Elizabeth Holmes’ appeal set to be heard Tuesday in federal court

Imprisoned Theranos fraudster Elizabeth Holmes’ appeal is set to be heard Tuesday in San Francisco federal court.

The notorious founder of the now-defunct Palo Alto blood-testing startup is serving a lengthy sentence at a minimum-security prison in Texas. Her startup, once valued at $9 billion, claimed its machines, using just a few drops of blood from a finger-prick, could conduct more than a thousand tests for diseases and conditions from cancer and diabetes to pregnancy and HIV infection.

Holmes’ legal team and the prosecution are set to argue the case at 9 a.m. in the U.S. Court of Appeals for the Ninth Circuit on her appeal launched in late 2022, 11 months after a jury convicted her on four felony counts of defrauding Theranos investors. She is seeking to have her conviction and 11-year prison sentence overturned, which would trigger a new trial.

Lawyers for Holmes, now 40, said in a December 2022 court filing that her criminal case tried at U.S. District Court in San Jose that resulted guilty verdicts was “teeming with issues for appeal.”

Among those issues, her legal team claimed, were purported errors by Judge Edward Davila, who oversaw her case and trial. Holmes alleged that Davila improperly allowed the jury to hear about regulatory action against Theranos, and about her company’s voiding of all test results from its problem-plagued “Edison” machines. Those events came after any “relevant” statements Holmes made to investors, and the jury should not have been allowed to hear about them, Holmes’ lawyers argued.

Holmes, a Stanford University dropout, launched Theranos in 2003, and built it into a high-profile company backed by some of America’s richest people: Oracle co-founder Larry Ellison, media mogul Rupert Murdoch, and the Walton family of Walmart. Theranos was weakly overseen by a board seeded with luminaries including former U.S. secretaries of state Henry Kissinger and George Shultz, and former U.S. defense secretaries James Mattis and William Perry.

But jurors in her trial heard damning evidence including that Theranos sought to conceal performance problems with its machines — touted as capable of conducting a full range of tests on just a few drops of blood — and that Holmes altered documents to dupe investors as well as falsely suggesting her technology was in battlefield use.

A series of Wall Street Journal exposés starting in 2015 led to federal probes and a U.S. Securities and Exchange Commission settlement fining Holmes $500,000 and barring her from serving as an officer or director of a public company for 10 years. In 2018, federal prosecutors filed fraud charges against her.

Ten months after her conviction, Davila sentenced Holmes, who has two young children with hotel heir Billy Evans, to 11 years and three months in prison. She surrendered herself May 30, 2023, as U.S. Bureau of Prisons inmate No. 24965-111, to Federal Prison Camp Bryan, about 100 miles from Houston.

Updates from the prisons bureau show she has shaved about two years off her sentence, and is scheduled to be freed in August 2032. Federal inmates can cut 54 days off their prison terms for each year of their sentences if they meet conduct standards, and may cut additional sentence time by completing recidivism-reduction and “productive activities” programs, according to the bureau.

Holmes will not appear at the hearing in person or via video, as only attorneys are typically present before the three-judge panel that hears oral arguments in federal court appeals, and the court does not arrange for incarcerated people to appear, a court spokesman said Tuesday.

Federal criminal appeals succeed at very low rates, according to the federal courts system. If Holmes loses, she could appeal to the U.S. Supreme Court, but its justices only hear about 100 to 150 appeals per year of the more than 7,000 it is typically asked to review, according to the courts system.