Theranos founder Elizabeth Holmes cannot remain free during appeal, judge rules

By Jody Godoy and Bharat Gautam

(Reuters) - A U.S. judge on Monday denied Theranos founder Elizabeth Holmes' request to remain free on bail while she appeals her conviction on charges of defrauding investors in the failed blood-testing startup that was once valued at $9 billion.

Holmes, who rose to fame after claiming Theranos' small machines could run an array of diagnostic tests with just a few drops of blood, was convicted at trial in San Jose, California last year.

U.S. District Judge Edward Davila sentenced Holmes to 11 years and three months in prison in November. Holmes asked Davila to postpone the sentence while the 9th U.S. Circuit Court of Appeals reviews her case.

Davila concluded that even if Holmes won her appeal to challenge the Theranos technology evidence, it wouldn't result in a reversal or a new trial of all the counts she was found guilty of.

"Contrary to her suggestion that accuracy and reliability were central issues to her convictions, Ms. Holmes’s misrepresentations to Theranos investors involved more than just whether Theranos technology worked as promised," he said.

Holmes, who is scheduled to begin serving her sentence in April, may ask the 9th Circuit to grant bail.

In denying the release appeal, Davila noted that Holmes was unlikely to flee or endanger the community.

Prosecutors said during the trial that Holmes misrepresented Theranos' technology and finances. Holmes testified in her own defense, saying she believed her statements were accurate at the time.

On appeal, Holmes plans to challenge several of the judge's rulings, including his allowance of evidence about Theranos' test accuracy that postdated her statements to investors.

Holmes' co-defendant, former Theranos President Ramesh "Sunny" Balwani, was convicted of defrauding Theranos investors and patients at a separate trial and sentenced to 12 years and 11 months in prison.

In March, Davila denied Balwani's request to remain free on bail during his appeal. The 9th Circuit also ruled that Balwani's sentence should not be postponed while it considers his case.

The case is U.S. v. Holmes et al., U.S. District Court, Northern District of California, No. 18-00258.

(Reporting by Jody Godoy in New York and Bharat Govind Gautam in Bengaluru; Editing by Bill Berkrot and Gerry Doyle)