Elizabeth Holmes has “limited financial resources” and should not have to pay $250 a month in restitution once she’s released from prison, lawyers for the Theranos Inc. founder told a judge.
Federal prosecutors say there’s a clerical error in a court filing that doesn’t specify a schedule for Holmes to pay $452 million in restitution to victims of her massive fraud at the blood-testing startup.
They’re now asking US District Judge Edward Davila to correct the paperwork to require her to make monthly payments once she finishes the 11-1/4 year sentence that she started last month at a federal prison camp outside Houston.
Like her former boyfriend, Ramesh “Sunny” Balwani, who served as president of Theranos and is now serving a 13-year sentence, Holmes has said she can’t afford to pay the nine-figure sum demanded by the US. That’s common in large financial frauds, but the government is required to seek restitution — and judges often impose payment schedules on convicts to ensure they make an effort.
Davila, who presided over the trials of both Holmes and Balwani, ordered them to pay $452,047,268 in restitution, saying they are jointly liable for the amount — with $125 million owed to Theranos investor Rupert Murdoch and lesser amounts for 13 other fraud victims.
The judge ordered Balwani to pay $25 quarterly while in prison and at least $1,000 a month, or at least 10% of his earnings, once released.
Holmes doesn’t object to $25 quarterly payments while she’s incarcerated, but argues the government is wrong to assume the absence of a post-prison payback schedule means the judge simply made a mistake.
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Her lawyers asked Davila on Monday to reject the correction proposed by prosecutors, saying the court had “substantial evidence showing Ms. Holmes’ limited financial resources and has appropriately treated Ms. Holmes and Mr. Balwani differently in sentencing.” They noted that while Davila ordered Balwani to pay a $25,000 fine, she was spared from that penalty.
The case is US v. Holmes, 18-cr-258, US District Court, Northern District of California (San Jose).