Theranos founder objects to $250 monthly restitution sought by U.S. due to limited financial resources
Federal prosecutors want Elizabeth Holmes to pay $250 each month to victims of her failed blood testing startup after she leaves prison, but her attorneys are pushing back, citing “limited financial resources†available to the disgraced founder of Theranos.
The U.S. filed a motion last week asking the court to correct “clerical errors†that included, prosecutors said, the lack of a timeline for restitution from the onetime billionaire once she is released from prison. Holmes’ legal team objected to those changes this week.
Holmes, 39, began an 11-year sentence at a minimum-security facility in Bryan, Texas, late last month after she and her former partner, Ramesh “Sunny†Balwani, were convicted of fraud for duping investors out of hundreds of millions of dollars while running Theranos, a Silicon Valley startup that promised to revolutionize healthcare.
In a May 16 ruling, U.S. District Judge Edward Davila ordered Holmes and Balwani, who is serving a nearly 13-year prison sentence in California, to pay $452 million in restitution to victims.
Disgraced Theranos founder Elizabeth Holmes enters a federal prison in Bryan, Texas, to begin serving a 11-year sentence for fraud and conspiracy.
After paying a total of $25 every three months to victims while incarcerated, federal prosecutors want Holmes to pay at least $250 each month or 10% of her earnings, whichever is greater, in restitution once she is released from prison.
That would be similar to Balwani’s judgment, which requires Theranos’ former chief operating officer to pay at least $1,000 a month upon supervised release, prosecutors said in last week’s filing.
Holmes’ lawyers argued this week that Holmes’ payment schedule in court documents is not a clerical error.
“Ms. Holmes’ Amended Judgment already includes a restitution schedule that begins while she is incarcerated,†Holmes’ attorneys wrote in a Monday filing. “There is no indication in the record that the absence of a change to the schedule after she is released was a clerical error.â€
The defense team also argued that Balwani’s amended judgment “says nothing†about what the court intended for Holmes’ payment schedule — adding that Holmes and Balwani “have different financial resources and the court has appropriately treated them differently.â€
Disgraced Theranos chief Elizabeth Holmes appears to be bound for prison soon after an appeals court rejected her bid to remain free while she tries to overturn her conviction in a blood-testing hoax.
Holmes’ attorneys made similar financial arguments throughout her criminal fraud trial. Both Holmes — whose stake in Theranos was once valued at $4.5 billion — and Balwani, whose holdings were once valued around $500 million, have indicated they are nearly broke after running up millions of dollars in legal bills while proclaiming their innocence.
The Associated Press reached out to attorneys representing Holmes and the U.S. government for statements Wednesday.
AP writer Michael Liedtke contributed to this report.
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