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Lawsuit Says Elizabeth Holmes Owes Theranos More Than $25 Million

TechTechnologyLawsuit Says Elizabeth Holmes Owes Theranos More Than $25 Million
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Former Theranos CEO Elizabeth Holmes (C) arrives in federal court with her mother Noel Holmes (L) and father Christian Holmes on September 01, 2022 in San Jose, California.

Justin Sullivan | Getty Images

Elizabeth Holmes has owed creditors of her former Theranos company more than $25 million, according to a lawsuit as she tries to delay her 11-year prison sentence.

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Theranos ABC, a company set up on behalf of its creditors, alleges in the lawsuit filed in California Superior Court in Santa Clara County that “Holmes has not made any payments due on any of the promissory notes.”

The suit was filed in December 2022, but was not revealed until Friday, when Holmes appeared in court.

According to the breach of contract suit, Holmes executed three promissory notes as CEO of the failed blood testing company. The promissory notes were as follows, according to the lawsuit:

August 2011 in the amount of $9,159,333.65.

December 2011 in the amount of $7,578,575.52.

December 2013 in the amount of $9,129,991.10.

According to the complaint, “Theranos ABC has demanded payment of Promissory Note #1 and Promissory Note #2 from Holmes, but Holmes has failed to pay any amounts due on the Promissory Note.”

Lawyers for Theranos ABC did not immediately respond to a request for comment.

The first two of the promissory note payments were due in 2016 and the third in 2018. In July 2016, Theranos’ board of directors included Holmes, former Defense Secretary James Mattis, attorney David Boise, former Bechtel Group CEO Riley at the time. Bechtel and former Wells Fargo CEO Richard Kovacevich amended the terms to extend the notes to five years. The first two notes are overdue and the third is due in December, the suit said.

Holmes returned to federal court in San Jose, Calif., on Friday to appeal her conviction and ask to delay her report date to prison next month. A prosecuting attorney approached Holmes’ attorneys’ table inside the courtroom. The increasingly agitated man was removed by marshals. It could not be immediately confirmed whether he was a process server trying to prosecute Holmes.

In January 2022, a jury found Holmes guilty of wire fraud and four counts of conspiracy. Holmes was ordered to turn himself in to begin his prison sentence on April 27, 2023. Her attorneys have indicated they intend to appeal Holmes’ case to the Ninth Circuit Court of Appeals.

Following her guilty verdict last year, Holmes became pregnant and gave birth to a second child.

A lawyer for Holmes cited several reasons why she is not a flight risk including her young children and she has been free on bail for more than a year without being on the run.

However, the government pointed to a one-way ticket Holmes and his accomplice, Billy Evans, had booked for Puerto Vallarta, Mexico, days after his sentencing.

Holmes is also fighting with prosecutors over how much he should pay in damages. Prosecutors want him to pay nearly $900 million, while Holmes argues that the government failed to prove that investors relied on his representations.

US District Court Judge Edward Davila plans to issue a ruling on both motions in early April.

Holmes founded Theranos in 2003 after dropping out of Stanford, with the promise of revolutionizing the healthcare industry. The company shut down in 2016 following a series of failed regulatory inspections and articles by then-Wall Street Journal reporter John Carreiro.

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