Elizabeth Holmes, the founder of the blood testing start-up Theranos, has reported to a federal prison in Texas to begin her 11-year, three-month sentence for defrauding investors. Holmes was found guilty last year of four counts of wire fraud and conspiracy for falsely claiming that Theranos’s blood tests could detect a variety of ailments with just a few drops of blood. She and her former business partner, Ramesh Balwani, must together pay $452 million in restitution to investors who were defrauded. Holmes has appealed her case, though her requests to remain out of prison during the appeal have been denied.
Holmes surrendered to F.P.C. Bryan, a minimum-security prison camp for women roughly 90 minutes from Houston. The prison’s 655 inmates are required to work in the cafeteria or in a manufacturing facility, where pay starts at $1.15 an hour, according to the prison’s handbook. Before starting work at the factory, Ms. Holmes may take a test to assess her strengths in areas such as business, clerical, numerical, logic, mechanical and « social. » Inmates can also enroll in a « Lean Six Sigma » training program to learn about efficiency.
At F.P.C. Bryan, Ms. Holmes will wear prison-issued khaki pants and shirts in pastel green, gray or white with athletic shoes that must not exceed $100 in value. She will not have any internet access but can buy a radio ($31.75) or an MP3 player ($88.40) from the commissary. All music must be « non-explicit, » according to the prison’s handbook. F.P.C. Bryan offers leisure activities including music programs, « table games » and movies, according to its handbook.
Holmes’s sentence was meant to send a message to others in Silicon Valley: There are consequences when ambitious start-up founders take an ethos known as « fake it till you make it » too far. Despite the tech industry’s long history of stretching the rules, as entrepreneurs invent new businesses and disrupt old ones, few have ever gone to prison for lying.
Keywords: Elizabeth Holmes, Theranos, fraud, prison, F.P.C. Bryan, Silicon Valley.
