Court rules Theranos founder Elizabeth Holmes must go to prison while she appeals against sentence

Former Theranos CEO Elizabeth Holmes arrives at federal court in San Jose, California (AP)
Former Theranos CEO Elizabeth Holmes arrives at federal court in San Jose, California (AP)

Theranos founder Elizabeth Holmes must begin serving a prison sentence while she appeals her conviction on fraud over the failed blood-testing startup, a US court has ruled.

Holmes raised nearly $1billion (£800m) from wealthy investors such as Rupert Murdoch for Theranos, which she promised would provide revolutionary tech to scan for hundreds of diseases and other potential problems with just a few drops of blood.

It earned her fleeting fame and fortune until Wall Street Journal investigation and regulatory reviews exposed dangerous flaws in Theranos’s technology.

An appeals court in San Francisco ruled on Tuesday she must begin serving her sentence of 11 years and three months for defrauding investors.

She had asked the 9th US Circuit Court of Appeals to pause her sentence on April 25, two days before she was to report to prison.

In another ruling issued late on Tuesday, US district judge Edward Davila ordered Holmes to pay $452m (£362.6m) in restitution to the victims of her crimes.

Holmes is being held jointly liable for that amount with her former lover and top Theranos lieutenant, Ramesh ‘Sunny’ Balwani.

Balwani is already in prison after being convicted on a broader range of felonies in a separate trial.

District judge Davila has recommended that Holmes serves her sentence at a women’s prison in Bryan, Texas.

It has not been disclosed whether the US federal Bureau of Prisons accepted the judge’s recommendation.

Balwani, 57, began a nearly 13-year prison sentence in April after being convicted on 12 counts of fraud and conspiracy last July.

He was incarcerated in a Southern California prison last month after losing a similar effort to remain free on bail while appealing his conviction.

In his restitution ruling, Davila determined that Holmes and Balwani should pay Murdoch $125m (£100m) - by far the most among the investors listed in his order.

Holmes’s lawyers have been fighting her conviction on grounds of alleged mistakes and misconduct during her trial.

They claim errors and abuses were so egregious she should be allowed to stay out of prison while the appeal unfolds - a request that has now been rejected.