Elizabeth Holmes owes Theranos more than $25 million, the lawsuit says.
Former Theranos CEO Elizabeth Holmes (center) arrives in federal court with her mother Noel Holmes (left) and father Christian Holmes on September 1, 2022 in San Jose, California.
Justin Sullivan | Getty Images
According to the lawsuit, Elizabeth Holmes has not returned more than $25 million to her former Theranos company’s creditors as she seeks to delay her 11-year prison sentence.
Theranos ABC, a company formed on behalf of its creditors, alleges in a lawsuit filed in the California Supreme Court in Santa Clara County that “Holmes made no payment on any of the bills.”
The lawsuit was filed in December 2022, but it only became known on Friday, when Holmes appeared in court.
According to the breach of contract lawsuit, Holmes discharged three debt obligations while serving as CEO of a failed blood testing company. According to the lawsuit, the bills were as follows:
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 USD 9,129,991.10.
According to the complaint, “Theranos ABC demanded payment from Holmes of promissory note #1 and promissory note #2, but Holmes did not pay any amounts on the promissory note.”
Lawyers for Theranos ABC did not immediately respond to a request for comment.
The first two bill payments were due in 2016 and the third in 2018. In July 2016, Theranos’ board of directors, which at the time included Holmes, former Secretary of Defense James Mattis, attorney David Boyes, former Bechtel Group CEO Riley Bechtel, and former Wells Fargo CEO Richard Kovacevich changed the terms to extend the duration of the bonds for five years. The lawsuit says the first two notes are overdue and the third is due in December.
Holmes returned to federal court in San Jose, California. on Friday, requesting that the date of her report to prison be postponed next month while she appeals her sentence. The man holding the lawsuit approached Holmes at her lawyers’ table in the courtroom. The bailiffs removed the man, who was getting more and more worried. It was not immediately possible to confirm whether he was the server of the process trying to serve the lawsuit on Holmes.
In January 2022, a jury found Holmes guilty of four counts of wire fraud and conspiracy. Holmes was ordered to turn himself in to begin serving his prison sentence on April 27, 2023. Her lawyers have signaled that they intend to appeal the Holmes case to the Ninth Circuit Court of Appeals.
After her conviction last year, Holmes became pregnant and gave birth to her second child.
Lawyer Holmes gave several reasons why she did not run the risk of escaping, including her young children, and that she had been released on bail for over a year without escaping.
However, the government pointed to a one-way ticket that Holmes and her partner Billy Evans had booked in Puerto Vallarta, Mexico days after her conviction.
Holmes also argues with prosecutors about how much restitution they should pay. Prosecutors are demanding that she pay nearly $900 million, while Holmes claims the government has failed to prove that investors relied on her claims.
US District Court Judge Edward Davila plans to rule on both motions in early April.
Holmes founded Theranos in 2003 after dropping out of Stanford University with the promise of revolutionizing the healthcare industry. The company closed in 2016 after a series of failed regulatory reviews and articles by then-Wall Street Journal reporter John Carreyrou.