U.S. District Judge for the Northern District of California Edward Davila sentenced former Theranos CEO Elizabeth Holmes to 11 years in prison last week following a four-month trial in which a jury found Holmes guilty of defrauding investors at her blood-testing company.

Below is a transcript of Davila's full remarks at the end of the sentencing hearing in San Jose, Calif., just before he handed down her punishment.

Holmes, 38, has been ordered to turn herself in April, 27, 2023, and she is expected to serve her sentence at a minimum-security women's facility about 100 miles outside of Houston, where Holmes grew up.

U.S. District Judge Edward Davila:

I'm a native. I was born up the street, and I remember this valley, and the innovation of this valley. The richness of the earth that is below us here in this valley at one time was agriculture. These pictures that are in my courtroom express some of that. We know that this valley at one time from the rich earth here supported the world. Food came from this valley.

Ranchers, farmers came to this valley from Europe, from Asia. From our neighbors south, and individuals who have held land from Spanish land grants, they farmed this land, they farmed this rich land, and they produced them, this was the center for the world, this agriculture. That's what provided and drove this area's economy. And farmers, ranchers, they developed this land.

They made their agreements, they exchanged business dealings, and I'm informed that more often than not those business dealings were sealed with a handshake, they were sealed with an eye-to-eye promise to perform, 'I'll bring this many bushels, tons of tomatoes, you will have strawberries, you will have cherries, you will have artichokes, you will have all of the riches that the earth below us in this wonderful, wonderful land produces.' But as all things do, times change. And on a little side street in Palo Alto in a little wooden garage, a single car garage, we know the history. We know what happened there. Two individuals put their minds together and they created something, they developed some industry and put their hard work to task and created innovation, and that changed this valley forever.

The commerce of this valley shifted then, didn't it, from agriculture to technology. And those two individuals in that small wooden garage in Palo Alto, they created the technology that changed the agricultural economy for this area. This area no longer produced the strawberries, the apricots, the cherries, the artichokes, and the tomatoes that it once did in that great abundance, but rather the technology changed, didn't it? So the Page Mill Road where we see a lot of innovation, Sand Hill Road, the valleys here, they changed, those farms are gone, and in their place are the titans of industry that have developed from that small garage. We know this local history.

It's not folklore. It's the history of this area. When they created, those two individuals, they created what they did, and they also, in creating their company, they also created an ethos and they created a way of conducting their business creating what they do, treating their employees and their business partners in a way that sought to continue innovation, to produce innovation recognizing that this area would soon be the crucible for innovation around the world as it is today.

And the world now looks to this area not so much for the agricultural gifts from the rich earth below us, but from the technology, the ideas that spring forth from the many bright minds that come here, and we welcome them. We're grateful for that technology that comes forward, and the world relies on it. They really do rely on it. Concurrent with that is — with those businesses are how do we fund that? How do we create that? How do we keep that going? And that's the issue of funding for business that we see.

This case is so troubling on so many, so many levels. There's no question that Ms. Holmes is bright. I've read her background. We read about her. We know what she has done. We know what she created. At an early age, 19, going to a prestigious university. I think that the PSR [presentence report] had to be corrected as to the age. And she created this and immersed herself forward.
People gravitated towards her idea. She just told us about her company's what drove her.

And it's clear from her comments that that spirit, her desire to produce, to make her company successful, perhaps, is what caused her to, as she told us just a moment ago, make certain mistakes. The industry that we know of here regrettably finds vectors with the financial and personal gain that clouds sometimes the good judgment of individuals, and we see that. And Mr. Downey tells us this was not a pursuit of money. This was not a pursuit of — it's not like other wire fraud cases where an individual sought riches to buy yachts, cars,
and all of those things, and to live a lavish lifestyle.

But what was it then? What was it that caused Ms. Holmes, regrettably, to make those decisions that she did? And the jury heard at least the evidence, heard the
evidence that the government put forward, statements from victims, statements from other individuals about representations that were made.

And that's the troubling part of this. Was there a loss of a moral compass here? Could, regrettably, Ms. Holmes partake in the fraud that the jury found existed, the conspiracy, and the three counts that they found that her culpable of? They heard the evidence.

They heard the statements that were made to them. They heard, saw the texts, the chain, the messages, the collaboration, if you will, between the co-defendants, and they saw that.

The tragedy of this case is that Ms. Holmes is brilliant. She had creative ideas. She is a big thinker. She was a woman moving into an industry that was dominated by, and let's face it, male ego. That young women entrepreneurs are regrettably denied access to, but she made that. She made that. She got into that world.

And as we've read and we've heard, we have heard evidence and we have heard other individuals testify in the trial as to various reasons how they came to know her and how they came to believe her statements, and believe the product that she was selling that we know, we know from the testimony of 29 witnesses, was not working.

