Elizabeth Holmes objects to $250 monthly payments to Theranos victims
Elizabeth Holmes, the disgraced CEO who once had a net worth of $4.5bn, cannot afford to make $250 monthly payments to victims of the Theranos fraud, according to court filings.
Lawyers for Holmes strongly objected to a suggested repayment schedule of $250 a month after the founder’s release from prison due to her “limited financial resources”. Holmes reported to federal prison in May for an 11-year sentence after being convicted in January 2022 on four charges of fraud related to the blood testing startup.
The judge previously ruled that Holmes and her co-conspirator Sunny Balwani, who was sentenced in his own case to nearly 13 years in prison, were liable for covering more than $452m in losses to duped investors, with victims including Rupert Murdoch, the News Corp chair, and the Oracle CEO, Larry Ellison.
Murdoch, who invested $125m in Theranos, described himself after Holmes’s sentencing as “one of a bunch of old men taken in by a seemingly great young woman”.
While the judge as part of the sentencing calculated the sum of money owed by Balwani and Holmes, he did not include a payment schedule – an omission the justice department called a “clerical error” in a court filing. The prosecutors proposed Holmes pay $250 a month, or at least 10% of her income – “whichever is greater” – once she is released from prison. While in prison, Holmes is obligated to pay just $25 per quarter to victims.
Holmes’s attorneys did not object to the $25 per quarter fee but argued in a court filing “there is no basis in the record for the payment structure in the government’s request” for the $250 a month following her release. They also stated “there is no indication in the record that the absence of a change to the schedule after she is released was a clerical error”.
Lawyers cited disparities between the financial standings of Balwani and Holmes and stated that prior court filings and actions “acknowledge these differences”. Balwani, who left Theranos in 2016, had an estimated net worth of $85m in 2022. Holmes meanwhile has asserted she never sold her Theranos shares and did not come out of the company’s collapse wealthy, with her net worth estimated at $0 in 2016. Her parents reportedly borrowed $500,000 against their home to post Holmes’s bond when she was first indicted and her legal fees for the 15-week trial were estimated at more than $30m.
Reports from CNBC previously revealed that Holmes and her partner Billy Evans, with whom she has two children, were staying in a $135m home in California for the duration of the trial.
The prison where Holmes is to carry out her sentence is a minimum-security work-based camp, where she will earn between 12 cents and $1.15 an hour working alongside other incarcerated people in a factory.
Source: The Guardian US
