Why Theranos' Elizabeth Holmes Received A Tough Sentence

The perception is that the jury found her testimony untruthful, and by refusing to accept responsibility for her crimes, she bolstered the prosecution's case that an example had to be made. JL

Marc Vartabedian and James Fanelli report in the Wall Street Journal:

Judge Edward Davila said that growing up in the Silicon Valley region influenced how he felt about the case. He referenced the honest entrepreneurial spirit of the region’s historically agricultural economy that gave way to the modern Silicon Valley. Mr. Davila added that honesty in the market was the foundation of the industry. “The tragedy of this case is Ms. Holmes is creative and a woman who got access in a male-dominated world.” (But) Ms. Holmes didn’t accept responsibility for her crimes, and jurors found her testimony at trial untruthful. "The chickens came home to roost.”

Before reading his sentence to Elizabeth Holmes, Judge Edward Davila reflected briefly on the case. He said that growing up in the Silicon Valley region influenced how he felt about the case. He referenced the honest entrepreneurial spirit of the region’s historically agricultural economy that eventually gave way to the technology juggernaut of modern Silicon Valley.

Judge Davila, who on Friday sentenced the former Theranos CEO to more than 11 years in prison, said he took into consideration letters he received from venture capitalists who reminded him that failure in the startup world is not uncommon.

“But they didn’t endorse failure by fraud,” Judge Davila said. “Those letter writers did not condone misrepresentation and manipulation.”

Judge Davila also cited Ms. Holmes’s role as a startup founder and how he thought her case wasn’t one of typical wire fraud. He said that he didn’t believe she was in pursuit of personal wealth.

“The tragedy of this case is Ms. Holmes is brilliant,” Mr. Davila said. “She is creative and a woman who got access in a male-dominated world.”

Elizabeth Holmes was sentenced to more than 11 years in prison, but lawyers say it could have been more.

U.S. District Judge Edward Davila significantly reduced Ms. Holmes’s potential sentence when he calculated the victims’ financial losses at $121.1 million, said Jeffrey Cohen, a former federal prosecutor and associate professor at Boston College Law School.

If the judge had found the government’s assessment of $800 million in losses, the sentencing guidelines would have been much higher, Mr. Cohen said.

“I think that it could have been a lot worse," he said.

By giving a sentence within the judge’s calculated guidelines, there is less chance of it being overturned on appeal, he said.

Jason Linder, a former senior Justice Department prosecutor and co-chair of law firm Mayer Brown’s white-collar crime practice, said Ms. Holmes’s sentence was at the higher end of fraud-related sentences but not among the top.

“It is still a punishingly long sentence,” he said.

Lawyers for Ms. Holmes did a great job of humanizing their client and presenting mitigating factors that they believed should have led to a sentence far lower than the federal guidelines, Mr. Linder said. However, Ms. Holmes didn’t accept responsibility for her crimes, and jurors found her testimony at trial untruthful, he said.

“This is probably a really hard day for her, because the chickens came home to roost,” he said.

Mr. Davila added that honesty in the market was the foundation of the industry.