On Monday, April 10, 2023, Judge Edward Davila ruled that Theranos founder Elizabeth Holmes must serve time in jail while the Ninth Circuit Court of Appeals hears her case. Holmes was previously sentenced to 135 months of imprisonment after being found guilty of three counts of wire fraud and one count of conspiracy to commit wire fraud.
A defendant who has been found guilty and sentenced to imprisonment must be detained, even if an appeal has been filed. However, under United States v. Handy, a defendant may be released on a motion pending appeal if: (1) the defendant demonstrates they are not a flight risk and danger to the community; (2) the appeal is not for purpose of delay; (3) the appeal raises a substantial question of law or fact; and (4) that substantial question is likely to result in reversal or a new trial.
Judge Davila found that Holmes presented clear and convincing evidence to support that she is not likely to flee or pose a danger to the safety of the community. Although Holmes was convicted of non-violent crimes, she is in no position to inflict similar fraud on the community. Further, Judge Davila found Holmes not to be a flight risk since Holmes has made no attempt to flee, she does not possess her expired passport, there is a $500,000 bond on her parents’ home, and her two very young children reside in the country. Holmes also has no family or assets abroad.
As to the substantial question requirement, however, Judge Davila did “not find that [Holmes] has raised a ‘substantial question of law or fact’ that is ‘likely to result in reversal or an order for a new trial of all counts.'” Holmes’ appeal hinges on 5 points: (1) whether the court erred as to evidentiary rulings relating to the issue of whether Theranos technology was accurate and reliable; (2) whether the court erred by excluding testimony of Ramesh “Sunny” Balwani’s prior SEC deposition; (3) whether permitting cross examination of Dr. Adam Rosendorff would have resulted in reversal of all counts because the evidence would demonstrate the bias in Dr. Rosendorff’s testimony; (4) whether the court erred by admitting evidence of misrepresentations that Theranos provided to the military; and (5) whether the court erred in denying all three of her motions for new trial based on newly discovered evidence.
As to Holmes’s first argument, Judge Davila found that “even if the Ninth Circuit were to agree with Ms. Holmes that the Court had erred on these evidentiary rulings, the mere fact that a purported error touched upon the accuracy or reliability of Theranos technology is not likely to support a finding that the jury’s verdict was materially affected, especially where the government had presented evidence of other misrepresentations related to Theranos’s accuracy and reliability.” As such, Judge Davila found that the questions posed as to this first argument were not the proper types of questions that must be presented for appeal.
As to Holmes’s second argument, Judge Davila found that “the issue of whether Ms. Holmes or Mr. Balwani was involved with preparing financial models is not likely to result in reversal or a new trial.” Although Holmes argues that such an exclusion of testimony amounts to a due process violation, “she has not demonstrated the primacy of this evidence” because “whether Ms. Holmes was involved in the financial modeling presented to select investors was not a necessary element of the government’s case, given the other misrepresentations she had made to investors.”
As to Holmes’s third argument, Judge Davila wrote that “Ms. Holmes’s reliance on Dr. Rosendorff’s testimony is misplaced” because the line of cross examination at issue “only pertains to Dr. Rosendorff’s bias and competence as a lab director” and “it cannot be said that the conditions of Theranos’s lab or Dr. Rosendorff’s specific recollections were ‘critical element[s] of the government’s case’ on fraud to Theranos investors.” Even if this question would result in reversal or a new trial, Judge Davila did not find the question to be a “fairly debatable” substantial question. Dr. Rosendorff was cross examined over four days of trial such that Holmes received her constitutional opportunity to effectively cross-examine Dr. Rosendorff.
As to the fourth argument posed by Holmes, Judge Davila noted that Holmes was convicted for different misrepresentations made to investors, and the representations made to the military comprise “only one facet of the larger prism of misrepresentations made to investors.” As such, Judge Davila could not find that “had Ms. Holmes’s misrepresentations to the Department of Defense been suppressed – the jury’s verdict would have been any different.”
Finally, Judge Davila found that Holmes’s final argument did not pose a fairly debatable or substantial question, “[e]ven assuming that errors in denying Ms. Holmes’s new trial motions would be the type of issue on appeal that would result in a new trial.” The new trial motions were denied “based on multiple grounds, any of which would have supported denial of the respective motion.” The current motion, however, “does not respond to all bases for the Court’s denials.” Therefore, Judge Davila ruled that “[t]he Court cannot conclude that reasonable jurists would fairly debate these remaining issues when Ms. Holmes’s Motion does not address all bases for the Court’s denials.”
Holmes is scheduled to begin her sentence on April 27, 2023, at 2:00 p.m. Sunny Balwani was convicted of 12 counts of defrauding investors and patients and has been sentenced to nearly 13 years in prison. Balwani is scheduled to begin his sentence on April 20, 2023.
Additional Reading
Judge rules Theranos founder Elizabeth Holmes jailed during appeal, The Hill (April 11, 2023)
Order Denying Motion for Release Pending Trial
USA v. Elizabeth Holmes (Case No. 22-10312)
Elizabeth Holmes Faces Sentencing After Request for New Trial Is Denied, Justia Legal News (November 9, 2022)
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