Elizabeth Holmes owes over $25 million to Theranos, lawsuit says

Former Theranos CEO Elizabeth Holmes (C) arrives at 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 hasn’t paid back over $25 million to creditors of her former Theranos company as she tries to delay her 11-year prison sentence, according to a lawsuit.

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

The suit was filed in December 2022, but didn’t come to light until Friday, when Holmes appeared in court.

According to the breach of contract suit, Holmes executed three promissory notes while she was 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 on account of Promissory Note.”

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

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

Holmes returned to federal court in San Jose, Calif. on Friday asking to delay her report date to prison next month while she appeals her conviction. A man holding the lawsuit approached Holmes at her attorneys’ table inside the courtroom. The man, who increasingly grew agitated, was removed by marshals. It could not be immediately confirmed if he was a process server trying to serve the suit on Holmes.

In January 2022, a jury found Holmes guilty on four counts of wire fraud and conspiracy. Holmes was ordered to turn herself in to begin her prison sentence on April 27, 2023. Her attorneys have signaled that 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 explaining why she’s not a flight risk which included her young children and that she’s been free on bail for more than a year without fleeing.

However, the government pointed to a one-way ticket Holmes and her partner, Billy Evans, had booked to Puerto Vallarta, Mexico days after her conviction.

Holmes is also fighting with prosecutors over how much restitution she should pay. Prosecutors want her to pay nearly $900 million while Holmes argues the government failed to prove investors relied on her representations.  

U.S. District Court Judge Edward Davila plans to make 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 shutdown in 2016 following a series of failed regulatory inspections and articles by then-Wall Street Journal reporter John Carreyrou. 

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