Theranos CEO Elizabeth Holmes on Tuesday faces back-to-back hearings in two different California State Supreme Courts: one before a Santa Clara County Superior Court, the other before the California Court of Appeal.
Both proceedings have the authority to revoke her probation before the court, thus ending the close monitoring of the blood-testing company’s operations and valuation.
Unlike most drug companies that simply have their products sold on pharmacy shelves, Holmes also had to have FDA approval, which took time. Theranos continued to make major inroads at a crowded blood testing market, claiming it would do all tests in a few drops of blood instead of the typical 2,000 drops.
However, it didn’t happen and now in 2017, Theranos and CEO Elizabeth Holmes were found to have taken $700 million in investor funds without the required FDA approval.
Holmes will be presented to a judge Wednesday in the lower court in an effort to take responsibility for her company’s flagrantly unsafe blood tests. If the judge finds Holmes guilty and sentences her to prison, she will be the first CEO convicted for criminal fraud in nearly a century.
“It’s going to be a long day for someone who is a serial risk taker. In the end, Holmes will have to go to prison for destroying her company, ” said Steven Radelet, Professor of Criminal Justice at the University of Texas at Austin.
Radelet added, “it’s an insanity defense, somebody just can’t live with themselves…I think it will be an interesting day for us to have an idea of how much Holmes is capable of getting into trouble and knowing what she’s capable of getting into trouble.”
The lower court judge will then hand down the sentence.
Judge Valeate most likely will tell Holmes that her refusal to take responsibility for the violations will put her back in prison, something that she said should happen even without any conviction.
By the time the lower court sentenced Holmes in 2017, she already had failed to repay nearly $60 million in investor funds and was forced to shut down the company she had started.
Holmes would have to be in prison for some time to ensure restitution for all the investors who lost money when Theranos collapsed.
Cyber security expert Jonathan Sorensen, a former employee at Dropbox, told Fox News it is crucial that Holmes step forward and say she understands she did wrong. “She has to show remorse. If she doesn’t, then whatever the punishment is, it doesn’t make sense.”
Holmes and her lawyers are planning to testify before a judge on Thursday that she did not do anything wrong and the entire case is just a misunderstanding.
Either way, it was one of the most disastrous CEO failures of all time, leaving current Chief Executive Darlene Friedman, and former Chief Scientific Officer Sunny Balwani, as well as investors and most investors who were lured in by Holmes, feeling extremely annoyed.
Holmes will be in the spotlight for the next three days.