It didn't work. It was sent to Walgreens. I read something that suggests Walgreens had the opportunity to test it. They could have tested it. It was given to them. They could have looked at it, but — and then we learned that there was tape perhaps, there were secured machines, the Edisons were secured. The proper appropriate devices were not given to them so they could accurately test it.

There was significant evidence about manipulation and untruths that were being used in the negotiation of the business. And what is it that caused that? Was it hubris? What caused that? Was it intoxication with the fame that comes with being a young entrepreneur? And Mr. Downey suggests she did not go to that, it came to her. And perhaps that's the real pity of it.

The letters that were referenced, I've read them, they were meaningful. These are letters in support of Ms. Holmes. They spoke to a different individual perhaps that the jury heard. They weren't here. Many of the letter writers weren't at the trial I don't believe, but they spoke to a different individual and their experiences. And they were moving. They talked about how Ms. Holmes would visit when they were ill, when they had a problem, she was so giving, she was always there.

The letters referenced by venture capitalists and others who mentioned innovation and they talk about the VC world and those types of things. One thing that was missing from those letters was — and I didn't see it, they talked about, well, in the industry in this valley failure is quite normal. Businesses fail all of the time. We, VCs we invest in businesses, and if we get a 10 percent return, we're successful, it's the next big thing, that's what we're looking for. So failure is not uncommon, and you should recognize that, they suggest. One thing that the letters omit, though, they did not say, they did not say anything about, nor did they endorse, failure by fraud.

They did not say, well, it's okay, fraud is okay, And that's part of failure. They didn't talk about that, and I don't think that they could. I don't think that they would, they would condone fraud. they couldn't do that. These letters speak to a recognition that companies fail, they falter. There was one letter — I wrote the quote down. it's, "we believe that no one should invest no more than they are expected to lose."

So investors, sophisticated investors, it's all right to invest and lose money, that's the expectation, but the public and sophisticated investors that make those investments, they take those risks. They should take those risks free from lies and misrepresentation. That's the foundation of innovation and investment, honesty in the market. Those letter writers did not condone misrepresentations, manipulation. And I know about all of the good things that the individuals said about Ms. Holmes, and I respect that, and it's to the court.

However, if it was revealed to them what this jury heard and of the conduct that was engaged in, I am quite confident they would not, they would not condone that. So what was it that caused — was it intoxication, as I said, with the fame? We know, the record shows, that the misrepresentation, there were many. The texts between Ms. Holmes and Mr. Balwani supported the jury's finding of the conspiracy.

One letter mentioned mercy and the work of Bryan Stevenson. We all are familiar with the work of Bryan Stevenson. He represents many who find themselves disproportionately insinuated into the criminal justice system because of poverty, lack of education, opportunity for family support, and his work exposes the inequities of the treatment of many in our criminal justice system. And the author did not suggest that this case, this case was a case that was the type of case that Mr. Stevenson would handle, but the letter did use the word "mercy" and suggested then that is something that the court should also consider.

This is a fraud case where an exciting venture went forward with great expectations and hope only to be dashed by untruth, misrepresentations, hubris, and plain lies. I suppose we step back and we look at this, and we think what is the pathology of fraud? Is it the inability or the refusal to accept responsibility or express contrition in any way? Now, perhaps that is the cautionary tale that will go forward from this case.

You'll recall the wonderful innovation of those two individuals in that small garage in Palo Alto. No exotic automobiles or lavish lifestyle, just a desire to create for society's benefit through honest hard work, and that I would hope would be the continuing story, the legacy and practice of Silicon Valley. In this matter, the court is going to impose a sentence that the court finds is sufficient but not greater than necessary, to comply with the purposes set forth in 18 United States code section 3553.

The court has considered the history and characteristics of the defendant and the nature and circumstances of the offense, including those items that I mentioned. The court has recognized that the sentence needs to be imposed to reflect the seriousness of the offense and to promote respect for the law and to provide just punishment for the offense, to afford adequate deterrence in criminal conduct.

In this regard, the court will impose the following: the court will impose a special assessment of $400, that's $100 for each count. The court will ask that the parties meet and confer regarding a restitution hearing date that we will set in the future.

As I've said, I've asked defense counsel to please check with your client to see if she wishes to waive her appearance for that. The court would accept that. The court is not going to impose a fine in this matter.

The court has reviewed the financial statements filed in this case, and the court will not impose a fine. The court will impose a period of supervised release of three years as to each count. Those are concurrent, concurrent as to each count.

The court will adopt the recommendations of supervised release as indicated in the PSR. The court has reviewed those and finds that they are appropriate, and the court will order those.

In this matter, having found the guidelines as indicated, the court is going to impose a guideline sentence of 135 months. The court imposes this sentence after consulting the United States sentencing guidelines and in light of the statutory concerns expressed in 18 United States code section 3553(a).

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