Elizabeth Holmes Possible Sentence: No Slap On The Wrist

Posted: January 13, 2022 | Author: | Filed under: crime, Elizabeth Holmes, Holmes Theranos Trial | Tags: , , , , , , , , , , , | Leave a comment

The sentencing of Elizabeth Holmes, the former CEO of Theranos, a blood-testing company in Silicon Valley, is set for Sep 26 2022 at 130 pm, Judge Davila, San Jose California Federal Court.

On January 3, 2022, Holmes was convicted of one count of conspiracy to defraud investors, and 3 counts of wire fraud, Each count carries up to 20 years in prison, a $250,000 fine, 3 years supervised release by probation, and likely victim (investor) restitution in the amount of $144 million dollars.

Why the sentencing “delay”? Here are 2 reasons….

Post-trial motions: Defendants, typically, file motions after the trial to challenge the verdict and to preserve issues for appeal. The judge has set a motions hearing for June 16, 2022 at 9 am regarding 3 potential motions raised by the Defense: Rule 29 motion for judgment of acquittal (substantial evidence of guilt or not), Rule 33 motion for a new trial (interest of justice requires vacate verdict) and Rule 34 motion to arrest of judgment (substantial defect in indictment i.e. indictment does not include all elements or court lacks jurisdiction, etc. this motion is seldom used and rarely granted). We will have a better idea of the defenses’ basis/arguments and the prosecutions response when their briefs are filed/due March 4 and April 29th, respectively, with Defenses reply brief due May 27.

Balwani’s Trial upcoming, reportedly, mid-March? (judge’s calendar indicates Feb 15th start for trial)
There may be evidence presented in Balwanis case that may impact Holmes sentencing as they are alleged co-conspirators in a scheme to defraud investors, patients and commit wire fraud.  

What’s the potential sentence for Holmes?

Federal sentencing is based upon sentencing guidelines established in the United States Sentencing Commission Guidelines Manual (aka “sentencing guidelines”). The guidelines establish sentencing ranges for crimes as an attempt to establish uniformity/consistency of sentencing across the federal courts. As of 2005, the guidelines are advisory not mandatory, and the sentence is up to the trial judge. 

So, assuming I did the math correctly, Holmes sentencing range is 108 months (offense level 31) to 210 months (offense level 35), that’s potentially 9 to 17.5 years in prison. Fraud is base offense level 7 plus 24-28 levels depending on aggravating/mitigating factors like the amount of loss, abuse of position of trust, aggravating/leadership role, cooperating with government, etc. Here’s the link to the guidelines USSC Guidelines. 

Sentencing time will be increased incrementally due to conviction on multiple counts rather than consecutive sentences. 

Although sentencing is up to Judge Davila, the sentence also rests in the hands of Holmes. Right now, she can take actions to reduce/mitigate her prison time. Specifically, here are 3 ways…

1. Flip on Balwani and cooperate with the government to help them with their case against Balwani,
2. Waive her appeal upon an agreement with the prosecution to recommend a shorter sentence,  
3. Accept responsibility for crimes 

Btw, her new mom status or even a pregnancy is not technically a mitigating factor. Holmes is also not technically eligible for probation or a mix of home detention and prison time due to her high offense level.

Fyi, based on 3 similar fraud cases at or near Holmes offense level, Judge Davila sentenced the fraudsters to 97, 108, and 140 months. Holmes will likely face a longer sentence as the amount of loss in her case, approximately 144M far exceeds the 7 million, 9.9 million and 48 million, respectively, defrauded by other defendants. However, based upon a review of 8 recent fraud cases sentenced by Judge Davila, the sentences were 30% less on average, than the sentencing range in the sentencing guidelines. In short, assuming Holmes loses her appeal, she could face a prison sentence of 76 months (108 x 30% reduction) to 147 months (210 x 30% reduction) or 6.3 to 12.25 years in prison. Keep in mind, this is just a sentencing estimate as there are many moving parts in sentencing including the sentencing recommendations by the probation department, the government and information yet unknown to be discovered in the pre-sentence report, at the sentencing hearing in September and in Balwani’s trial.

Contrary to some public sentiment, Holmes sentence will not be a slap on the wrist. Additionally, as she faces a longer sentence, she will also likely await the outcome of her appeal in prison rather than out on bond. Her defense team will undoubtedly pursue all possible avenues to minimize her sentence.

