with her sights set on 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 Billy Evans — the father of her two young children — sat in the front row of the courtroom listening intently to the oral arguments. All three federal prosecutors who presented the U.S. Justice Department’s case during the original four-month trial were sitting in the courtroom audience, including two attorneys — Jeffrey Schenk and John Bostic — who have since gone to work for private law firms.

Three appeals court judges — Jacqueline Nguyen, Ryan Nelson and Mary Schroeder — gave few clues into whether they leaned toward upholding or overturning Holmes’ conviction. However, they periodically made it clear that it would take compelling evidence for them to throw out the jury’s verdict.

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

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

Holmes will remain in prison, with a currently scheduled release date of August 2032 — earlier than her full sentence because of her good behavior so far.

A decade ago, Theranos had become such a hot health care commodity that it was called an exemplar of U.S. ingenuity by several prominent people, including then-Vice President Joe Biden. Holmes had emerged as a media sensation with a fortune worth $4.5 billion.

The excitement stemmed from Holmes’ claim that Theranos-designed devices could scan a few drops of human blood for hundreds of potential diseases. But the devices produced unreliable results that both Holmes and her former business partner and lover at the time, Ramesh “Sunny” Balwani, attempted to hide.

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

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

Balwani, 58, contends federal prosecutors distorted evidence to bias the jury against him while weaving a different narrative than the story they presented during Holmes’ trial, which was completed shortly before Balwani’s trial began in March 2022. Unlike Holmes, Balwani was convicted on all 12 felony counts of fraud and conspiracy facing him, a factor that contributed to his lengthier prison sentence. He is currently scheduled to be released from a Southern California federal prison in November 2033.

By MICHAEL LIEDTKE
AP Technology Writer

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