Lawyers for disgraced entrepreneur Elizabeth Holmes said this week she wouldn’t be able to afford to pay $250 each month to the victims of her failed blood-testing start-up, Theranos, after she left prison.
Ms Holmes, 39, began serving an 11-year, three-month prison sentence in Texas in May after being found guilty last year of four counts of wire fraud and conspiracy for defrauding investors by misleading them about her company’s technology and business dealings .
Last month, a federal judge in California ordered Ms. Holmes and her former business partner, Ramesh Balwani, to pay back $452 million to investors who were defrauded, including media mogul Rupert Murdoch.
Federal prosecutors last week asked the US District Court for the Northern District of California to correct “clerical errors” in court documents. One of the proposed corrections would mean that as part of her restitution, Ms. Holmes would have to pay $250 or at least 10 percent of her earnings each month after her release from prison, whichever is greater.
Ms Holmes’ lawyers objected to this proposed change on Monday, saying the court had substantial evidence showing she had “limited financial resources”.
Her lawyers also challenged the government’s argument that the change would be in line with the payment schedule for Mr Balwani, who was tried separately and is serving a nearly 13-year prison sentence on fraud charges. According to the court, he must pay at least $1,000 a month after he is released from prison.
Ms Holmes and Mr Balwani have appealed their case.
Ms Holmes’ lawyers argued that it was appropriate that the two had been treated differently at sentencing. “There is no indication on file that the failure to make a schedule change after she was released was an administrative error,” the filing said.
Lawyers representing Ms Holmes did not immediately respond to a request for comment on Thursday. A Justice Department spokesperson declined to comment.
Other entities listed as victims for restitution purposes include RDV Corporation, an investment company representing the wealthy DeVos family of Michigan, who invested $100 million in Theranos, and several investment vehicles associated with Don Lucas, a venture capitalist from Silicon Valley who died in 2019.
Ms. Holmes raised $945 million for Theranos, a company she founded in 2003 after dropping out of Stanford University. She promised that the company would revolutionize healthcare with tests that can detect a variety of conditions with just a few drops of blood. But the claims were unraveled after a 2015 investigation by The Wall Street Journal revealed that the blood-testing technology didn’t work. Theranos disbanded in 2018.