And….lastly, since Holmes has been convicted, she will be required to forfeit any assets traceable to the fraud proceeeds including any commingled assets. Curious, what property will secure her 500k bond? 

Simply, my opinion, what say you?

Available for Legal Analyst services including media interviews, trial/legal commentary, or inquiries.

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Elizabeth Holmes Theranos Trial: Lab Director Testimony Helps Defense Case

Posted: October 3, 2021 | Author: | Filed under: crime, Elizabeth Holmes | Tags: , , , , , , | Leave a comment

Elizabeth Holmes is currently on trial in federal district court in San Jose California. She is charged, as alleged, on 8 counts of wire fraud and 2 counts of conspiracy to commit wire fraud while she was CEO of Theranos, a revolutionary blood testing company. Each count of fraud carries a potential sentence of up to 20 years in prison.

Although prior witnesses in the Theranos trial have testified to the inaccuracy and unreliability of the Theranos testing technology, including former Theranos Lab Director Dr. Adam Rosendorff, the cross examination of Dr. Rosendorff has shed some doubt on the Government’s fraud case against Elizabeth Holmes.

Specifically, the below testimony could be argued to show Holmes’ lack of knowledge of the fraud and/or provide evidence to support a good faith defense, either of which, could support a not guilty or hung jury verdict.  

Here are some of the highlights I noted as I watched Dr. Rosendorff’s testimony: (I’m providing legal analysis on the case)

1              Accuracy tests (proficiency testing) were done on the Theranos Edison testing device.

2.            Dr. Rosendorff developed SOPs for proficiency testing and he signed off on the proficiency testing reports which tested the accuracy of the Edison and other testing devices.

3.            Proficiency testing was done weekly and separate quality control testing was done daily.

4.            4 out of 5 Theranos proficiency tests met CLIA regulations.

5.            Dr. Rosendorff admitted he had “ultimate responsibility” for accuracy of tests and responsibility for labs. (Per emails presented, discussions were mostly with co-defendant Balwani with no cc to Holmes. 2 emails shown where Holmes responded within minutes to follow up).

6.            Theranos Edison samples when compared to gold standard assays met acceptable criteria to pass CLIA regs.

7.            Sample accuracy testing done by witness Cheung resulted in “confusion” due to inappropriate testing procedures.

8.            Confusion in accuracy testing led to a SOP proficiency testing presentation to lab employees to address any testing procedure “confusion and misconceptions”.

9.            Balwani asked for more accuracy testing beyond the regulation requirements to include other assays beyond Vit D.

10.          Dr. Rosendorff kept Balwani posted on accuracy of Vit D tests (not Holmes?).

11.          Dr. Rosendorff failed to call several doctors back who had questions on results even though obligated to do so under CLIA regs.

12.          When Dr. Rosendorff had concerns that proficiency testing SOPs were not being implemented properly, the entire leadership team was willing to meet next day, but, Rosendorff delayed meeting.

13.          Holmes asked Dr. Rosendorff if he wanted meeting and if he “had other points to discuss”. Rosendorff didn’t request a meeting.

14.          Although prior testimony showed concerns regarding Theranos HCG tests, Dr. Rosenberg validated HCG tests for use. When he expressed concerns regarding HCG test result and accuracy, Holmes responded within minutes, “how did that happen”. He does not recall if he had meeting with Holmes to discuss.

15.          Although Dr. Rosendorff was opposed to deleting data points, he approved of the 6-tip practice at Theranos and testified that standard guidelines allowed for averaging 5 readings Theranos averaged 4 readings.

16.          In response to a doctor’s inquiry regarding test results and accuracy, Dr. Rosendorff empathetically assured the doctor that Theranos tests had “rigorous accuracy” and he was “confident on lipid panel results’ as he “checked the QC results”.

While Dr. Rosendorff’s testimony may have shed some doubt as to whether Holmes had the requisite knowledge of the inaccuracy or unreliability of the technology amounting to fraud, or lack thereof, the jury will be instructed that the doubt required is reasonable doubt, not just any doubt or a doubt as to the defendant’s guilt or innocence. And…it is up to the jury to determine what the facts are, weigh the credibility of each witness and determine whether a doubt is reasonable.

The Defense is scheduled to continue their cross examination of Dr. Rosendorff on Tuesday.

Simply my opinion, what say you?      

Watch my legal analysis of the Holmes trial on KRON4, KPIX5 CBS, FOX KTVU. KPIX5 CBS.