A judge will rule on Elizabeth Holmes’ freedom request in April

A San Jose federal district court judge has taken into consideration Theranos founder Elizabeth Holmes’ bid to stay out of federal prison. The judge is also considering prosecutors’ request that Holmes repay $900 million to Theranos investors.

Holmes, the founder of the failed Silicon Valley blood-testing start-up, appeared in court Friday for post-trial arguments against a court order ordering her to surrender to jail on April 27.

In November, U.S. Federal District Court Judge Edward Davila sentenced Holmes to 11 years and three months in prison for multiple fraud convictions handed down by a jury in January 2022. The prison date allowed Holmes to remain out of custody for the delivery of her second child.

According to reports from several news organizations, Judge Davila said he would rule on the arguments in April.

According to Law 360Holmes’ attorney Amy Saharia told the judge that Holmes should be allowed to remain free while her case plays out on appeal, especially given that the court previously found Holmes to be no flight risk.

Government lawyers reportedly countered the claim, saying a one-way ticket for Holmes to fly to Mexico, purchased during her trial, shows she may have wanted to avoid responsibility for any conviction.

The judge heard other disputes between the parties during Friday’s hearing, including the government’s request that Holmes pay $878 million in restitution to investors who prosecutors say were victims of Holmes’ fraud. The nearly $900 million represents the full extent of investments made during Therano’s existence.

Holmes started the company in 2003 at age 19, shortly after dropping out of Stanford University. The company shut down in 2016 under regulatory pressure and after a Wall Street Journal revelation that Theranos’ touted ‘fingerstick’ blood tests failed to produce hundreds of tests as advertised. Investments in Theranos, combined with its valuation, once made Holmes the richest self-made female billionaire.

According to Law 360Assistant US Attorney Robert Leach argued that every dollar invested in Theranos should be returned to its investors.

“Just use common sense. The money people lost is the money they put in,” Leach argued, Law360’s Dorthothy Atkins wrote in a tweet. Holmes’ lawyer, Patrick Looby, said instead that investments on charges for which Holmes was acquitted should not be counted in a repayment calculation.

Attorneys for Holmes have indicated they intend to appeal the district court’s decision to the 9th Circuit Court of Appeals. This court ultimately has the power to decide whether Holmes must follow Davila’s order and report to jail or remain free as it assesses the merits of her appeal.

FILE - Former Theranos CEO Elizabeth Holmes arrives in federal court in San Jose, Calif., Oct. 17, 2022. A federal judge will decide Friday, Nov. 18, whether Holmes must serve a lengthy prison sentence for duping investors and putting investors at risk.  patients while selling a fake blood test technology.  (AP Photo/Jeff Chiu, File)
Former Theranos CEO Elizabeth Holmes arrives in federal court in San Jose, Calif., on Oct. 17, 2022. (AP Photo/Jeff Chiu, File)

Davila previously ordered Holmes to submit to jail on April 27. Davila assigned the date, taking into account that Holmes was pregnant at the time. She has since given birth to her second child.

In court documents ahead of Friday’s hearing, Holmes’ attorneys argued for her continued freedom, saying she was not a flight risk, posed no risk to public safety, and filed her appeal not to delay jailing but to present several significant questions about whether Davila’s decisions before and during her trial were made in error.

Holmes filed 19 motions for the admissibility of certain evidence in her case and also requested a new trial after the jury’s verdict, which Daviia denied.

“Overall, the case is rife with issues for appeal,” Holmes’ attorneys said in the filing, noting that if the 9th Circuit Court of Appeals agrees with any of Holmes’ appellate arguments, a new trial would have to be held.

Holmes’ continued freedom, her lawyers said, would allow her to continue to communicate more effectively with her lawyers in preparation for her appeal, they said.

In January 2022, Holmes was convicted of three counts of criminal internet fraud and one count of conspiracy to commit fraud. Her jury unanimously found her guilty of illegally defrauding investors out of millions of dollars through her Silicon Valley blood-testing startup.

In July 2022, a separate Silicon Valley jury concluded another chapter in the decades-long Theranos story, convicting its former president and chief operating officer, Ramesh “Sunny” Balwani, of criminal fraud. Balwani was also Holmes’ romantic partner during the time the two ran the biotech startup.

Alexis Keenan is a legal reporter for Yahoo Finance. Follow Alexis on Twitter @alexiskweed.

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