Elizabeth Holmes may have a secret way to reduce sentence

The Theranos founder heaped much of the blame for the company’s scandalous downfall on her former partner Ramesh ‘Sunny’ Balwani, whose own fraud trial begins this week

Elizabeth Holmes’s chances of a reduced prison sentence for defrauding Theranos investors may lie with the outcome of her ex-boyfriend and business partner Ramesh “Sunny” Balwani’s trial, legal experts say.

Mr Balwani’s trial gets underway on Wednesday when jury selection begins in a federal court in San Jose, California.

The 56-year-old is charged with the same counts of criminal wire fraud and conspiracy against investors, doctors and patients brought against Holmes.

Holmes, 38, heaped much of the blame for the company’s scandalous downfall on his alleged attempts to control her and his alleged mismanagement of the company’s blood-testing labs during her four month trial.

Holmes faces a maximum of 20 years in jail after being found guilty in January on four counts of conspiracy and wire fraud after investors lost approximately $600m in her former blood-testing startup. A jury was unable to reach a unanimous verdict on three other counts.

Legal experts say Judge Edward Davila, who is presiding over both of the complex cases, will take into account whether Holmes was abused by her older ex-partner during sentencing.

Tim Crudo, a white-collar criminal defence lawyer at Coblentz Patch Duffy & Bass, told Bloomberg: “She will want evidence to show that he was the force behind everything, a master manipulator, a bad man.

“That could play into her theory that he manipulated her.”

Mr Balwani has denied all the charges.

Andrey Spektor, a lawyer at Bryan Cave Leighton Paisner LLP, told Bloomberg, the verdict in Mr Balwani’s case would provide crucial context for the sentencing judge.

“It also could be used to show that Ms Holmes suffered during her Theranos experience - that it wasn’t all glitz and glamour, and she therefore doesn’t need a particularly long sentence to be punished or to be deterred,” Mr Spektor said.

According to guidelines, Holmes is likely to face a minimum recommended sentence of nine years, rising to a potential maximum of 17.5 years.

This will depend on a range of factors including the amount of investor loss, the sophistication of the fraud, and the number of victims.

Holmes’ rise from Stanford University dropout to self-made billionaire, followed by her spectacular fall from grace, has been dramatised in the new TV series The Dropout.

Her sentencing has been delayed until 26 September, and she remains free on bond.