SAN JOSE, Calif. - When a Silicon Valley jury found Elizabeth Holmes guilty of three counts of fraud and one count of conspiracy last week, it set up the next legal battle around a crucial question: What kind of punishment will the Theranos founder get?
Holmes and her attorneys have two options: Continue fighting the case and attempt a come-from-behind victory on appeal, or accept the verdict and ask for mercy from U.S. District Court Judge Edward Davila.
How she proceeds could have huge ramifications for her future. Holmes, after all, recently had a baby and may very well end up raising her child while behind bars.
"I expect Judge Davila to potentially hammer her because she’s expressed no remorse," said Neama Rahmani, a former federal prosecutor in the Southern District of California. "I would expect her – without any acceptance of responsibility – to look at potentially double-digit years in federal prison."
Rahmani pointed out that fraud cases typically don’t go to trial in the federal system and defendants will often take plea deals that come with several years in prison. Although it’s a defendant’s right to take a case to trial, a guilty verdict from a jury often comes with greater risk for a longer sentence.
"Typically these cases don’t go to trial, but this is part of Elizabeth Holmes, her hubris – her arrogance," Rahmani said.
Holmes and her lawyers have not commented since she was convicted on Jan. 3. The judge has not set a date for her sentencing, but he signaled that he may wait until after her co-defendant, Sunny Balwani, proceeds to trial.
In sentencing, the judge can consider aggravating factors – even the circumstances involving the counts Holmes was not convicted on, like risking patients’ health. The dollar figure may also come into play. The three counts she was convicted on total more than $140 million in losses for investors.
If Holmes continues to stay defiant, past cases show courts imposing tough penalties for convicted fraudsters.
In 2018, Martin Shkreli – the so-called "Parma Bro" – was sentenced to seven years in prison for lying to investors in his hedge fund.
And the same judge who’s sentencing Holmes dealt out nine and 12-year sentences for the couple involved in the famous Wendy’s chili finger scam back in 2006.
They sued the fast food restaurant after the woman put a severed human finger into her own chili.
Holmes’ other option may be to appeal the verdict – but the judge ran an ultra-careful trial and didn’t give her team much to contest.
"The case was litigated extensively by Holmes’ defense team and ultimately she got many of the rulings that she wanted," Rahmani said.
Part of the reason the judge may bring a harsh sentence would be to prevent others in Silicon Valley to act like Holmes.
"When the government brings a high-profile prosecution like this they want in part to add some deterrence to that – to essentially send the message that this whole fake-it-till-you-make-it thing is not going to fly," said Robert Dugdale, another former federal prosecutor, who now works in white-collar criminal defense.
He said Holmes’ effort on the stand to undo a decades-long paper trail was too little, too late.
"At the end of the day it was a pretty overwhelming case that really put the defense on the defensive," he said.
The conviction may ultimately embolden prosecutors to clamp down more on startups that play fast and loose with the truth.
"This case will absolutely have an effect on Silicon Valley, and it will send shock waves through both executives and venture capitalists," Rahmani said.
Evan Sernoffsky is an investigative reporter for KTVU. Email Evan at firstname.lastname@example.org and follow him on Twitter @EvanSernoffsky