A federal judge sentenced former Theranos CEO Elizabeth Holmes to 11 years and 3 months in prison Friday — too harsh a punishment considering the crime and the defendant. Holmes was convicted last January of wire fraud for deceiving investors about Theranos’ ability to conduct cheap finger-prick blood tests on its own machines.
Given her notoriety and the scope of the fraud, some might be outraged that the sentence, while significant, was still much lower than the maximum she could have received and lower than the punishment sought by the prosecutors. But no one should be surprised by it.
Federal sentencing can seem arbitrary, but at bottom, it requires a humane and common sense result: Defendants must not be punished more than is absolutely necessary. In this case, that meant not locking the 38-year-old Holmes in a federal penitentiary until she was well into her 50s, as the government had proposed.
Most people who are first exposed to federal sentencing — including lawyers — are bewildered by its unpredictability. Even defendants who plead guilty often don’t know if they will receive no prison time, some prison time or have to say goodbye to their families for years. And defendants like Holmes, who exercise their constitutional right to a trial, are entirely at sea about their likely exposure.
Anyone who claims Holmes received more or less than what she was “supposed to get” does not understand federal sentencing. I served for almost seven years as a federal prosecutor, led dozens of sentencings and co-authored a nationwide guide to prosecutors on the topic, and I couldn’t predict with any confidence what sentence Holmes would receive.
Indeed, 10 different federal judges would have likely imposed 10 different sentences on Holmes. That’s both a function of the general process and of Holmes’ particular case. She didn’t face a mandatory minimum sentence (meaning the judge was not required to impose a prison term), while her maximum sentence under the relevant statutes for her offense was 80 years (20 years for each of the four wire fraud counts of conviction). The defense asked for home confinement or, at most, 18 months in prison, primarily citing Holmes’ redeeming qualities; the prosecution, focusing almost entirely on her crime, asked for 15 years.
But the judge also considers the recommendation of two judicial authorities: the Probation Department, an arm of the court that is supposed to provide an objective view, and the U.S. Sentencing Commission’s guidelines. This thick handbook, produced by a bipartisan, independent agency of the judiciary, attempts to determine the seriousness of the offense and criminal past of the defendant through a series of questions about the crime and the defendant’s criminal history. The calculated range is no longer binding on judges and is meant only to guide them and offer some predictability.
According to the Probation Department’s calculations, the guidelines produced an advisory sentence of life in prison for Holmes, driven largely by the sheer amount of financial loss sustained by the investors. The department itself, however, only recommended nine years as an appropriate sentence.
The parties spilled a lot ink before sentencing: over 120 pages’ worth of sentencing memoranda (not counting exhibits), much of which were consumed by the technical questions surrounding the guidelines enhancements. These are aggravating facts that drive up the guidelines’ recommended sentence and in this case, according to probation, produced the advisory life sentence.
But that calculation was the least important component of determining Holmes’ sentence because the judge ultimately disagreed with the probation estimate and, anyway, no rational judge would have sentenced her to anything approaching life in prison. Among other things, she is a first-time, nonviolent offender whose crime did not lead to anyone’s death.
Still, the guidelines are a critical ingredient for setting up a potential appeal. District judges have broad discretion in fashioning what they believe is the correct sentence, a decision that cannot be overturned even if the appellate court would have imposed a different sentence. But if the district court miscalculates the guidelines, then a successful appeal is almost guaranteed. Much of the sentencing hearing was, as a result, consumed by arguments and rulings on the guidelines.
Yet district judges often look past the guidelines since they can consider virtually anything in arriving at the “right” sentence. That even includes, the Supreme Court has held, conduct for which a jury acquitted the defendant (in Holmes’ case, defrauding patients) so long as the judge is satisfied, by applying a much lower burden of proof than the one used by the jury, that this conduct did in fact happen.
If that doesn’t sound arbitrary and unfair enough, note that one of the best predictors of the sentence tends to be the courtroom in which the defendant happens to land through the random judge assignment system that follows an indictment. Punishments imposed vary federal district by federal district, judge by judge. A Texas prosecutor’s recommendation for the same crime, under the same federal statute could be laughed out of a federal court in New York — or not, depending on the judge.
Thankfully, there is one principle that every federal judge in the country must follow, the lodestar of sentencing: It must impose a “sentence sufficient, but not greater than necessary,” to achieve the goals of sentencing. Those goals are, unlike the federal sentencing process, quite intuitive, and can be reduced to a few questions: How bad was the crime? How bad is the defendant? How much does the defendant need to be punished to make sure she doesn’t do this again? How do we send a message to other would-be wrongdoers? What have other defendants received for similar crimes?
Common sense and a dose of perspective show that Holmes shouldn’t spend more than a decade in prison, let alone 15 years. The government argument for why her crime was “far-reaching and severe” is telling: “dozens of investors lost $700 million and numerous patients received unreliable or wholly inaccurate medical information from Theranos’ flawed tests, placing those patients’ health at serious risk.”
In other words, her crime was serious, but prosecutors can point to no dead body or even serious bodily injury, though the risk was real. She was convicted of fraud, but even the government seems to acknowledge that she was not your typical fraudster — she did not dupe people simply to take their money and spend it on herself. She actually appeared to believe in her vision, misguided as it was. As the government admitted, her “crimes were not motivated by a short-term desire for financial gain” — a statement you don’t often hear from the government in fraud cases.
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Holmes has also been punished in a unique way: She has been assailed in popular television shows, an award-winning podcast and a bestselling book. From her voice to her attire, she has been scrutinized and ridiculed. Her trial received wall-to-wall coverage. Holmes can now never live a normal life; she can never go anywhere in public without facing immediate and likely irreversible judgment and scorn. No one looking honestly at Holmes’ experience would think, “Yep, she really got away with it!”
In other words, a strong message has already been sent to the public — defraud investors and your life could be ruined. What would locking Holmes away for over a decade have achieved? She is not a violent criminal from whom the public needs protection, and her ability to commit fraud has been virtually eliminated by her notoriety. At this point the overriding question should be about the prospect of rehabilitation. Holmes can be a productive member of society. The judge, while not sentencing her to as much prison time as he could have, should have shown more leniency.