United States v. Holmes and Balwani: charges, verdicts, sentences and appeals

analysisOn June 14, 2018 a grand jury in the Northern District of California indicted Holmes and Balwani in connection with two multi-million-dollar schemes to promote Theranos (United States v. Elizabeth A. Holmes, et al., 18-CR-00258-EJD), charging each with two counts of conspiracy to commit wire fraud and nine counts of wire fraud. The case was first assigned to Judge Lucy H. Koh. Both pleaded not guilty; at Holmes's trial her lawyer told the jury that, despite some mistakes, leading a failed start-up did not make her a criminal. An indictment is an accusation, not a finding of guilt: tried separately, Holmes was convicted on four of the investor counts and Balwani on every count, and the Ninth Circuit affirmed both convictions in 2025. ^{1 2 3 4 5 6}

analysisThe indictment was superseded twice in July 2020. The third superseding indictment charged both with conspiring to defraud investors from 2010 to 2015 (Count 1) and patients from 2013 to 2016 (Count 2), six counts of wire fraud on investors who invested in 2013 and 2014 (Counts 3 to 8) and four counts of wire fraud on patients (Counts 9 to 12). The investor counts rest on six transfers into Theranos's Comerica Bank account, from $99,990 on December 30, 2013 to $99,999,984 on October 31, 2014, by investors identified only by number. The patient counts concern tests sold through Walgreens stores in California and Arizona and, in Count 12, a $1,126,661 payment to Horizon Media for Wellness Center advertising. The indictment also alleged that Holmes and Balwani told investors FDA approval was unnecessary when, by late 2013 and throughout 2014, the FDA was requiring Theranos to seek it. Horizon Media is named only as the payee for the advertising. These were the government's charges, and the verdicts set out below differed for the two defendants: Holmes was acquitted on the patient conspiracy and three patient wire-fraud counts, a fourth having been dismissed during her trial, and Balwani was convicted on all of them. ^{6 5 2}

analysisHolmes was tried first. On January 3, 2022 the jury convicted her of conspiracy to defraud investors (Count 1) and three counts of wire fraud on individual investors (Counts 6 to 8), involving transfers of more than $140 million; it acquitted her of the patient conspiracy and three patient counts and could not agree on three investor counts concerning C-1 investors, while a further patient count had been dismissed at trial. The amended judgment of May 30, 2023 records her as guilty on Counts 1, 6, 7 and 8, not guilty on Counts 2, 10, 11 and 12, with Counts 3, 4, 5 and 9 dismissed. ^{1 2 3}

analysisBalwani was tried separately in a four-month trial and convicted on July 7, 2022 on all twelve counts, including both conspiracies and the patient counts. The precise division of responsibilities between the two was disputed at the trials, but evidence at both showed that Balwani oversaw the patient-testing laboratory and the retail relationships, according to the Ninth Circuit. After his conviction the U.S. Attorney summarised the evidence: although Theranos had no revenue in 2012 and 2013, Balwani and Holmes told investors in 2013 and 2014 that it earned hundreds of millions from pharmaceutical companies and the military, and Balwani conspired to induce Walgreens and Safeway to invest on the strength of false pharmaceutical endorsements and revenue projections. ^{1 2}

analysisOn November 18, 2022 Judge Edward J. Davila sentenced Holmes to 135 months in prison and three years of supervised release, without a fine, finding ten or more victims and a loss of $120 million, which gave a guideline range of 135 to 168 months. On December 7, 2022 he sentenced Balwani, with the same range, to 155 months on each count, concurrently, three years of supervised release, a $1,200 special assessment and a $25,000 penalty. Balwani was first ordered to surrender on March 15, 2023 and lost his bid to stay free pending appeal; his second amended judgment gives April 20, 2023. According to a business news site, he entered a California prison in April and Holmes reported to a Texas prison on May 30, 2023. ^{1 2 3 4 5 6}

analysisIn May 2023 the court ordered both, jointly and severally, to pay $452,047,268 in restitution: about $397 million to the twelve investors identified at sentencing and $54.5 million to Safeway and Walgreens, crediting what Theranos had already paid three investors in civil settlements but not any residual value of the shares. The HHS Departmental Appeals Board noted that Holmes's total restitution obligation comprised $322,747,296 owed to business entities and $129,299,972 to individuals. The largest payees in the schedule are Rupert Murdoch, RDV Corporation, Peer Ventures Group, PFM Funds and Walgreens; the schedule's printed total of $453,047,268 is $1 million more than the amount ordered. ^{2 7}

analysisOn February 24, 2025 a Ninth Circuit panel affirmed both convictions, the sentences and the $452 million restitution order (129 F.4th 636). It denied Holmes's petition for further hearings on May 8, 2025, a television news network reported, and on December 22, 2025 amended its opinion and denied Balwani's petitions for rehearing. Balwani petitioned the Supreme Court in May 2026 (No. 25-1330); the government waived its response, and the Court denied the petition on October 5, 2026. ^{1 2 3}

analysisOn March 26, 2026, according to an excerpt of the decision published on a legal blog, Judge Davila cut Holmes's sentence by one year, to 10¼ years, under a retroactive guideline amendment for defendants who did not personally cause substantial financial hardship, accepting her argument that no individual investor-victim had shown such hardship. The government opposed, arguing that she had not accepted responsibility, had paid minimal restitution and was advising her partner on raising capital for a start-up whose prototype device it said resembled Theranos's; the court found that the scrutiny her notoriety brings reduced the risk that she could reoffend in the same way. Before the reduction, a television news network had reported a release date in August 2032. ^{4 2}

analysisBecause of their convictions, the HHS Office of Inspector General excluded both from Medicare, Medicaid and all federal health care programs for 90 years. It excluded Balwani first, and on December 29, 2023 excluded Holmes, extending the five-year minimum on the basis of four aggravating factors. Holmes appealed, arguing among other things that the exclusion depended on Chevron deference, that 90 years was an unlawful lifetime bar and that investment amounts were the wrong measure of risk to federal programs; an administrative law judge upheld the exclusion on April 25, 2025, and the Departmental Appeals Board affirmed it on January 16, 2026. ^{1 2}