A judge is due to rule on Elizabeth Holmes’ freedom request in April

A judge in the San Jose federal district court has considered Theranos founder Elizabeth Holmes’ request to be released from federal prison. The judge is also considering prosecutors’ request that Holmes pay back $900 million to Theranos investors.

Holmes, founder of the failed Silicon Valley blood testing startup, appeared in court Friday to challenge a post-trial court order that ordered her to surrender to incarceration on April 27.

In November, US District Court Judge Edward Davila sentenced Holmes to 11 years and three months in prison on multiple counts of fraud, which were handed down by a jury in January 2022. The date of imprisonment allowed Holmes to stay out of custody due to the birth of their second child.

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

Accordingly Law360Holmes attorney Amy Saharia told the judge that Holmes should be allowed to remain free while her case is on appeal, especially considering the court had previously determined that Holmes posed no escape risk.

Government attorneys reportedly contradicted the allegation, saying a one-way plane ticket for Holmes to Mexico, purchased while her trial was pending, showed that she may have wanted to evade responsibility for convictions.

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

Holmes founded the company in 2003 at the age of 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 showed Theranos’ touted “fingerstick” blood tests couldn’t produce hundreds of tests as advertised. Investments in Theranos, combined with its valuation, once made Holmes the richest self-made billionaire.

The story goes on

Accordingly Law360US Assistant Attorney Robert Leach argued that every dollar invested in Theranos should be returned to its investors.

“Just use common sense. The money people lose is the money they have invested,” Leach argued. Law360’s Dorothy Atkins wrote in a tweet. Holmes’ attorney, Patrick Looby, instead said that investments in charges for which Holmes was acquitted should not be included in any calculation for restitution.

Holmes’ attorneys have indicated that they intend to appeal Holmes’ case to the Ninth Circuit Court of Appeals. This court has ultimate authority to decide whether Holmes must comply with Davila’s order and report to prison, or remain free when considering the merits of her appeal.

Former Theranos CEO Elizabeth Holmes arrives in federal court in San Jose, California on October 17, 2022. (AP Photo/Jeff Chiu, File)

Davila had previously ordered Holmes to submit to imprisonment on April 27. In granting the date, Davila took 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 pleaded for her continued freedom, saying she posed no risk of absconding, posed no risk to public safety, and filed their appeal not to delay the detention but to present several substantive ones Questions about whether Davila’s decisions leading up to and during her trial were made in error.

Holmes filed 19 pretrial motions regarding the admissibility of certain evidence in her case and also requested a new trial following the verdict of the jury, which Daviia denied.

“Overall, the record is riddled with appellate issues,” Holmes’ attorneys said in the document, noting that a new trial would have to take place if the 9th Circuit Court of Appeals upheld Holmes’ appeal arguments.

Holmes’ continued freedom, her attorneys said, would allow her to continue to communicate more effectively with her attorneys to prepare for her appeal, they said.

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

In July 2022, a separate Silicon Valley jury closed another chapter in Theranos’ decades-long history, convicting 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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